Call for political intervention to resolve state funding of containerlines

Call for political intervention to resolve state funding of containerlines

More than two thirds of Splash readers to date concur with the heads of Maersk and MSC that state funding of containerlines is to blame for creating overcapacity and the slashing of rates in the box sector.

Both Soren Skou and Diego Aponte, the heads of the world’s two largest containerlines, Maersk and MSC, respectively, have gone on the record in recent months to hit out at state subsidies fuelling the growth of Asian rivals. China’s Cosco, Hyundai Merchant Marine (HMM) from South Korea and Yang Ming from Taiwan have all been able to expand their fleets massively recently thanks in no small part to government funding.

The expansion of these Asian carriers comes at a time where freight rates are poor and carriers are reporting red ink so far this year.

In our ongoing latest online survey, MarPoll, 69% of the 300-plus voters believe state funding of lines is to blame for the loss making predicament containerlines find themselves in today.

“It creates an uneven playing field, and it also breeds mediocrity. It allows poorly led lines to rape markets for share knowing that any P&L shortfall will be picked-up regardless,” one reader commented, adding the suggestion: “WTO needs to redefine global rules for industries, which operate globally, and not consider them under their flag-state country status.”

Another reader agreed with the above sentiment, suggesting the state funding would eventually have to be addressed at a political level. “[China’s] concern (long term) is their own rise above all else. The losses by others be damned,” the reader wrote.

In another poll carried on this site earlier this year two thirds of Splash readers believed Cosco would overhaul Maersk to become the world’s largest containerline within the next 10 years. Cosco’s huge expansion this year comes at a time where loss making Maersk Line is actually reducing its operating capacity for the first time this decade.

The liner/state funding question is one of nine topical issues posed in our latest survey, results of which will be revealed in the next issue of Maritime CEO magazine due out next month.

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4 Comments

  1. Richard
    July 10, 2018 at 5:08 pm

    So, having swamped the market with excess capacity by building vast numbers of mega-ships, in an attempt to bankrupt others and create a duopoly, two Europeans aren’t happy when others do likewise. Heaven forfend that governments should have the temerity to put their national interests ahead of a foreign multinational corporation’s!
    “They don’t like it up ’em, you know!”

  2. Santosh
    July 10, 2018 at 6:03 pm

    Fully agree with you Richard.
    We do it to ‘modernize our fleet, significantly improve our operational efficiency and help us achieve our growth ambitions, regardless of short term economic cycles’….. When you do it – its politics!!

  3. Ian Priban
    July 10, 2018 at 9:38 pm

    Priban

    What must be done must also be done fast by use of science like in world war two.
    This picture should explain why.

    .

  4. Dave
    July 10, 2018 at 11:50 pm

    Can’t take the heat? Don’t stay in the oven.