NORTH ATLANTIC SHIPPERS' CONFERENCE

Regarding the question of continental rates and their detrimental effect on Great Britain's export trade, the shippers concerned are entitled to expect cooperation from the steamship companies in overcoming the menace of foreign competition. The North Atlantic Shippers' Conference has taken up this matter very forcibly with the North Atlantic Lines, and in a communication sent them about a year ago a very strong case was made.

It was pointed out that on such a route as the westbound North Atlantic, and for traffic such as is carried by the liner services, rates of freight are not, of necessity, to be strictly related either to the pure cost of carrying the goods in question or to any regular percentage of the value of the goods. Even the general level of the international freight market is not necessarily as important a factor in fixing rates for such a route as for some others. The object of the lines in fixing rates must be to so arrange the whole of their trade as to yield them a legitimate profit on their capital at current value. Subject to this general consideration, individual rates should be fixed on the basis of "what the goods will bear."

RATE CONSIDERATIONS

In order to concentrate the problem of rates into a definite understanding, the shippers suggested that the lines agree to give favorable consideration to applications for freight reductions made by the shippers' conference if the following conditions were manifestly satisfied by the evidence:

1. In instances where lower continental freights do not affect the case, it must be established that:

(a) A reduction in rate is likely to lead either to an increase in volume commensurate with the reduction or, at the very least, to checking and revers ing a clearly discernible tendency to decreased volume.

(b) The reduced rate would so affect selling prices as to bring about a material alteration in the competitive position in the market of destination. (c) The existing rate is unjustifiably and quite excessively high in relation to the value of the goods and the pure cost of carrying them.

2. In instances where lower continental freights are alleged, it must be established:

(a) That the prices at which continental goods are sold in the Atlantic markets are lower and that freight enters materially into the difference.

(b) That the volume of goods shipped from continental ports is large enough, compared with the volume passing from this country, to constitute a really serious attack on the British trade in question.

(c) That the volume of traffic which it is hoped to regain, or the volume of the further loss which it is hoped to avoid, bears a reasonable relation to the cost to the shipowner of the reduction applied for.

It should be further understood that the shippers' conference would be expected to accompany any application for reductions by statistics of exports and of domestic production, where obtainable, and by accurate price quotations supplied in confidence by members of the conference.

Reductions, where conceded, might be given for a period (say, 1 year), and subject to review at end thereof. The shippers would be obliged to concur in the reinstatement of the old rate if the reduction had not materally affected the situation.

At present the lines have the power to institute increases in rates of freight without prior consultation with the shippers' conference

or with individual shippers. It was not suggested that they should alter this in any way. But, in return for an agreement on the basis of the foregoing paragraphs regarding reductions, the shippers' conference stated that they would consider supporting the lines in making such increases as might be justified by: (a) Unavoidable increase in operating costs, (b) the existence previously of an obviously unremunerative rate and the emergence of new conditions making an increase practicable, (c) as a balancing factor for reductions made on other commodities in which competition against Britian was clearly much more severe, and providing the commodity subjected to increase was apparently able to bear it.

In case the lines received complaints against an increased rate, it might be desirable to advise that they had discussed the matter with the shippers' conference and that the latter supported them.

The reply of the steamship companies to these representations was not particularly encouraging, but the effort gave the lines the opportunity of studying the considered attitude of organized opinion among their customers.

TRAMP SHIPPING

ADMINISTRATIVE COMMITTEE

The year 1934 marks a significant transition in the tramp-shipping industry. For the first time in history, British and foreign tramp owners abandoned unrestricted competition in a number of important trades and established schemes of minimum rates. The prolonged depression in the freight market was a factor, but the deciding influence was the granting of a subsidy by the British Government on the condition precedent that British tramp owners organize for the purpose of avoiding dissipation of the subsidy. This they did, and enlisted the cooperation of foreign tramp owners with marked success. The details of organization are set forth in the Memorandum on Financial Resolution (Cmd. Paper 4754) presented to Parliament by the president of the Board of Trade in November 1934, which provides as follows:

TRAMP SHIPPING SUPSIDY

The amount of the subsidy would not exceed £2,000,000 and would be reduced below this figure if the average level of freight rates during the subsidy year rose above 92 percent of the average level in the year 1929.

The subsidy would be payable for a period of 1 year and would be subject to withdrawal within that period if the circumstances which led to its introduction were altered. The period proposed is January 1 to December 31, 1935.

FREIGHT LEVEL DETERMINES SUBSIDY

If, in the opinion of the Board of Trade, at the end of the subsidy year the average level of freight rates for the year (expressed as an index number representing a percentage) is less than the average for 1929 (represented by 100 percent), then the total sum payable by the Treasury for the year will be a sum not exceeding a quarter of a million pounds for every unit percent by which the average for

1 With the exception of the brief period in 1905 when the Baltic and White Sea Conference established minimum asking rates." See section on the Baltic and International Maritime Conference.

the subsidy year is less than the average for 1929, subject to a maximum of £2,000,000. The following schedule shows index number (1929=100) representing average level of freight rates during subsidy year.

It is proposed to appoint a statutory committee under the name of the "Tramp Shipping Subsidy Committee" to advise the Board of Trade as to the administration of the subsidy, and in particular to examine claims and to make recommendations to the Board of Trade regarding them.

The expenses incurred in the administration of the subsidy scheme by the Board of Trade and the Tramp Shipping Subsidy Committee would be defrayed out of the subsidy. It is estimated that the total cost of administration will not exceed £10,000.

The president of the Board of Trade, in his statement of July 3, announced that before the Government was prepared to introduce legislation in regard to a subsidy it would be necessary for the shipowners to formulate a scheme satisfactory to the Government which would (1) prevent so far as possible the subsidy from being dissipated by the domestic competition of British ships carrying tramp cargoes, and (2) insure that it is effectively directed to securing the greater employment of British tramp shipping at the expense of foreign subsidized shipping.

The shipowners have accordingly submitted a scheme to the Government containing proposals for the distribution of the subsidy, and describing the arrangements which they intend to make, with a view to promoting the better organization of the industry and to achieving the objects of the subsidy. The Government has accepted the scheme as fulfilling the conditions set out in the preceding paragraph. The president of the Board of Trade, in his statement of July 3, 1934, laid down that the shipowners, through their international organizations, and in any other ways open to them, should press upon the shipowners in other maritime countries the framing of proposals tending to adjust the supply of tonnage in the world to the demand and thus to raise freight rates once more to a remunerative level. In order to meet this condition the shipowners are taking steps to secure a meeting of the International Shipping Conference to discuss proposals tending to adjust the supply of world tonnage to the demand.

ORGANIZATION OF TRAMP-SHIPPING INDUSTRY

The Government, laying down certain conditions for the subsidy offered to tramp shipping, stated that these involved "a real measure of organization" of the tramp-shipping industry.

Such words are necessarily relative and must be interpreted in relation to such an industry as tramp shipping. The industry is international, competitive, and exceptionally fluid in character. Consequently it has hitherto been comparatively unorganized in the sense that, since its development a century ago, it has been marked

by a very high degree of individualism among its members. This individualism belongs both to its nature and to its methods. To introduce the principle of organization and cooperation into such an industry involves a revolutionary change and must necessarily be somewhat experimental in its early stages. Nevertheless, the Tramp Shipowners' Committee is convinced that the measure of organization desired by the Government is not only a proper provision to its offer of assistance but, if successful, will be of real value to the industry. It has therefore submitted that, for the reasons given, His Majesty's Government should accept a system of cooperation which will be elastic and allow it to grow naturally by trial and error until its more permanent form can be determined by experience rather than to insist upon an immediate cast-iron system which, by being premature, would be imperfect.

GENERAL NATURE OF PROPOSALS

The main features of the organization proposed by the Tramp Shipowners' Committee contemplate the establishment by the industry itself of a "Tramp Shipping Administrative Committee” which might set up subcommittees for particular trades or for special purposes. The committee would, as its main functions, actively promote cooperation among shipowners in (1) minimizing domestic competition; (2) improving freight rates and conditions; and (3) promoting as against foreign subsidized competition the fullest possible employment of British tramp shipping. It is contemplated that the committee would make recommendations as to the steps to be adopted by shipowners for achieving these objects.

CONSTITUTION OF COMMITTEE

The committee would be an elected body composed of 12 members-10 elected by the Tramp Shipowners' Committee of the Chamber of Shipping and 2 by the Joint Liner Committee of the Chamber of Shipping and Liverpool Steamship Owners' Association, who will also have power to withdraw members appointed by them and to fill vacancies if such arise.

FUNCTIONS AND METHODS

It is proposed that the functions of the Tramp Shipping Administrative Committee should include the following:

1. To promote organized cooperation among owners to maintain and improve freights and by such organized cooperation to promote their interests generally.

2. To recommend such conditions of charter as in their discretion they think fit.

3. To confer with charterers in an effort to increase the employment of British ships.

For the purpose of promoting organized cooperation among owners, as provided above, the administrative committee would seek to collect and circulate such information concerning world freight markets as would be likely to be of assistance to shipowners.

The functions of the administrative committee in promoting cooperation among owners would include action

(a) to coordinate the operations of tramp shipowners by influencing them to maintain a united front against any possible combined operation of shippers to depress freights below an economic level;

(b) to promote cooperation between tramp and cargo liner owners by mutual consultation, direct representation, or liaison with liner conferences with a view to mutual action to maintain and improve rates;

(c) to cooperate where possible with other shipowners' organizations, such as the International Shipping Conference and the Baltic and International Maritime Conference.

The administrative committee would appoint subcommittees or coordinating committees for the principal trades such as the River Plate and Australian tramp trades and, if necessary, committees at outports; and it might delegate any of its functions to such bodies. The activities previously mentioned would be undertaken either by the administrative committee itself or through appropriate subcommittees, as might be most effective. In particular, the administrative committee would probably delegate to committees with special knowledge of particular trades the carrying out of the objects described above relating to cooperation between tramp and liner owners and among tramp owners themselves.

Normally, the committees would be left free to arrange for cooperation and procedure on the lines suited to each trade (since the conditions vary considerably in the trades), but would keep in close touch with and be under the control of the administrative committee on matters of general policy

COOPERATION WITH TRAMP SHIPPING SUBSIDY COMMITTEE

The Tramp Shipowners' Committee understands that it is proposed to appoint a Tramp Shipping Subsidy Committee to make recommendations to the Board of Trade regarding the payment of the subsidy. The Tramp Shipping Administrative Committee will cooperate with the subsidy committee to secure the objects of the subsidy.

CONSULTATION WITH THE SHIPPING INDUSTRY

The administrative committee will, throughout, have the advantage of the experience of the industry through consultation, when necessary, with (a) the Tramp Shipowners' Committee of the Chamber of Shipping; (b) the Joint Liner Committee of the Chamber of Shipping and the Liverpool Steamship Owners' Association; and (c) the Council of the Chamber of Shipping.

Moreover, since both the administrative committee and the subcommittees will be composed of practical shipowners in daily contact with the freight markets and with the general conditions and particular needs of all sections of the industry concerned, these bodies will be thoroughly practical in character and should be able to carry out their functions with the maximum efficiency at the minimum cost of administration.

REPORTS OF WORKING

A report to the president of the Board of Trade on the working of these committees and on the progress of organization and cooper