Rate-reporting rule on horizon

By Xin Dingding in Nantong, Jiangsu and Wang Ying in Shanghai (China Daily) Updated: 2013-07-12 00:10

China's largest shipping company, China COSCO Holdings Co Ltd, reported large losses for a second consecutive year in 2012.

Lin Guolong, director of the Shanghai Maritime University Logistics Research Center, said the shipping rates reporting mechanism underscores the government's commitment to boosting market transparency and fighting unfair competition, which is also in line with international practices.

According to Lin, a few industrial giants are monopolizing the shipping market by offering extremely low rates in private deals, leading to a disorderly market.

The new measure indicates the government's firm stance in restoring market order, Lin said.

"European countries and the United States have implemented similar measures for more than a decade, and I am glad that we are closer to high-standard management in regulating the shipping industry," said Lin.

An insider speaking on condition of anonymity said shipping rates have dropped quickly in recent years due to intensifying and sometimes irrational competition in the shipping industry. In some cases, below-cost freight rates are being offered.

The new measures will be able to protect the interests of industry players and promote self-regulation among shipping companies, the source said, though it might be better to let the market choose the survivors.

Maersk China Ltd declined to comment on the policies on Thursday.

Despite the government's support, Song said it is also time for China's shipping companies to rethink their strategy.

"They should consider how some foreign freight carriers deal with market turbulence, and learn to pursue long-term cooperation with cargo owners," he said.

Under a long-term partnership, even in bad times, shipping lines can still operate businesses that guarantee a profit, he said.

"But they should also learn not to (look back on) the high profits earned in good times. The reality is that too many could not resist the temptation of high rates when the market was good.

"They tore up contracts and chased after profits. Once the market slumped, they just asked for government help," he said.

The ministry and the National Development and Reform Commission are drafting guidelines that aim to find long-term solutions for the industry, which look 30 years into the future, he said, without elaborating.