CHINA MARITIME LAW NEWSLETTER
Vol. 1, No. 6 - October 19, 2001
TOPICS THIS ISSUE:
- International Maritime Conferences in Harbin and Shanghai
- Shipping Industry Slightly Damaged After Terrorist Attacks
- Competition Tightens - Small Enterprises at Risk
- China-US shipping Business Outlook
- Suit Over Fiber Cable Break
- European Ship Design Groups Join Forces
International Maritime Conferences in Harbin and Shanghai
On Thursday 18 October, the 2001 International Conference on Navigation and Control opened in Harbin. Experts from Europe, China and North America participated in this gathering organized by the Harbin Institute of Technology.
The 2001 China International Maritime Affairs Exhibition and Seminar will be held in Shanghai from December 4 till December 7 and companies from 14 countries are expected to attend. In the Exhibition Center the latest marine inventions, such as a "black box for a ship," will be displayed. The "black box" is designed to record data to help investigators find causes for maritime accidents, according to the same principles as the black boxes designed for airplanes. Other areas that will be displayed cover, among other topics, navigation systems, shipbuilding and repairs.
There are 21 participating countries, among them are the United States, Britain, Japan, the Netherlands, Italy, the Republic of Korea and Germany. Germany, with 74 companies represented, will send the largest delegation. Also participating are multinationals such as ABB Turbo Systems and Siemens AG.
(Source: Xinhua News Agency)
Shipping Industry Slightly Damaged After Terrorist Attacks
While the direct impact on China's shipping industry was slight after the terrorist attacks on the United States on September 11, the nation's shipping volume to the US may drop because of damaged US consumer confidence and the likely increased costs.
Industry insiders say that Chinese shipping companies - unlike air carriers - have felt little impact since the attacks. And also there is news from the transport department of China Ocean Shipping Company (COSCO) saying that until now, no direct loss was reported, except that the number of ships to the east coast of the US, and states such as New York and New Jersey in particular, dropped. COSCO is the country's largest container carrier.
In fact, the Chinese ocean shipping industry has dropped from the first quarter of this year as the economy of the United States, China's second largest shipping destination, began to slow down.
Even though, in general terms, the numbers in the shipping industry have dropped, COSCO recently received a USD 200 million order from P&O Nedlloyd. The deal concerns freezer containers, which is the major export product of COSCO. P&O Nedlloyd is the largest container handler in the world.
(Sources: Xinhua News Agency)
Competition Tightens - Small Enterprises at Risk
The terrorist attacks on the US have aggravated an economic downturn. This down turn has damaging affects on smaller shipping companies, which are now under risk to be swallowed by larger companies.
Outside of China, Malaysia International Shipping Corp intends to buy smaller companies, particularly those in financial difficulties. In China, COSCO (China Ocean Shipping Company) has been talking to Japanese Kawasaki Kisen Ltd, Yang Ming Marine Transport of Taiwan, Hanjin Shipping Co, and DSR Senator Lines of Germany to form the world's second largest alliance. Other mergers that show for the trend of creating larger companies are those between Peninsula & Orient and Dutch Royal Nedlloyd, now P&O Nedlloyd, which recently made a USD 200 million deal with COSCO.
The terrorist attacks are said to have decreased freight rates, which has led to rationalization of services and thus formation of alliances, which threatens the survival of smaller companies. Another limiting effect concerning freight rate is the increased usage of large vessels.
China-US Shipping Business Outlook
Official figures showed that major ports in China handled 450 million tons of cargo in foreign trade last year, about 56 per cent of which was shipped to the North and South American markets.
Some experts commented that Chinese shipping companies might increase the number of ships heading to Europe to make up for their companies' reduction in US business. They do not believe local shipping companies will reduce their business.
Some analysts have said many ship owners would still pin hopes on shipping goods to the US in the remaining months of the year and around the Christmas sales season in particular.
(Source: China Daily)
Suit Over Fiber Cable Break
China Telecom has taken a shipping company to court after accusing one of its ships of damaging two trans-Pacific cables off the coastal city of Shantou, in Fujian Province. The two cables, the Sino-US and the SEA-ME-WE3, were damaged on September 20. China Telecom and a consortium that includes Reach, Singapore Telecom, Concert and Japan Telecom own the 27,000-kilometre-long Sino-US cable. The damage halted all Internet traffic in surrounding areas and slowed communications.
The Chinese telecom giant filed its lawsuit with the Admiralty Court in the city of Guangzhou, Guangdong Province, last month. The Telecom Giant claimed a cargo ship belonging to Shanghai's Xinhaitian Shipping Company was responsible for the accident. Shanghai Xinhaitian Shipping Company is a joint venture owned by the COSCO Group and Changjiang Shipping. The claim is that the cargo ship had failed to anchor in a designated area and had not taken the proper steps to prevent its anchor from dragging along the seabed, an action that ultimately severed the cable in several places along a 30-kilometre stretch.
China Telecom is asking for RMB 40 million (US$4.8 million) in compensation from Shanghai Xinhaitian Shipping Company. The amount is justified because the repair work requires a considerable amount of labor and materials and because the damage has seriously affected the service life and communication quality of the cable.
(Source: China Daily)
European Ship Design Groups Join Forces
The Chinese shipyards are some of the fastest growing in the world. Predictions say that they will double their share of the new building market. This increase creates a demand for ship design services. Two European ship design groups, Craig PLC of Cardiff and Carl Bro A/S of Copenhagen, have decided to cooperate in order to fill this demand. The two partners will provide a full design service from Shanghai.
Both designers have previous China experience and have worked with Chinese shipyards the past five years. Carl Bro is an international engineering and planning company and the Craig Group has interest in a variety of shipping businesses, such as ship owning, management, ship design and finance.
(Source: Journal of Commerce)
Lehman Lee & Xu
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