Shippers forced to source closer to home

I am writing to support the view express by Jean Louis Carbon, recently elected Chairman of the European Shipper’s Council Maritime Transport Council with regards to the Shipping Liners current strategies with regards to capacity and pricing. My company Al Dahra Agriculture is a Middle East based Agrio Food Company supplying a diverse range of Animal and Human Food commodities from our cultivation and production facilities in North America, Europe, Africa and Asia. In 2009 Al Dahra shipped over 32,000 containers from these locations to Asia and the Middle East. So the actions of the Shipping Lines in terms pricing and capacity has a major impact on our business as margins are low and cost stability is vital. Therefore the policies that Lines are pursuing of slow steaming, restricting capacity due to idling of ships (estimated at 11% of total capacity by World Shipping Journal); the estimated scrapping of 200 ships in 2009, plus the postponing of new ships has created at artificial constriction of equipment for many Shippers like us. I also do not believe in the view expressed by some of the Shipping Lines that the market will have increased price instability if the European Union outlaws the Shipping Trade Conferences in Europe which allow the Carriers to discuss capacity and demand with a view to smoothing out freight rates. I believe that the price instability should not be confused with a competitive market. The policy of short term rates offered with the view to pushing them even higher in the next quarter is hindering all Shippers and their Suppliers future growth due to the uncertainty. The current global downturn needs a healthy and expanding international trade to continue the fragile recovery. The end consumer will also have to pay the price of these policies with higher costs which will continue to suppress demand. The other Stakeholders in our Supply Chain such as Farmers, Producers & Trucking companies in the exporting countries are reliant on Al Dahra using their goods and services and will suffer loss of business if we are reducing our orders due to high Shipping costs. This will also have a knock on effect as prices will be forced up to the Dairy Farms, Meat Processing Plants and Poultry Companies who we supply. These Companie’s need of our ability to supply the products on time and cost effectively combined with price stability to be able to plan correctly and invest in their medium and long strategies. If this is not possible prices for the end Consumer will also continue to rise. The Shipping Lines cannot continue to use the simple logic of 2009 was bad for us; therefore the Shippers and Consumers will pay for this in 2010. A long term view with a win-win-win position for Producer, Shipper and Consumer must be reached. This will allow constructive relationships built on steady, sustainable growth to flourish and will created an environment where prices will not only be stable but also at the correct level for all parties to enjoy profitable growth and as Jean Louis Carbon said an “end to the cycle of boom and bust” Khadim Al Darei Vice Chairman & Managing Director Al Dahra Agriculture Company L.L.C