Who Controls Shipping Lines?

Imy Clarke - On behalf of Alchemy Recruitment, June 11, 2014

International shipping is crucial for the world economy and where there’s money there follows very powerful people. But, who actually has control of the shipping lines? Is it the importer/exporter, the international shipping company managing the shipment or is it the shipping line itself, or even none of the above?

The shipper, the person or company responsible for the import and export of goods clearly has an element of control. After all, without the goods to ship, there would be no shipping line. Yet, with the shipment of goods in their economical interest, they stand a lot to lose should the shipment fail. With total responsibility for the goods being shipping and the financial and administrative processes of the shipment, the shipper is left very much in the hands of all other companies and people involved in the process.

The international shipping company ultimately oversees the shipment from start to finish. They are often the ones to arrange transport of goods to port, arrange the type of transportation onboard the cargo ships and complete any survey to know exactly how the goods need to be transported. Since they are the company that require the shipper to sign a contract and will eventually charge a hefty bill, they maintain the control of the organisation of the shipment. Yet, as the ‘middle man’ in the shipping process, reliant on both the shippers themselves and the shipping lines, a lot is beyond their control.

No ships = no shipment – it’s a good bargaining tool. Shipping lines have a lot of power, so it’s no surprise that the world’s rich lists are adorned with shipping magnates. This ‘need’ that the world has for shipping lines has meant that they have a wealth of special privileges:

  1. The right to overbook ships and then pass extra cargo onto other ships.
  2. The right to declare ‘end of voyage’ in the face of war, port strikes, natural disasters or other unexpected event.
  3. The right to throw cargo overboard should the ship be damaged or be on the verge of sinking.
  4. The right to change routes, schedules or anything else they see fit for any reason they see fit, including financials.
  5. No responsibility for damage, loss, or late arrival of cargo.
  6. No cargo will be released without payment.

The shipper, not the shipping line, will foot the bill for all of the above. As if shipping lines weren’t powerful enough, a recent alliance between three of biggest names - Maersk Line, MSC Mediterranean Shipping Company and CMA CGM - mean that over a third of the shipping market could now be controlled by a single partnership. The US Shippers Association has made the point that “It is just a matter of time before the P3 controls the trans-Atlantic market,” a situation they have described as “dangerous”.

Yet, is the control of shipping lines really in the hands of any one part of the shipment process? There is currently a fleet of stranded cargo ships sat in the River Fal on the UK’s south west coast. Following the collapse of the Lehman brothers in 2008, these cargo ships laid up on the river carrying various cargo including cars. Should these ships moor up in port, the tax on their cargo will be considerable. So the shippers, and the shipping lines, are quite content to let them sit there with a skeleton crew. It would appear that shipping lines are beyond anyone’s control. As always in business, the financials call the shots.

Posted in categories: Costs and Expenses, International, Shipping
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