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Another Look at Co-ordination

25th June 1965, Page 79
25th June 1965
Page 79
Page 80
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Page 79, 25th June 1965 — Another Look at Co-ordination
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Which of the following most accurately describes the problem?

By S. BucKiey Assoc tnst

CO-ORDINATION in transport is nothing new despite what politicians and some economists may imply. Moreover, co-ordination is a continually developing process necessitated by the fact that transport—if it is to serve its proper function—is a service industry. Accordingly, as trade and industry develops and becomes more complex, so it is necessary for the co-ordination between the transport operator and his customers likewise to become more comprehensive and complex.

Taking the simplest example a farmer may hire a local haulier to move his produce to market, in which event it is possible that they would be the only two parties involved. So co-ordination would be at its simplest level. At harvest time, however, when grain is being delivered to the local coal merchant, a third party—namely, the corn merchant —would enter into the picture so that acceptance of the load could be arranged to the mutual benefit of all parties.

More Parties Involved

But as the economic life of the country has become more involved, not only do more and more parties become involved in what was originally a simple transaction between customer and operator, but additionally national interests often have to be considered.

With ever greater emphasis on the need for exports this necessity for consideration of national interests in transport co-ordination is being extended increasingly into the international field. Relative to road transport the recent and continuing development of ' roll-on/roll-off ferry services is an example. But because shipping is by its very nature an international as well as a national transport service it is not surprising that this form of transport has long experience in co-ordination, bearing in mind that it is one of the oldest means of conveyance.

Emphasis on Co-ordination

With so much emphasis being placed on the need for co-ordination of inland transport in the UK—however much seasoned observers may suspect such a policy to be little more than an excuse for oblique rail subsidization--it is therefore worth while to examine what shipping has done in the development of co-ordination within its industry.

To the layman it is possible that the only. knowledge he has of co-ordination in shipping concerns the "conference" cargo liner system, which has been the subject of considerable criticism on the grounds that it created something of a closed shop with the resulting benefit of a monopoly.

Whilst such conferences do preserve rights for their members. benefits are not exclusive to such members. The objectives are achieved by offering preferential rates or, alternatively, a discount to regular customers who are prepared to consign all their traffic by shipping interests who are members of the conference. In some cases payment of the rebate is deferred until the end of a specified periodfor example, after a year, when an appreciable percentage of the total payment made during that period might be refunded.

Two Scales of rates Alternatively, in contrast with the rebate system, two scales of rates might be applied. The first would be available to all customers, whilst the other and lower rate would be available for customers who were prepared to sign a contract giving the members of the conference the first opportunity to move their traffic.

Despite the long experience of shipping in transport co-ordination, recently there has been a further development. This is the creation of national shippers' councils. The concept is comparatively new and it is significant that the first was the British Shippers' Council which was subsequently followed by councils in Belgium, France, Italy, Netherlands, Norway, Sweden and the Federal Republic of Germany. More recently there have been added those in Switzerland, Denmark and Greece. The initiative of

the British " shippers reflects the national ability for co-ordination whether on a political or commercial level, and may well be a pointer for the UK's influence in other fields of transport co-ordination particularly—in the near future—relative to the Continent and the Common Market.

As already stated, consultation between shippers, shipping lines and conferences of which those lines were members has been a practice of long standing. As in the example initially quoted of the farmer and local haulier, such consultation previously has been between individual shippers and individual shipping lines on matters of mutual interest and in a wider sphere between trade associations created to look after their particular interests and the shipping conferences. As with relations between haulier and customer, a large part of the work of shipping lines has been, and continues to be. the daily business of maintaining contact with their customers—the shippers—and in discussing matters of mutual interest. Nevertheless, about 10 years ago there was a growing feeling among shippers that some machinery was necessary for consultation at national level on wider issues of national and international importance affecting their shipping interests. The setting up of national shippers' councils was the outcome.

Correspondingly, and at about the same time, shipowners considered that there was need for a more formalized procedure than previously had been the case for consultation with shippers on such issues. Accordingly, a 'Note of Understanding was concluded between European Conference , Lines and the European shipperscouncils and this was formally signed in October last year.

The 'Note of Understanding' This provides for procedures for consultation covering all aspects of contractual relationship between the conferences trading in and out of Europe and the importers and exports of those European countries where shippers' councils had been set up. Additionally, the Note provides for those cases where there is no contract tie between the member lines of a conference and shippers. Provision is also made for shipowners to seek settlement of any disputes they may have with shippers.

The basis of this Note of Understanding is the acceptance by both parties of the need for machinery appropriate for the maintenance of fair practices and for discussion of matters of useful interest, in the belief that such machinery could best be provided and operated by agreement between them.

The Note provides that representatives of the shipowners and shippers should meet at regular intervals to discuss matters of principle and broad issues of mutual interest. Secondly, where differences have arisen in day-to-day operation, every endeavour should be made to continue and improve the normal machinery for resolving such differences. But failing such agreement through the normal channels, the matter in dispute could be referred by the shipper. trade association, shipowner or conference to the appropriate shippers' council. Should the matter in dispute affect traders in a number of countries, there would be consultations between the shippers' councils in the countries concerned.

Reference to an 'Independent Panel' Failing agreement being reached under this procedure, the matter could still be referred to an "Independent' Panel" consisting of three representatives nominated by European shipowners and three representatives of European shippers' councils. So far as possible, such representatives would not intimately be concerned with the matter in dispute. It would be the function of the Panel to find a fair and equitable solution and its recommendations would then be considered by the interests concerned in a spirit of mutual acceptance. In any particular case under this procedure. if the shipowner or shipper representatives on the panel felt that it would help to resolve the matter in dispute, they are free to co-opt an independent chairman of appropriate standing.

Freight Rate Issues Regarding freight rate issues, both parties are agreed that some such issues raise matters of general principle beyond considerations applying to individual rates, and in such circumstances these issues must be discussed and investigated under the provisions of the note of under

standing. But they are equally agreed that disputes regarding individual freight rates must continue to be determined by direct negotiations between the parties concerned. Both shippers and shipowners recognize that it would be quite impracticable for the assessment and adjustment of individual rates to be subject to the procedures of the provisions of the Note of Understanding.

The advantage of this arrangement is that both small and big shippers have full recourse to consultative procedures so that no individual shipper should have ea use to feel that he stands alone against a conference or that he has no means of seeking a remedy for legitimate grievances.

While this Note of Understanding is recognized as the outcome of responsible commercial bodies negotiating together, it is the view of European conference shipowners and shippers that given those conditions elsewhere the same pattern could well be extended beyond Europe.

Structure of Shippers' Councils Regarding the structure of shippers' councils, there is no standard pattern, but membership is such as to give full representation of the cargo interests in the countries concerned and of both large and small importing and exporting firms. In some countries the initiative for setting up councils has been taken by the national committees of the International Chamber of Commerce. In others it has been taken by the national industrial organizations or trade associations, whilst in a few countries it was on the initiative of an existing organization of inland transport users. The governing body of each council naturally has varied. but the tendency has been for business men of high standing to accept membership, so ensuring that the councils could speak with authority on matters of major policy.

Regular meetings The existence of national shippers' councils in Europe naturally has led to co-operation between them and this may well be extended so as to cover uniform councils in other countries. Co-operation of this nature is ensured by regular meetings and by the existence of a documentation centre for all national shippers' councils in 'The Hague. But although this has resulted in active and healthy international co-operation each shippers' council nevertheless preserves its own autonomy and freedom of action.

As with several national transport associations in the UK these shippers' councils are not governmental bodies, although European governments have fully endorsed the part that they are playing in promoting closer consultation and co-operation between shippers and shipowners.

After 10 years of existence these shippers' councils have demonstrated their value to both shippers and shipowners, and from their experience it is apparent that much could be learned by customers and operators in other forms of transport who feel the need for consultative machinery.


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