定期船海運의 運賃決定要因과 安定化方案에 관한 硏究

Abstract

The global liner shipping industry has been significantly and rapidly changing to meet customer's requirements and shipowner's management styles especially in containerized liner service. Since the advent of container ships in the 1960s, the liner market has been stabilized relatively in supply and demand of ship's slots and freight incomes till the early of 1980s owing to the limited supply of ship's slots and the increase of container cargoes and strong activities of freight conferences as well as self-investigation policies in the main trade lane of Asia/Transpacific and Europe.

However since the late of 1980s, a movement to respect market's principal has spreaded across international trade and liner shipping industriy along with deregulation of various regulatory principles through the strong influences of so called Thatcherism and Reaganomics.

Accordingly in the liner shipping market there were the great changes at the shipper's convenience and interests due to regulatory reforms or revisions in the shipping sector such as Anti-trust rules of the EU in 1987, the Shipping Act of 1984 and the Ocean Shipping Reform Act(OSRA) of 1998 in the United States. With the introduction of these regulations, existing shipping conferences and member carriers had no longer efficiently exercised their market power. Meanwhile, in the liner shipping markets, the negotiating power of shippers against carriers has become stronger it has changed from supplier's oriented market to customer's oriented market.

Moreover, in addition to the above regulatory reforms, the liner carriers have invested a lot of funds to build more and larger vessels in order for them to bring about low costs via economies of scale and to improve profitability. Furthermore the production time needed to build new ships has been reduced drastically to 1-2 years by continuing technological innovation. As a result of this, most liner trade routes have been oversupplied with container vessels since the 1980s. The Korea Maritime Institute(KMI) estimated that surplus ratio of ship's slots will be around 24.5 percent in the worldwide market and an excess capacity of 30 to 40 percent in the Transpacific Trade and Europe-Asia Trade in 2002.

As the consequence of the aforementioned, this inevitably triggered a fierce competition among the liner carriers and thus today's liner shipping market is characterized by chronic overtonnage and lower freight rates. Such structural changes make it difficult for all liner operators to carry out liner business and ultimately it might bring about more difficulties in international freight traffic by disorder and demoralization in the freight market.

In this regard, the purpose of this study attempts to analyze the determinant of liner freight rates and to seek for an effective policy and counter measures to stabilize liner freight market and rates.

In respect to liner freight rates, an empirical and theoretical study was conducted and further extended its analysis by the data collected from a survey questionnaire of local ship operators and international freight forwarders in Korea. The items on the questionnaires were analyzed by using the Reliability Test Method and Factor Analysis Method in respect of the determinant of freight rates and the Structural Equation Modeling in decision making on the management of the liner shipping business.

Before the study of stabilization on the liner freight market and rates, the result of research on the current market trends and changing paradigms in the liner industry are as follows:

(1)The cargo movements of container liners have increased steadily approx. 6 to 12 percent every year and KMI(Korea Maritime Institute) has forecasted that the global container movements in 2002 would be 248 million TEU showing a 142% increase on 103 million TEU in 1991.

(2)Whereas, the number of container vessels and the loading capacity have been increased substantially for the purpose of contributing to the increase in worldwide demand for freight and the existence of economies of scale. KMI also reported that the global loading capacity of container fleets in 2002 is estimated at 5.5 million TEU up 150% from 2.2 million TEU in 1999. The size of vessels ordered by global carriers has become bigger and larger to that of post/super panamax model of 6,000-8,000 TEU capacity as a fifth to seventh generation type. This was followed by some carriers designing 9,000 TEU capacity and presently 10,000 TEU container vessels are under technical consideration. As a result of the ratio of excess ship capacity, the liner shipping market has become more and more competitive.

(3)Another paradigm shift in the liner market is the expansion of strategic alliances and M&A among major carriers. Most carries having bigger vessels have sought partnerships to increase utilization by means of space pooling, space swapping, space chartering and sometimes by participating in strategic alliances and M&A viewing that proper cargo reservation to fulfill the space is not an easy task, especially due to restraints of time. Presently 6 major alliances were forged among 17 leading carriers who owned and operated 1,302 vessels with a total capacity of 3,216,936 TEU.

(4)Nowadays another important paradigm shift in the liner market is the expansion of the service coverage to the offshore and inland area to meet customer's requirements and to create additional profits for the carriers through various extended and total logistic services. Now many shipping carriers are providing warehousing, trucking, terminal operation, consolidation, forwarding and logistics consulting among other services, to satisfy customer's needs under the rubric 'onestop service'.

(5)Another change in the liner shipping industry is the enhancement of transport services made possible by developments of Information Technology. Electronic business(e-business) which is rapidly spreading throughout all industries has been initiated by the technological breakthrough of the digital revolution and rapid growth in the number of internet users. Shipping companies are increasingly taking up roles as integrated service providers to cope with the increasing demands of customers in the view of the new supply chain management(SCM) system. This will boost competitiveness, expand business opportunities and generate added value. Therefore most carriers have been implementing and updating their electronic data processing and networking in their overall liner business

marketing analysis, cargo booking and traffic, container logistics, documentations, freight and disbursements, customers information etc., by providing integrated hardware and software.

(6) Other regulatory changes were made to the national policy of liner shipping by leading countries. Particularly in the United States, the Shipping Act of 1984 stipulates the allowance of the anti-trust exemptions for liner freight conferences along with the new introduction of Service Contract(SC) and Independent Action(IA) for shippers' interests. However the conferences were required to publicly post tariffs and negotiated individual contract with the FMC. In this regulatory environment not only did all carriers know exactly the terms of their partners' or rivals' freight rates but these were also visible to all shippers under the "me-too" clause of the law. Therefore any shipper could request the same rate as that negotiated for any other similarly situated shipper. Under these conditions, Conference carriers had extremely little incentive to deviate from the official conference tariff.

A remarkable momentum to change existing conservative in the freight market was the passage of the United States Ocean Shipping and Reform Act(OSRA) in 1998 which allowed shippers and carriers active in the US trades to enter into confidential contracts without prior notice. The result of this has been a rapid and massive switch to confidential agreements which have the potential to undermine the dominance of conference tariff. Very little traffic now takes place directly under conference terms. This movement was a decisive motive to let shippers have the power to negotiate lower rates whereas it underscored a generalized erosion of conference power.

In the case of the EU, in 1986 the European council of ministers adopted Regulation 4056/86 which provided a block exemption for liner conferences including common or uniform rates from Article 85 & 86 of the Treaty of Rome(EU Competition Rule) (now Article 81 & 82 as amended by the Amsterdam Treaty). However the European Shipper Council(ESC) and the OECD remains opposed to the liner conference block exemption, particularly the price fixing or rate setting provisions as liner shipping conferences do not provide freight stability or economic efficiency.

At the strong request of the ESC in 1996, the EU adopted the Consortia Rules, which precluded members of a consortium and vessel sharing agreements from fixing maritime price and inland transportation prices on the ground that the EC agreed that the liner consortia agreements were not liner conference. In 2000, EC reviewed the consortia block exemption and made some minor changes.

In Japan, Sec. 54 of Sea Transportation Law also stipulates an exemption of anti-trust law in respect of a convention, agreement, freight conference, etc., for the purpose of price fixing, cargo sharing, capacity adjustment in shipping industry. However it regulates that such exemption may not apply in case of serious problems by unfair transaction and competition.

In chapter 5, as the result of analysis of survey questionnaires by the Reliability Test Method and the Factor Analysis Method, it showed that the major factor of the determinant for liner freight rates is firstly change in Supply and Demand in ships capacity and secondly, the level of competition and conciliation among liner carriers, which is taking precedence over shipping costs. Of course, shipping cost is a fundamental factor in fixture of freight rate in normal market situations as described in the theoretical study of pricing determinant. However under the current situation of overtonnage, it cannot be classified as an independent variable.

Nowadays excess capacity in liner shipping is a result of increased competition among the carriers in which appears to have been led by a quest for lower freights and lower costs. In turn the liner market has been extremely unstabilized by the intense and unfair competition as the profitability of liner carriers has been reduced and such low profit may be the force driving liner carriers toward various strategies including alliances, mergers and building larger ships in an effort to capture economies of scale and scope. However most of carriers continue to be in difficult financial management, furthermore many of the liner carriers were pushed out of the world shipping markets.

Under such circumstances, this study is also concerned with how to stabilize for the liner markets and liner freight rates even though it is an extremely extensive and difficult task. The first order is to sum up the structural factors which dictate that not only carriers cannot receive a reasonable freight(rate) but that they also encounter constant pressure of freight decrease in current liner market is as follows:

(1)Mechanisms for maintaining the order and the stabilization in liner freight market was almost collapsed. Shipping conferences which traditionally had an oligopoly structure for the adjustment of fleet capacity and freight rates have no longer effectively exercised control in the current liner market.

(2)The excessive competition is widely spreadeel over among the carriers such as bargaining of freight, absorption of assorted charges and various malpractices in order to respectively slot utilization ratio.

(3)Shippers, especially big general trading houses and international freight forwarders/NVOCCs have become stronger negotiation (bargaining) power against the carriers through the abuse of their predominant position in a current excess capacity market.

(4)Whereas the power of collusive and cooperative actions among liner carriers becomes weaker, the current strategic alliance of the carriers is for survival and not for maintaining a stable freight market. Some competitive mega carriers are focusing on market domination through the increase of freight market share.

(5)The homogeneity of the quality of liner services is being accelerated through strategic ties and alliances with respect to service type, transit time, operation cost and marketing strategy.

Based on the aforementioned analysis and phenomena, the study presents some essential suggestions and recommendations, to stabilize liner freight rates and markets in both quantity and quality.

(1)The best optimization strategy for both carriers and shippers in liner shipping business is to maintain a stable and adequate freight rate without its rapid fluctuation as per supply and demand in the market. Accordingly it is necessary to establish an artificial and systematic mechanism in order for the carriers to provide general rules and tariffs with a self control policy. Therefore it is in the liner's best interests that a super conference, which modify past failure issues and participate in by all carriers trading in the same service route and accept anti-trust laws of relating countries, should be reformed quickly for the sake of freight restoration and stabilization. In this way, shippers will be able to easily predict future freight rate which will help lead towards the further stable transaction of international trade. Carriers, as well will, need to come up with appropriate master plans for fleet replacement and improvement in shipping services.

However it is very unfortunate that the Maritime Transportation Committee of the OECD recently reported that there are no reasons to allow exemptions from anti-trust laws for conference actions of the shipping business compared with other industries and instead call upon respective countries to review its rescission without any specific counter measures to the liner carriers.

(2) The priority subject for the stabilization of the freight and liner market is the reduction of excess loading capacity which has decisively led to the disorder of the liner trade and the decrease of freight rates. Accordingly it is desperately needed that an effective and enforceable measures should be taken to curb excessive investment to shipbuilding and to reduce existing excess vessel capacity in order to break the vicious cycle of irrationality in liner industry.

To be concrete, it is essential for them to set up and effectively manage an international institute or association for the purpose of i) constant study and circulation of ships capacity vs cargo movements, ii) strong recommendation of capacity adjustment, for which this study deliberately suggests that the International Maritime Organization(IMO) which is the standing organization of the ECOSOC in United Nations undertakes such research by the newly organized Vessel Adjustment Committee in addition to the existing five committees. This organization can expect to contribute positively to the overall global trading and shipping industry through their systematic and cooperative working channels to the respective nations and ocean carriers.

(3) Especially in the non-flexibility of the supply of ships, it is quite difficult for liner operators to make short term adjustment to ships space. In other words, in case of an increase of space requirement in the short run, the carriers were unable to meet cargo requirements due to the shipbuilding period of a few years in which the carriers are trying to cover their past loss in a time by adopting General Rate Increases(GRI) or General Rate Restorations(GRR) or charging Pick Season Surcharges(PSS) on existing freight. This also makes it difficult for shipper to do normal transactions because of unexpected increases in freight rates and fur the more This causes lots of friction with the carriers.

On the other hand, in case of decrease of cargo movement in a short period, the carriers cannot take any action either to suspend, independently, their liner services or lay up their fleets. Generally, most of liner carriers continue to do their service taking into account future good market and customer's relation.

Under such pressure, the carrier used to take to bargaining on freight rates and entering into service competition among the carriers by offering lower freight rates sometimes even marginal cost.

In respect to the above two cases in the short term period, the carriers or the alliances by themselves should take proper countermeasures such as adopting minimum box rates, vessel withdrawal schemes etc. to initiate reasonable freight decrease or increase through mutual cooperative action between carriers and shipper.

On the basis of the aforementioned theoretical and empirical study and analysis of the liner markets, it is clearly the conclusion that the determinant and change of liner freight rates have been influenced, on the most part, by supply of ships capacity and the competition of liner carriers.

Therefore, it is imperative for the liner shipping industry to control excess capacity of vessels and to stabilize liner freight rates by the mutual cooperative activities of the respective liner carriers and nations. For the purpose of effective and efficient implementation of these, it is profoundly considered that a systematical mechanism such as Super Conference in major liner trade and the Capacity Adjustment Committee of the executive organization of U.N. shall be restructured as soon as possible.

Lastly, all the other business industries and international commercial organizations should actively support the liner shipping industry to stabilize the liner market and freight rates and to fulfil, satisfactorily, the mission of common/public carriers in worldwide trade.

Meanwhile the subject of this study is very extensive, profound and variable in accordance with the prevailing market environment, thus more rigorous studies are constantly needed to improve the liner market and the liner industry.