United Arab Agencies Inc.

The overall financial gains realized by ocean carriers over the past 20 years have been disappointing, and that trend is not expected to change in the near future. Poor returns on investment have forced several traditional carriers to sell out or to shut their doors. This extensive list includes such venerable companies as Sea-Land, P&O Nedlloyd, U.S. Lines, Hellenic Lines and Cho Yang. A few lesser-known names joined the list in 2008, and speculation is high that a few more could be expected to join the ranks in 2009, a year that could be one of the toughest faced by liner operators. If this is the case, why do regulators and shippers believe the industry is exploiting its antitrust immunity to better itself at the expense of its customers? Oct. 18, 2008, sounded the death knell to the antitrust immunity granted to carriers operating in the trades connected to the European Union. Coming atop the worst economic meltdown since the Great Depression, this dealt a double blow to liner operators and helped to decimate the Asia-Europe liner trade, one of the most profitable trades of the past few years. Consolidation and cancellation of services, and the laying up of ships followed. 2009 could usher in further corporate consolidation as carriers confront the credit crunch, poor returns on revenue and cash-flow problems. Against this background, certain quarters are clamoring to dismantle the remaining U.S. antitrust immunity granted to the shipping industry. In the short term, the withdrawal of antitrust immunity could lead to further rate erosion that may benefit shippers. In the medium to long term, however, this would lead to reduced competition, poor customer service and possibly a dearth of investment in liner shipping to support ever-growing trade. Proponents of the withdrawal of antitrust immunity in the U.S. and EU need to step back and study if their action is helping or hurting international trade. Ocean carriers are a facilitator of international trade, not a detractor. Where would international trade have been if not for the huge strides made in containerization in the past 50 years?