ANNEX ISupplementary provisions
List of members of the TAA Sea-Land Service, Inc. Seattleweg 7 NL-3195 ND Pernis-RT A.P. Moeller-Maersk Line Esplanaden 50 DK-1098 Koebenhavn Atlantic Container Line AB 50 Cragwood Road South Plainfield New Jersey 07080 USA Hapag Lloyd Ballindamm 25 D-20095 Hamburg 1 Nedlloyd Lijnen BV Boompjes 40 NL-3011 XB Rotterdam P& O Containers Limited Beagle House Braham Street UK-London E1 8EP MSC Mediterranean Shipping Company 18, chemin Rieu CH-1208 Genève OOCL (UK) Ltd OOCL House Levington Park Bridge Road Levington UK-Suffolk IP10 0NE Polish Ocean Lines Gdynia 81-364 10 Lutego 24 Poland DSR-Senator Lines GmbH Martinistrasse 62-66 D-28195 Bremen 1 Cho Yang Shipping Company Ltd Cheong Ahm Building 85-3 Seosomun-Dong Chung-Ku Seoul Korea NYK Line (Europe) Ltd Beaufort House 15 St Botolph Street UK-London EC3A 7NY NOL (Neptune Orient Lines) Ltd Tricom Shipping Agencies Inc. 15 Exchange Place Jersey City New Jersey 07302 USA Transportación Marítima Mexicana SA de CV (TMM) Av. de la Cúspide N° 4755 Col. Parques del Pedregal Tlalpan 14010 México, DF México Tecomar SA de CV Benjamin Franklin 232 11800 México, DF México ANNEX II The TAA members refer to seven large 'independent' international shipowners capable of entering the transatlantic trade in competition with the TAA. The following table shows the agreements to which each of these seven shipping lines belongs in the other two major east-west world trades. These agreements group together at the same time a significant number of TAA members. >TABLE> Asian shipowners have clearly voiced their interest in stabilization agreements such as the TAA, TSA and EATA: 'Asian shipowners in stability pacts call' 'A surprise call for all independent operators to join their appropriate liner trade stabilization agreements has been made by representatives of Asian shipowners' organizations. An unanimous recommendation that all non-participating lines should join the transpacific, transatlantic and Europe-Asia stabilization agreements has been issued by the Asian Shipowners' Forum following a meeting in Beijing [. . .]. The success of this appeal was ensured when Chinese representatives backed the call. China's support was something of a surprise as it has previously displayed a less than enthusiastic attitude towards shipping agreements and conferences. An addendum to a communique agreed at the forum was proposed by the Chinese delegation "recommending" that all non-participating lines join to explore ways of further strengthening the agreements' (1). The most important Chinese shipowner is Cosco. (1) Lloyds List, 19 May 1994. ANNEX III The market: extracts from the literature 1. Due to the relatively large carrying capacity of a ship, a basic division of the total market for sea transport is between (a) markets for sea transport and less-than-full shiploads, and (b) markets for sea transport of full shiploads. Shippers of less-than-full shiploads are primarily served by shipping lines maintaining regular services between specified ports according to schedules advertised well in advance - in short, by liner shipping (Jansson and Shneerson, Liner Shipping Economics, Chapman and Hall 1987, p. 16). 2. . . . the traditional competition between the liner and the all-purpose tramp belongs to the past. In the future, some competition between the liners and tramps will remain, and will take two forms. First, there are bulk ships that are designed to take both bulk and general cargo or containers. These are few in number and do not constitute a severe threat to the liner trade . . . The other form of competition is simply that with the general increase in the volume of international trade, the borderline between general cargo and bulk will gradually shift. Some commodities that were potential liner cargo (such as sugar and rice) will become minor bulk, moving in quantities that are sufficient to fill a ship (Jansson and Shneerson, Liner Shipping Economics, Chapman and Hall 1987, p. 19). 3. Another way of distinguishing liner cargo from bulk cargo is by the presence or absence of packages. It is true that 'packaged cargo' is rather close to an exhaustive definition of liner cargo (Jansson and Shneerson, Liner Shipping Economics, Chapman and Hall 1987, p. 20). 4. As a result of the container revolution, the nature of competition between ships has fundamentally changed. The tramps which could move quite readily into liner markets have disappeared and on developed routes the liner market is now dominated by cellular container ships (italics added for emphasis). A similar trend is in evidence in developing countries, although with rather more reliance on flexible ships. Part of the old tramp market has been taken over by specialized semi-bulk ships (and this applies particularly to large flows of timber and vehicles, etc.), whilst much of the rest has been incorporated into the liner sector, either being containerized or in some cases carried in flexible ships in association with containers. However, although tramp competition has disappeared there is competition between ship types for the medium-sized parcels of bulk and semi-bulk cargoes, and some bulk and semi-bulk ships also provide fringe competition by carrying containers (S. Gilman, The Competitive Dynamics of Container Shipping, Gower 1983, p. 28). 5. What we do find critical is the provision of a regular, reliable service. It is easy to understand the reasons for this. Shippers of large consignments are in a position to charter ships for their requirement, but most shippers who use liner services (italics added for emphasis) do so because their consignments at any particular time are small relative to the size of ships used in the trade. For producers of consumer goods and many industrial inputs, it is important to maintain a supply of these in all markets used at all times; if shipping services operated irregularly, the costs of stockpiling at either end of the trade would be high, especially at a time of high interest rates. For suppliers of capital goods it is important to be able to give firm delivery times when tendering for a project. Important sources of trade growth are in goods not previously traded, and in the opening of new markets for goods already traded. Since consignments of such goods are usually small initially, they travel largely by liner, so that regular liner services to an area aid its development as a export market (M. G. Graham and D. O. Hughes, Containerization in the Eighties, Lloyds of London Press 1985, p. 45). 6. Ships are to a large extent designed for specific trades and, as a result, cannot easily be moved from one trade to another. Thus, vessels on the north Atlantic are predominantly full container vessels, whereas liners operating between the United Kingdom and India or Africa tend to be break-bulk vessels. The difference in vessel types mirrors not only the nature of the commodities transported (whether they be containerized or not), but also port infrastructure and the capabilities of the inland transport systems in the countries served (G. K. Sletmo and E. W. Williams Jr, Liner Conferences in the Container Age, Macmillan 1981, p. 47). 7. A full shipload in the tramp market . . . might vary from perhaps 4 000 to some 30 000 tonnes. Although this is not much when compared to the trade volume of major bulk commodities, it is enormous in terms of industrial products. Industrial products are sold in a large number of markets, with the result that the flows to any one market are limited in size. The relatively high value of such products makes them expensive to store, hence producers try to minimize the time spent in transit or storage. Products of this nature, therefore, cannot economically be shipped in the quantities associated with bulk commodities except under special conditions (G. K. Sletmo and E. W. Williams Jr, Liner Conferences in the Container Age, Macmillan 1981, p. 48). 8. The difference between the nature of the services offered by liners and tramps may not have much significance for shippers on routes with a heavy population of tramps and a correspondingly high likelihood of finding tramp space, at the typically lower rate, whenever wanted (the expected frequence of the need for space being less for some shippers than for others). Given any one level of requirement for regularity or frequency, shippers must always consider the possibility that tramps may, in the future, be drawn elsewhere by the forces of demand, and they must evaluate this possibility in terms of the higher 'basis' liner rates, which are exacted from shippers wo are trying to use liners and tramps in combination (E. Bennathan and A. A. Walters, 'Shipping Conferences: an Economic Analysis', in Journal of Maritime Law and Commerce, Volume 4, 1972, p. 109).