Shipping negotiations

Press, 21 October 1983, Page 29

Shipping negotiations

Competition in shipping services brought the prospect of lower freight rates but threatened the assured service conditions under which wool was carried by shipping conferences, according to the president of the Council of Wool Exporters, Mr Michael Moss. The present arrangement of most of the wool for Europe being shipped under conference service conditions and freight rates and a small proportion being carried by competing lines at cheaper-rates could only be temporary, he said. There were a number of factors involved, he said after the annual meeting of the council in Christchurch, where the organisation had changed its name from the New Zealand Wool Buyers’ Association.

“In this past season the exclusion of part of the European tonnage from the N.Z.E.S.A. freight agreement enabled us to obtain a cheaper service to Egypt, North Africa and Ireland, with the balance being used to obtain a limited amount of tonnage at ‘box rates’,” he said. “In the new European

freight agreement which begins on October 1 the excluded tonnage is bigger this year and, after allowing for Egypt and North Africa, it looks as though about 700 to 800 containers will be available for allocation to wool exporters at ‘box rates’. “We will see for the first time in many years a new shipping line involved in the European service outside the conference and this will please many who have argued in favour of greater competition in shipping ser-

vices and freight rates. “While our council’s pcilicy is to press for a ‘box rate’ option in addition to the retention of a standard shipping option at per kilogram rates of freight, we need to keep our feet on the ground. Until the central wool facilities are reequipped with stronger dump presses, it will be largely scoured wool that will benefit from ‘box rates’. “At present the potential application for ‘box rates’ oil our European service at higher densifies is limited to probably no more than 40 per cent of the total tonnage shipped. The balance is, of course, made up of greasy wool and slipe wool and that scoured wool which is produced in works that do not have high density packing equipment and the ability to pack at source. “There will be a continuing need for central wool facilities to service less than container loads and clean weight orders of greasy wool, as well as servicing our Chinese and Russian shipments. ./ “The conference system provides an assured service but at a freight rate that is always a compromise between the highest price you are willing to pay and the minimum service you can accept

“It has been argued by some exporters that we have become locked into a mixed cargo system that provides a more frequent service than we really need and that opening up the trade to competition ' will quickly identify lower levels of freight rates at acceptable frequencies and conditions of service.

“The industry continues to debate the extent to which new dumping and packing facilities should be provided to be able to pack wool in containers to greater densities to take advantage of box rates. These decisions are yet to be made.“lf the present competition being offered to the conference lines successfully proves its ability to carry wool at the lower rates, to aggregate iti within New Zealand at loading ports and to deliver it to inland destinations in Europe, it offers the prospect of opening the whole European service to free competition on an ‘approved earner 1 basis.

“This is where individual lines have the right to seek to become ‘approved carriers’ on the basis of minimum agreed conditions and frequency of service, and maximum rates of freight that will not be exceeded for the period of approval “One cannot proceed for too long on the basis of a conference agreement for the major proportion of the tonnage and the balance at cheaper outsider rates before the conference begins to disintegrate and elements seek to compete with the outsiders. “A conference enables an agreement to be made under which the conference, as a whole, makes good the shortcomings of the individual line and we have benefltted from many examples of this in recent years.