MILES: DEREGULATION CAUSES RATE VOLATILITY

   Ray Miles, president of CP Ships, said that deregulation in the U.S. and Europe has led to the greater rate volatility that is being witnessed now in the Atlantic, Pacific, Asia/Europe and other container trades.
    Miles said that the Ocean Shipping Reform Act in the U.S. and actions by the European Commision in Europe have weakened freight conferences and their ability to ensure a certain stability in liner markets.
    Last year, ocean carriers saw transatlantic rates fall sharply in anticipation of the enactment of the Ocean Shipping Reform Act.
Miles, who supports the conference system, said that freight rates will now be dictated by sudden changes in supply and demand.
    In the more deregulated environment, the container shipping will operate like a bulk shipping market, he said.
    Since the beginning of the year, numerous rate increases have been announced or implemented by conference and non-conference carriers in the transatlantic, transpacific, Asia/Europe, Indian Subcontinent/Europe and other trades.
    Last week, the Trans-Atlantic Conference Agreement announced unprecedented increases of up to $600 per 20-foot and $750 per 40-foot or 45-foot box.
    Miles said that shippers’ councils and organizations which lobbied for a weakening of conferences should not be surprised that conferences are no longer able to provide stability.
    Despite the move toward consolidation in the ocean carrier industry, carriers are still "price takers" rather than "price makers" in the marketplace, Miles added.
    The CP Ships group includes Canada Maritime, Cast, Lykes, Contship Containerlines and Australia New Zealand Direct Line.