Angry shippers have been slugging container carriers lately, prompting Gianluigi Aponte to come out swinging.
When Mediterranean Shipping Company’s Caroline Becquart blasted shipper criticism of liner practices at a recent transpacific conference, it seemed out of character for a line that traditionally shuns the media spotlight.
However, her response fits neatly with the hard line approach taken by MSC boss Gianluigi Aponte, who made some extraordinary comments in a Financial Times article recently.
Aponte dumped blame for the container shipping crisis at the feet of shippers, accusing them of exploiting carrier overcapacity to drive freight rates below operating costs.
He went on to rail at how shippers were concerned only by price and would take their business elsewhere for just US$50. This, Aponte said, created pricing instability.
It was an interesting take on the liner troubles, but it would have been even more interesting if it weren’t complete nonsense.
Why is it that when shippers try to get the best price for their freight it is exploitation, but when the carriers slap on surcharge after weekly surcharge it is just the price of doing business?
The shipping lines got themselves entangled in their overcapacity mess without any help from shippers. Obsessed with maintaining market share the carriers ordered new vessels as fast as they could, desperate to ensure they had more capacity coming online than the guy next door. The orderbook stretched to the moon.
The race for market share also extended to freight rates. Carriers on the transpacific have been moaning about chronically low rates for the past year, saying that they were at unsustainable levels and should be raised. Unfortunately, shippers signed 12-month contracts with the lines at those low levels.
The only way to explain why the carriers accepted the aggressive rate cuts is that they were trying to maintain market share. It was this blind pursuit that plunged them into the red ink, not exploitation by ruthless shippers.
But most remarkably of all, Aponte mourned the end of the liner conference system that he said smoothed out freight rate movements by allowing carriers to meet and discuss capacity and demand. Of course it smoothed everything out – the lines could fix prices. It was a licence to rig the system.
For decades, members of conference cartels were exempt from anti-trust legislation and free to collude. That was great for shipping lines, which explains the MSC chief’s nostalgia, but it is hard to believe anyone can actually be against the practice of conducting business on a level playing field.
Shippers and carriers have been at each other’s throats for so long that it is naïve to expect a rousing rendition of Kumbaya to break out any time soon. But blaming shippers for the container line crisis is just a refusal to look in the mirror.
As they say, denial is not a river in Egypt.