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US national divisions

US national divisions
The debate raging over the position shipowners should take in the Pacific trades has a twist very much to do with the place the US occupies in a changing world and whether US business has fully grasped that position.

US national divisions.

The debate raging over the position shipowners should take in the Pacific trades has a twist very much to do with the place the US occupies in a changing world and whether US business has fully grasped that position.

US President Barack Obama, as presidents do, has called for an export drive to support a US recovery. US exporters have been jostling for space on ships heading from the west coast to Asia, just as importers in Asia are chafing about the capacity shortage in the other direction.

This has emerged from the surge in volume that surprised the container industry at the start of 2010. The surge is attributed to inventory restocking and many believe it may die down, while a minority see the start of a sustainable trade recovery.

Either way, shippers have been vocal in protesting about a rise in rates resulting from undercapacity. The charges and counter arguments have been covered by Lloyd"s List for two weeks. Shippers are furious at carriers" refusal to bring more ships back into service at a time when cargo is being left on the dockside in Asian ports.

Some have suggested collusion. Eager regulators can be trusted to scrutinise the lines and regard their views sceptically, if not necessarily with distrust. But this surge looks very much market-driven. And if shipowners were slow to recognise demand, shippers appear to have been on the wrong foot too. After all, it is their inventories that require restocking.

The irony rarely talked about, but increasingly apparent, is the national divide that looms in this debate. Most of the shippers raising cries come from the US, implying that the stance of shipowners on rates are to the detriment of a US turnaround.

But no shipowner on the Pacific trade hails from the US. Why, in a market-driven boom, should a diverse group of non-US shipowning companies see it as necessary to support US manufacturing and trade?

US dependency on foreign partners, so new to the US mentality, will have its reflection in shipping too.

Trading blows

Ocean carriers and shippers seem as far apart as ever, if the latest exchanges are anything to go by.

Michelin"s Jean-Louis Cambon, the new chairman of the European Shippers" Council"s maritime transport council, has complained about how little container lines understand the needs of their customers.

In particular slow steaming, which has helped to transform lines" finances in recent months, could force manufacturers to source products closer to home.

If that happened, container lines would lose valuable business as there would be less demand for longhaul ocean transport.

Mr Cambon is not alone in warning that reduced ship speeds are playing havoc with supply chains and could be counter-productive in the long run.

But discontent is not confined to one side. Mediterranean Shipping Co boss Gianluigi Aponte recently blamed shippers for market volatility by pressing for the end of conferences.

The normally publicity-shy Mr Aponte told the Financial Times that shippers were concerned solely with price and were responsible for market instability.

That was in similar vein to MSC"s Caroline Becquart, who told US cargo interests they did not understand shipping. Meanwhile, Maersk Line chief executive Eivind Kolding said customers continued to resist long-term contracts, even though that was the best way to provide price and service predictability.

As freight rates recover, shippers are bound to direct more salvos at lines. But they also benefited from record low rates last year. Free ocean shipping markets are what shippers demanded. This is what they have.


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