The Hindu Business Line : Has the shippers' movement sprung a leak?

A strong shippers' lobby, it is felt, is vital to ensuring this segment of the sea trade gets fair services at competitive rates from the shipping lines and others. But this requires the government to issue clear-cut guidelines and provide budgetary support. Else, the shippers movement will flounder.

A little over a quarter of a century ago, various shippers' councils of South Asia got together and formed a regional grouping, the Association of Shippers Councils of Bangladesh, India, Pakistan and Sri Lanka (ASCOBIPS), and drafted a constitution to protect the interests of shippers in the region in the face of what they saw an "onslaught" by shipping lines. The chairmanship of ASCOBIPS is by rotation. The tenure of the Shippers Council of Bangladesh, which held it last , expired in June.

At the last meeting of ASCOBIPS in Sri Lanka, it was decided that the All India Shippers Council (AISC) would host the Association's next meeting in 2006 in India and take over as its Chairman. There is no news of either the AISC holding the meeting, or taking over ASCOBIPS Chairman. Thus, in all likelihood, the Chairmanship will go to Pakistan Shippers Council.

State of shippers' movement

The development is enough to illustrate the state of the shippers' movement in India. The country's prestige and the credibility of the apex shippers' body are in the depths. The president of a regional shippers' association was recently quoted as emphasising greater cooperation among the shippers' organisations to promote their cause and to protect their interests in view of the increasing complexities of transportation and the enhanced level of competition. But is anyone listening?

Surprisingly, this has happened at a time when the need for greater cooperation among shippers is being felt in view of rapid developments in the sea transportation sector. With the introduction of containerisation, a whole range of cargo intermediaries and service providers such as consolidators, NVOCC (non-vessel owning cargo carrier), freight forwarders, 3PL and 4PL service providers have emerged, and the interests of these intermediaries are often very different from those of the shippers.

Particularly, for the not-so-big shippers, it is quite confounding as they are not clear about their rights. With the majority of shippers sub-contracting the shipping transportation job to various intermediaries, their own interests often get diluted at some stage or the other.

New M&As

At the same time, the shipping lines have reorganised themselves into new alliances that virtually act as cartels. A few have become mega carriers through acquisitions and mergers, and therefore much stronger entities while some have become terminal operators. There is thus an uneven playing field between the shipping lines and other service providers on the one hand, and the shippers on the other and in such a situation the need to have an effective countervailing force in place can hardly be overemphasised.

A strong shippers' lobby, it is therefore felt by many in international trade, is vital to ensuring that shippers get fair services at competitive rates from the shipping lines and other service providers.

History of shippers' bodies

It may be interesting to note that the shippers' issues caught the attention of the Union government in the 1950s and a Freight Investigation Bureau was formed under the office of the Director-General of Shipping in 1959. Also, zonal shippers associations were formed, first in Bombay, the Western India Shippers Association in 1962; then in Calcutta, the Eastern India Shippers Association in 1964; followed by Madras, the Southern India Shippers Association in 1966;and in Cochin, the South Western India Shippers Association in 1969. Further, taking note of the recommendations of the International Chamber of Commerce, UNCTAD and ESCAP, a decision was taken to form an apex shippers body, and All India Shippers Council was constituted in 1967.

Internationally also ESCAP and UNCTAD played an important role in fostering shippers' cooperation at regional, sub-regional and national levels at that time. The shippers' movement in Asia, including India, developed mainly under ESCAP's Ship Users' Cooperation Project (SUCOP), which extended from 1971 to 1988. A series of workshops, seminars, studies, visits, advisory support, manpower development projects and institutional support initiatives were held on a continuous basis for more than a decade and a half, providing necessary momentum for the shippers' movement.

The termination SUCOP dealt a severe blow to the shippers' movement. There was a total lack of follow-up action to sustain the organisational structure that was so assiduously built over the years under SUCOP. With economic liberalisation gaining strength, New Delhi too was unwilling to provide budgetary support.

Voluntary membership

Shippers' associations had to depend on their members but then membership was voluntary. The termination of SUCOP also coincided with the breakdown of conference system and the rise of containerisation. There was overcapacity in shipping market, leading to a free-for-all situation. Undercutting was rampant and the shippers could negotiate `right' rates for themselves. They did not feel the need to support shippers' bodies. The result: The weakening of the shippers' movement and shippers' organisations.

Fortunately, the Draft Maritime Policy Document circulated by the UPA Government emphasises the need for strengthening various user interest groups including shippers' bodies. According to the Union Shipping Minister, Mr T. R. Baalu, a comprehensive policy for the maritime sector is on the anvil. The final policy statement, still awaited, will, hopefully, pay due attention to the shippers' issues. However, one thing is certain: Unless clear-cut guidelines and budgetary support are provided, the future of shippers' movement will remain as bleak as ever.

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