China's COSCO and South Korea's Hanjin Shipping are among 14 container shipping companies under an EU investigation for allegedly influencing prices for European routes, two people with knowledge of the matter said.The European Commission opened a probe into the group last month for appearing to alert each other of price increases via press releases and on their websites, saying they may be acting in concert in breach of competition rules.
The investigation, which could lead to formal charges and fines of up to 10 percent of a company's global turnover, comes as the global industry struggles with an excessive number of vessels and weak demand due to the economic downturn.
Container ships transport consumer goods such as electronics and food in metal boxes, with a standard length of 20 feet.
Consultancy Alphaliner said a negative decision could be highly detrimental for the sector by curbing "the avenues for communicating future price increases and prevent carriers from implementing uniform rate hikes simultaneously".
The European Union competition watchdog did not identify the companies, in line with its usual policy. But the two biggest container line operators AP Moller Maersk and Mediterranean Shipping Company both said last month on the day of the EU announcement that they were under investigation.
Taiwan's Evergreen Marine, Germany's Hapag-Lloyd and CMA CGM, which is the third-biggest operator, all confirmed on Thursday they were included in the probe.
The sources said the group also includes South Korea's other top shipper Hyundai Merchant Marine, China Shipping Container Lines and Japan's No. 1 Nippon Yusen Kaisha and No. 2 Mitsui O.S.K. Lines.
The others are Hong Kong-based OOCL (Orient Overseas Container Line), United Arab Shipping Co (UASC) and Israeli company Zim Integrated Shipping Ltd, they said.
A spokeswoman for Zim declined to comment. Officials at COSCO, China Shipping Container Lines, Nippon, Mitsui, Hanjin, Hyundai and UASC could not immediately be reached for comment
"Prima facie evidence suggest that the EC (European Commission) may have a case against the carriers for price signaling," Alphaliner said.
According to Alphaliner data, carriers on the benchmark Asia-to-Europe route have announced at least 34 rate increases since 2009. In most cases, the timing and amounts of increases were largely similar for the main carriers, with announcements made by lines within a few days of each other.
Although carriers in some instances varied the rate increases by $25 to $100 per teu (20 foot-equivalent unit), their pricing could still come under the Commission's ambiguous 'concerted practices' rules as tacit collusion, which does not require an explicit agreement to fix prices, Alphaliner said.
Analysts expect further headwinds next year for the container shipping industry, with no respite from depressed rates.
Source: Reuters (By Jonathan Saul, additional reporting by Steven Scheer in Jerusalem, Cho Meeyoung in Seoul, Arno Schuetze in Frankfurt, Clare Jim in Taipei and Keith Wallis in Singapore; editing by Jane Baird)
With ship prices sinking, Apeejay Shipping eyes buys (GIA TO APOGEVMA)
Apeejay Shipping is on an acquisition spree, as ship prices have sunk in the wake of the persisting slump in the global freight market.
Last few months have seen shipping companies the world over place orders for new and second-hand ships, with asset prices just beginning to claw up from their record lows. Though prices in the second-hand market have inched up from their earlier lows, ship owners are still finding them attractive.
Part of the Apeejay Surrendra Group, the company has just bought two 75,000 DWT bulk carriers from the Japanese and Chinese markets for about $20 million, the second one joining its fleet this month. It is now looking for another Panamax carrier.
“We will pick up a Panamax carrier as soon as we see a good buy. I think it is still a great time to buy (ships),” Karan Paul, Chairman, told Business Line.
With the two acquisitions, its fleet strength stands at eight, with an average age of 11 years, all carrying dry bulk cargoes such as coal and iron ore.
Second-hand market
Paul agrees that ship prices in the second-hand market have risen by about 50 per cent from their lows in the first quarter, while the rise in the new building sector is about 10-15 per cent.
Today, prices of a new-build panamax are hovering at less than $30 million, while a five- and ten-year-old asset of the same class could be got for $23 million and $17 million respectively.
Indian companies, including Great Eastern, Mercator and Aegis, have bought at least four bulk carriers and five tankers in the last 10-11 months, with the lowest prices ranging from $7.5 million for a bulk carrier (Apeejay) and $10 for a tanker (Arya Voyagers). Encouraged by these trends, Apeejay is now eyeing an entry into the tanker and dredging markets.
Entering tankers
“We see particularly bright opportunities in the domestic dredging market, with the older ports needing to deepen their drafts to accommodate larger vessels. We will first make a small entry and then scale up,” Paul said.
He sees the bulk freight rates, which plumbed lows of 700-800 index levels in the first half of the fiscal, rising further in the second half.
“The bulk index is currently at 2000 levels. I feel the worst is over and next fiscal should get us better rates in this segment,” he said.
Source: Hindu Business Line
