SHIPPING AFFAIRS. SOME RECENT FUSIONS.

Evening Post, Volume LXXXIII, Issue 77, 30 March 1912, Page 9

SHIPPING AFFAIRS. SOME RECENT FUSIONS.

$?HAT THE FUTURE MAY HOLD, TEE POSITION REVIEWED. Pieif^t Morgan began it. Of course there were fu&ions of shipping companieo before bib great combination, which enibiaeed tho interest*, centered in the Western Occ:ui trade. Theis vas the Inm^n Line, for instance, which passed town the Eritk-h to the Mexican flag; there were, tuo, thb eases of the Guiou and National lanes. But J. Pierpont Morgan was tins first to amalgamate shipping inicre&ts on a colossal scale. They represented a capital of the turn of £20^332,541, a fledt of 1;5O4,1C8 tons— and no dividend has y*t been paid. Since that time, and it was but in 1902, fiaaie extraordinary developments have taken place in tho management of steamship lifidi the world over. There have b&sp amalgamations, acquisitions of one line, by another, secret agreements, conferences, associations, ■working underptaiidinga, and communities of interests of a, magnitude and. extent undreamt of flvq and twenty years ago, or, if dreamt of, certainly not then considered to be I'ftalifable. The latest amalgamation rumour associates the names of the Union Steam Ship Company and the New Zealand Shipping Company. There no evidence forthcoming of any flirtation between these two companies, ,but, even as a pretty girl cannot give a man a smile without "making people talk," so it is • conjeetuMd that there is already, 'or e&on will be. an official announcement of the fiancialles. The London and New Zealand sharemarkets responded to the Import, which was officially denied without* reser/ve. The price of the shares of the Union Company has* eased, but the bystander 1 still thinks there was something in the rumour. Ho may be right, ho may be wrong ; but he is as likely to bo. m right 'as wrong, because the ■way* of shipping companies are past finding out. That searching analyst of balancesheet^ the editor of the "Wild Cat" column of the Sydney Bulletin, in a, -way confesses that the Union Company's balance-sheet is beyond him, and other experts are similarly bewildered in their efforts to ascertain just how financially strong the Union Company really is — not on paper alone, but m hard fact. All, apparently, agree that its strength is very great, much greater, in fact, than is officially admitted. It ought to be. Providence has been kind in giving it a sea-girt,* compact, and extraordinarily productive territory ; also the management has been unequivocably sound in the interests of its shareholders. SPECULATIVE QUESTIONS. _ The questions may be asked, in the light of so many recent shipping amalgamations, Would it be in the interest of shareholders of the Union Company if it absorbed, or was absorbed, by any other line? and, if so, what line or lines? Ordinarily nothing official is given out when negotiations for amalgamation of shipping interests are in progress; but sometimes information does ooze out. Sometimes it is wrong information. Apparently the establishment of a closer relationship between the New Zealand Shipping Company and the Union Steam Ship Company than exists at present is not contemplated by either company. The general managers of both say it is not^ so. But is there any other suitor for the Union Company, or is- that company {it being leap year), making advances on its own account? It is competent to do so, for, in the slightly varied words of the old Jingo song — ■ It has the men, It has the ships, It has, the money, too. For a 'great many years it had an un* disputed monopoly of the New Zealand trade and that connecting these islands with Australia. It was hotly challenged by the Huddart, Parker Proprietary some years ago, but to-day and for a long time past, these two companies have worked in harmony. They dove-tail their time-tables, charge the same fares and freights, and interchange tickets. Shippers by the one line enjoy no ad\ antage over shippers by the other. The Union Company does not trade on the Australian coast, but confines itself to New Zealand and Tasmania, and the Huddart Parker Lino is the only one of the great Commonwealth owners that trades to New Zealand. P. AND 0. COMPETITION. The advent of the P. and 0. Line in th& Sydney-Auckland trade during certain months of the year was not exactly what was expected of it by the Union Company. Its competition was keenly felt in the passenger department, and the chtifrin was. not disguised. There is a glamour about leaving and arriving by a P. and O. liner Avhich old and seasoned travellers can resist, but there is no denying the fact that toany people of means regard travelling by that line as conferring some sort of social glory, and the Union Company had those people on its own passenger lists along with all the others before the P. and O. Line came into this trade. -It has evidently come to New Zealand to stay— at any rate, during certain months of. ih* year. Should the apple export trade develop in • New Zealand as the acreage given over to it would seem to warrant., the P. and O. Line may "call at a If** Zealand port for cargo, as it does already at Hobart. This would extend its season. But it is a mere detail. UNION LINE AN OCEAN LINE. Now, the Union Company has expanded beyond the limits of New Zealand and "the Tasman Sea. It is now a deepgea line. It has the New ZealandSan Francisco trade, and the New ZealaodcTancouver trade in its own hands'. It has a regular, line to Calcutta and Singapore during a certain part of the and it has all the New Zealand trade with Fiji, Samoa, Raratonga, and Tahiti. What prospects it may see beyond the dflte of the opening of the Panama Canal are undisclosed. Then, with the return of law and order in China, will come stupendous commercial developments. So it would be uncharacteristic of the^Union Company if it did not yearn for more trades to conSaer. Taking the last balance-sheet of ie Union Company one finds how it confessedly stands: — ' £ Paid-up capital. ..« „. 800,000 Value of tonnage ..* ... 1,187,382 Iteserve* 655,868 Profits for 1911 116,431 The tonnage is given as 175,598 tons, but 16,200 was then building and partly paid for. There are those who say that they can prove that the Union Company is three, even four -times financially stronger than it appears. At any rate, it is a line that would take the eye of any great company seeking a profitable amalgamation, and could itself with full assurance of success, consider the Knking up of other substantial interests with its own. MERELY SUPPOSITION. Supposing — and it is pure supposition — that the British-India Company were to make overtures to tha Union Company. If successful, it would bo able to establish itself a-s firmly in New Zealand, as in Australia the A.t.S.N. Line, usually iegaidcd as identical with the BritishjLadu Line, luej although the

Union Company's houseflag would still fly at the main, and th» distinctive colour of the funnel would undergo no change. It might be to the "8.1.'5" advantage to extend its service* from Brie* bane to London, -ua Panama. if it decided to do any of thfise things, it would be of great advantage to L»v« some, if «ot all of the tontrolling interest in a lin© so well established in these parts as the Union Steam Ship Company, Or it might be- of advantage als§ t& the Union Company to have one such, powerful friend in the Pacific, All t^k, t>i course, is niei-e supposition. The British-India Corapdiiy is m\ exceedingly ettorig company. At the end of lfil ii was the largest individual owner of tonnage of any company, tlia P, and 0Company esceptetl, which led by lees than 2000 tun?. It then stood ihu«;=- £ Paid-up capital 1.657,200 Value of tonnage ... 2,710.271 Preserves 150,000 Tho accouEts of thu? company arc not made public. It might, again, be to the advantage of the Eoyal Mail Steam Packot Company to establish intimate relations with the Union Company, for the lioyal Mail ia an absorbing line. It was formerly regarded aa y, puruly Wwsfc Indian and South American line, but to-day its ramifications extend to Argentine, by the pui'Rhaiio of tho Lamport and Holt Linej^ to the West Coast of South America, having taken over tbo Pacific Steam Navigation Company ; to the Far East, having acquired controlling 'interests in tho Shira and Glen Lines; to South Africa, having purchased, with the Elder, Dempster Company, who are in the VVest African trade, tho UnionCastle Line (itself an amalgamation), and it begins business in that territory next month. < It i» also currently reported that it has eoniD interest in the Orient Line (for which, by the way, the Union S-S. Company looks • after the New Zealand interests). Sir Owen Phillips, chairman of the Eoyal Mail Steam Packet Company, appeared to hint at _ tho future of his company and the various line* in which he (or it) is interested when he recently expressed the hope that, impressed as he was by its great importance to the shipping world, the Panama, Ganal, when opened, would be as free as the ocean. If not so ir<io, then that all nations shoidd be put on an equal footing as to tulle. THE PANAMA CANAL. The Panama Canal is regarded by tho great shipping companieb of the world as likely to work a complete revolution in existing itineraries and arrangements. It is expected to entirely change the route map of the world. In this connection New Zealand occupies a geographical position of the highest importance. It is felt that not only the West Indies, Central America, and the seaboard trade of the United States will be influenced, but that the year 1913, when the canal is expected to be open, will witness some very farreaching changes in the present arrangements of the great shipping lines of the world, and especially of the Pacific. It is tolerably certain that the Union Company foresees, if it does not actually know already, with Bismarckian prescience,, what these changes will be — and has planned accordingly. The confidence of the investing public in shipping ventures, justified by generally excellent returns from almost all trades, is to be seen in the enhancement of the value of leading shipping companies' stock. Only a few days ago people paid £535 for the deferred stock of the P. and 0. Company, which in December, 1910, was quoted at £208 10s, and a year iater £252. The Union- ■ Castle shares increased by 50 per cent, during^ last year, and there were sub stantial advances in the prices of Cunat*d, -Ellei'inan, Leyland, *• Royal Mail, New Zealand, and other lines' ordinary and deferred shares. In short, there has been, a shipping boom, which has notjejb subsided.