Gangway No.1 Spring 1976 - BlueStarLine.org

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The ever-growing share of world trade carried by Soviet bloc vessels is now being recognised as a serious danger to the wellbeing and prosperity of all Western merchant fieets. The 1l0n-corr&nercial practices of the Eastern fieets are a threat to the livelihood of everyone in British shipping. In order chat Gangway readers may appreciate the facts, we reprint here the recem statement by the General Council of British Shipping. Introduction British shipping is a major national industry. It provides a vital economic lifeline for Britain. Any threat to its future well-being can only be a threat to Britain itself. Such a situation is now developing. British shipping operates successfully in the top league in an intensively competitive international market because it is an efficient industry with a modern and technologically advanced fleet . And it earns and saves substantial sums in foreign exchange. British shipping believes it can compete effectively with all-corners on a basis of fair competition. But its competitive ability in many parts of the world is increasingly threatened by severe rate-slashing and other non-commercial practices of Eastern Bloc merchant fleets, above all, the Russian fleet. Soviet lines are fixing freight rates substantially below those charged by free enterprise Western shipping lines including the British. Rates of 20 and 25 per cent below existing levels are widespread. There is evidence that the Russians present the greatest threat and that their considerable new building programme gives added cause for concern. Russian fleet growth The Russian merchant fleet has been growing fast. Ir now ranks sixth in the world. Eighteen years ago it was away back in twenty-sixth place. And Russia has the largest conventional cargo liner fieet in the world-6.9 million gross registered tons in 1974. (British total 6.4 million grt.) _ The Russians have announced that by 1979 they will have a substantial volume of large, modern and fast container or roll-on/ roll-off ships in service. It is reported that at least some of these could have speeds up to 36 knots and carry up to 2,500 20-foot containers. The Eastern Bloc, according to 'Fairplay International' and other sources, could account for up to 20 per cent of all liner tonnage on order. Most of this is for Russian flag. How and where, then, do their extra liner ships find employment? The Soviet Union has a very limited deepsea liner cargo trade of its own. Most of the new ships they are building can therefore only be used in cross-trades which are already more than amply covered by existing tonnage. So, they must continue RED ENSIGN VE to concentrate on trade other than their own and very largely from/to Western Europe, Japan and the USA. Their principal method is to undercut drastically the freight rates offree enterprise Western shipping lines, including the British. The Russians also indulge in other noncommercial practices which control the routeing of their own national cargo by stipulating the terms of sale-purchase. How are they able to do this? Because their fleet exists to serve state policy, they are not subject to the commercial disciplines of the West and have quite different accounting systems. The political and economic system in Russia and other Eastern European countries makes profitability irrelevant compared with the dominant aim of earning or saving foreign currency, as well as political considerations. They also discriminate in favour of their own ships in their own trade. For example, in 1973, as a result of cif/fob manipulations by Soviet monopoly trading organisations, UK ships carried only 15 per cent of all UK exports to Russia (Soviet flag 82 per cent) and only 5 per cent (Soviet flag 79 per cent) of UK imports, excluding iron ore. Bloc shipping companies are at liberty to establish agencies under their own control, and to solicit cargo, in most Western and developing countries: ship- .,!/! / . - • owners of these countries have no corresponding freedom in Bloc states. Low wages for seamen give a substantial cost-advantage to the Russians in operating cargo and, especially, cruise ships in the international market. Officers and crews of the Russian merchant fleet and navy are reported to be regularly exchanged, with the naval budget bearing a large proportion of merchant fleet operating costs. In some trades, by taking advantage of their powerful state-supported bargaining position, Bloc lines have secured conference membership with substantial rights as cross-traders, on occasion beyond the 20 per cent which even the UN Liner Code Convention envisages as reasonable for sharing amonst all cross-traders. The rapid growth of the Soviet merchant fleet is probably intended, as a first step, to gain foreign currency. But the coupling of economic and strategic considerations is obvious and has been recently re-stated in an East-German shipping publication, 'Okonomie des Seetransports', which says that socialist shipping has a military-strategic objective demanding a large and suitably structured ocean-going merchant fleet. Three dangers A three-fold danger therefore confronts British and Western shipping: • World shipping is passing through a • Right: the Russian Ro-Ro ship Suurlaid in lhe Thames estuary (Photo ~O l,JrU: 5Y of Lamence Dunn) 12
SUS RED FLAG difficult period because of a deep trade recession. Our stake in world cargo liner trade is bound to be eroded by substantial concessions to developing countries, and Bloc fleets already have considerable shares in many trades. Any further inroads by such lines will further impair the ability of established lines in conferences to maintain the level of their services. • Rate-slashing, if allowed to continue, will present an increasingly formidable challenge : loss of freights, and inability of conferences [0 maintain rates at adequate levels because of Eastern Bloc undercutting, will restrict future investment in free enterprise shipping, and seafarers' jobs could be put at risk. Meantime, Russian and other Eastern Bloc fleets continue to grow. • The third danger arises from the developing nature of the threat. If the present trend of rate-cutting and fleet expansion continues unchecked during the next five years, Eastern Bloc shipping could attain a dominant position in world trades. Shippers might then lose the traditional flexibility, adaptability and guarantees of regular service, which British and other lines provide; and there could be severe and irreparable damage to UK owned and registered ships which in 1974 contributed a net £789 million to the balance of payments, plus a gross figure of £381 million for import savings. Some examples Here are a few instances of the degree of rate-slashing over a number of major conference trade routes. These are only a sample. North Continent/St Lawrence and Great Lakes and vice-versa-up to 25 per cent. North Continent/West Coast South America-up to 30 per cent. UK/East Africa-up to 30 per cent. North Continent/Australia-up to 40 per cent undercutting by Polish Ocean Lines. The Baltic SSCo of Leningrad is a conference member in this trade, and the Bloc has the best of both worlds by its freedom to operate both inside and outside the conference. Japan, Hong Kong, Philippines, Singapore to and from West Coast of the United States and Canada-up to 40 per cent . There have already been serious effects. For example: Did you knOW ? THAT rate-slashing by the Russian Fesco Line in recent years has disrupted several trans-Pacific conferences? THAT trades between Europe and United States ports are being increasingly infiltrated by Soviet lines, mostly as nonconference operators? They already carry 12/ 13 per cent of the large trade both ways between the Federal Republic of Germany and the U nited States with relatively •• inefficient and slow ships. THAT whilst Eastern Bloc lines have joined some liner conferences, Russian shipping in particular operates mainly as outsiders in world-wide cross-trades and has 50 :50 bilateral arrangements with a wide range of countries? THAT the Russians as outsiders are making a determined attempt to disrupt the Europe/East Africa and M ozambique trades? Their aim is to secure 30 per cent of the U K outward and homeward traffic at an early date. THAT Eastern Bloc shipping companies on the D anube have driven nearly all Western shipping lines out by operating cargo routeing controls, rate-slashing and a freight rate freeze since 1955? THAT the Odessa Ocean Line has com e into operation as an outsider between UK/ North Continental ports and South East Asia in both directions? THAT the Europe/Far Eastern Freight Conference faces two-pronged competition: from the Odessa Ocean Line and from the Trans-Siberian Railway? Together these could undermine the commercial viability of the whole organised Western sea-tran sport system between Western Europe and the Far East. THAT by 1974 the conference lines in the Far East/Europe trade both ways had lost at least 7 per cent of their cargo volume to the Trans-Siberian Railway? Over-riding problem The over-riding problem British and all Western shipping faces with the Russian and Eastern Bloc threat is not competition but the nature an d source of the competition. No amount of commercial expertise can alone counter rate cuts on such a scale. Unless checked, West European trade could come to depend increasingly on Eastern Bloc tran sport within the next five years. The threat is not limited to sea transport. Road haulage companies, railways, coastal and inland waterway carriers are also affected to varying degrees, and Bloc pressures are increasing. Reduced participation or elimination of Western transport undertakings in serving their national and international trades could have much wider strategic as well as commercial implications for the West. If the Eastern Bloc gained a monopoly and the opportunity to capitalise by raising rates to whatever levels it chose, there is little doubt that it would so act. The way ahead Satisfactory solutions to the threat could be achieved by n egotiation. But if commercial negotiation fails, we believe the threat could only be averted if- Western Governments, and other Governments similarly minded, are prepared to con sider concerted action against un commercial Eastern Bloc practices. and Shippers sensibly evaluate the immediate attraction of uSing Soviet cut rates which will be only short-term and for which a big longer-term price would have to be paid. The time for action is NOW.
Page 2 and 3: Gangway Number 7 Spring 1976 Journa
Page 4 and 5: The COl wins The f ollowing is the
Page 6 and 7: Hadley's having a much younger wife
Page 8 and 9: 'SIarman Express; .. Starmall conti
Page 10 and 11: • Hamish M cKean beside his Cessn
Page 12 and 13: Holl 0 Century wilh Blue Slor line-
Page 16 and 17: Colonel U A Vowling was one of the
Page 18 and 19: The artist at sea " CA Jackson, a B
Page 20 and 21: Amanda Miller. a 66.000 dwt oi/ tan
Page 22 and 23: Richards Bay - Soulh Africa's major
Page 24 and 25: Blue SIar line AFRIC AMERICA ANDALU
Page 26: lamporl I Holl line RAEBURN RAPHAEL

Gangway No.1 Spring 1976 - BlueStarLine.org

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