COMMENTARY: Time for a little saber rattling

COMMENTARY: Time for a little saber rattling

Saad'

   CMA CGM founder and Chairman Jacques Saad's call for government protection of Europe's three major container lines last week has whipped up a bit of controversy.
   Saad', speaking at a meeting of the French employers' federation Medef, blasted regulations on liner carriers that went into effect in 2008, preventing them from meeting to collectively decide rates and capacity. He said the decision to end an antitrust exemption for carriers combined with the global economic crisis has created an uneven playing field for carriers in Europe versus their Asian rivals.
   He added that European governments need to redress the balance, noting that carriers based in Asia were gaining unfair advantages from a relative lack of regulation.
   'I call on the competent authorities — banks and public bodies — to protect the three big European maritime companies and ensure the survival of the maritime sector in Europe,' he said at the meeting, as reported first by Lloyd's List and then by international news outlets over the weekend.
   Representatives from the Danish Shipowners' Association and the European Shippers' Council, however, responded quickly to the riposte from Saad', with the ship owners suggesting that individual European governments shouldn't be automatically compelled to use taxpayer money to save struggling lines. The ESC told Lloyd's List Monday that the goal of governments worldwide should be to bring their liner regulations in line with those in Europe, not to erode the EU ban on conferences.
   The Danish Shipowners' Association, in a Reuters report Tuesday, pointed out that expecting governments to provide guarantees for big lines could also create an unlevel playing field within Europe — if, for instance, the French government were to back CMA CGM, but the Danish government were to balk at doing the same for Maersk Line.
   And one need not even use a hypothetical, since the German government and the City of Hamburg are expected to sign off this month on more than $1 billion in guarantees for German line Hapag-Lloyd.
   Saad's comments come at a time when he is clearly frustrated at the battering his line and his industry have taken the past year. The block on liner conferences coincided almost sadistically with the beginning of the global economic meltdown.
   But it's also a hard position for Saad' to justify, given that Europe's three biggest lines (Maersk, Mediterranean Shipping Co. and CMA CGM) are far and away the three biggest in the world, and growing. They’ve all spent massive amounts on new ships in recent years, trumping the most ambitious growth plans of any of their rivals. The three lines have also collaborated on a handful of services in the last two years, showing that carriers are not exactly operating in silos.
   His comments that lines in Asia are receiving preferential treatment also rings a little hollow since they have been affected by the same anti-conference regulations on the Asia/Europe trade as Europe's big lines have. On the transpacific and transatlantic, the U.S. Ocean Shipping Reform Act affects carriers equally as well.
   Perhaps Saad' was referring to intra-Asia routes, where indeed there is little if any regulation, and where Europe's big three are increasingly training their focus. Or perhaps he just needed to vent some steam after a brutal year. ' Eric Johnson