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Import News from the Importers Institute

Import News from the Importers Institute

11 May 2000

Feedback on Shipping Collusion

All previous items from Import News are published on our website, http://www.silva.co.nz/institute/articles.asp. You can search for items by key words, and can give feedback on each one. We welcome your views and will publish them. This issue contains feedback from readers on recent topics.


[We complained about a price hike of more than $700 on each 20 ft container imported from the US, which several shipping companies have agreed to. The Government intends to review shipping exemptions under the Commerce Act, a decision we welcomed. Lindsay Perigo, editor of the excellent magazine The Free Radical (http://www.freeradical.co.nz) took us to task on this stance. We believed the need for regulations to control anti-competitive behaviour was self-evident, but Lindsay made us think again. Here are some excerpts from his emails.]

"The Importers Institute doesn't give a rat's arse about free enterprise and will go whining to the Government like any other pathetic bunch of socialist snivellers when it suits. The shipping companies should be free to charge what they damn well please. Don't like it, set up your own!...

"You might as well endorse the whining about the 'unfairness' of removing tariffs and exposing local manufacturers to foreigners 'abusing' their 'dominant market position'. Sickening stuff...

"One simple law of economics - if they charge too much, they undermine themselves. You can't pay the prices, they lose the revenue. Leave it to the market!...

"It's not competition that is the cornerstone of the market, it's freedom. That means freedom to 'collude' with a rival if both of you agree. In a laissez-faire situation, someone else will come in and undercut you though!...

"Monopoly status is ONLY ever acquired through the actions of the Government. Only the Government has the power to close off a given field to new entrants. So the answer is - get the Government out! You don't do that by running off to the Government when you think (mistakenly) that it suits."

Lindsay Perigo editor@freeradical.co.nz Auckland

[The Editor replies: I agree with your proposition that in a libertarian society there would be no need for restrictions on the behaviour of firms. As you pointed out, monopoly status can only ever be acquired through the actions of the Government. However, we are not running to politicians asking for favours; we merely demand that they abolish the favours given to shipping companies by their predecessors and treat them the same as other businesses. The Importers Institute will continue to demand that shipping companies should be subject to the same law as importers. That is our function.]

* * *

Sir - As a trade facilitator with clients who import used cars from Japan I have witnessed fluctuations in the freight rates for used cars from Japan this year, compared with other trade routes you have highlighted.

Earlier this year three out of five car carriers on this route imposed a NZ$100 per car bunker surcharge to cover the increased cost of fuel, as did all the non-vehicle, global, carriers. However, since then a cheaper source of fuel to power their car carriers has been sourced, as they have dropped the charge, unlike other global carriers.

Introduce competition to the market in the form of Eastern Car Lines - an independent, non-aligned, Japanese pure car carrier at $800 per car - and suddenly the rates tumble from $900 to $800, and, in the case of Mitsui OSK, to $700.

On this trade route prices have been slashed, fuel has become cheaper, all in four months. Why this route and not others? Perhaps your readers could provide the answer?

Ivan McNicholl Trade Facilitator Wellington ivan@cawl.co.nz

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