Shipping rise forecast

Press, Volume CXI, Issue 32554, 13 March 1971, Page 15

Shipping rise forecast

fUZ. Presi Association) j WELLINGTON, March 12. Members of the New Zealand Eastern Shipping committee have endorsed predictions by Mr G. Hunter, chairman of the Overseas Shipowners’ Committee, that higher crude oil prices and other increased costs would inevitably affect the cost of all shipping services to and from New Zealand. Mr H. E. B. Ward, chairman of the committee which consists, of the China Navigation Company, Crusader Shipping Company, Japan Line, Mitsui O.S.K. Line and Royal Interocean Lines, said the oil price rise and an increase up to 30 per cent in Japanese stevedoring costs emphasised how shipping companies were just as severely affected by costs outside New Zealand as they were by those that occurred locally. “Shipping companies are in an unenviable position because they meet the full force of inflation in both the northern and southern hemispheres,” said Mr Ward, “yet increased freight rates are still equated in the public’s mind with increased profits. “Increases in freight rates have traditionally lagged behind increases in costs, which means shipping companies never catch up,” Mr Ward said. “A clear example of this was the increase in the committee’s rates on January 1 which only covered additional costs incurred to June, 1970, and in part at that. “Since then, port charges, seamen’s wages, waterfront costs and bunker prices have all risen sharply and these costs are, of course already being met by the lines. “The time lag between the imposition of higher costs and the ability of lines to recover them is one of the reasons why the shipping in-

dustry shows a far lower return on risk capital than most other industries expect or obtain,” he said. Faster rise When costs rose slowly the effect on shipping companies’ profits was not so serious and could be compensated by infrequent adjustments in freight charges and increased efficiency. It meant exporters and importers were faced with an upward drift in their shipping costs. “But today the whole process of cost increases has speeded to such an extent that everyone feels the effects much more quickly. “Members of the committee will clearly have to take the effect of present as well as future cost increases into account in their financial reviews now taking place. While it is yet too early to predict the final outcome the shipping companies are, unhappily, left with little room to manoeuvre,” said Mr Ward.