Infighting amongst European carriers

This is quite amusing. Maersk thinks the other European carriers (Hapag-Lloyd and CMA CGM) should be forced to reduce their capacity, because they are receiving government monies.

Well, that's a nice way to try and kill off your competition.

But, what if they just found a way to reduce their expenses, without reducing capacity?
Wouldn't that be a better idea for the monies given to them by the government?
Oh, but then, they might survive?
And, Maersk doesn't want that.
Anyway, here's the article from Lloyd's List.
Judge for yourself.

Danish owners call for CMA CGM and Hapag Lloyd capacity cuts

Richard Meade - Wednesday 14 October 2009

HAPAG Lloyd and CMA CGM should be forced to cut their fleet capacity in return for government financial support, Danish shipowners have told the European Commission.

The suggestion to directly link state support with fleet reductions was put forward during a meeting between Brussels competition officials and the Danish Shipowners’ Association last week.

According to association executive vice president Jan Fritz Hansen, proposed moves by France and Germany to support CMA CGM and Hapag Lloyd risk creating significant market distortions.

“What we said to the commission was that they need to look carefully at these plans,” Mr Hansen told Lloyd’s List. “We want to be the early birds here saying that this should not turn into a subsidy race.”

The Danish Shipowners’ Association, which counts AP Moller-Maersk as its largest member, raised specific concerns during the meeting regarding Germany’s approval of a €1.2bn ($1.8bn) package for Hamburg-based Hapag-Lloyd and a potential French government equity stake in Marseille-based CMA CGM.

While the meeting was said to be informal and no official proposals were put forward, the commission is understood to have taken the association’s comments “on board”.

“If you get that kind of assistance we suggest that it is only fair that you participate in the solution,” Mr Hansen said. “If you get guarantees, or subsidies or if the government buys into the company there should be strings attached. One of these strings should be that the company has to adjust its capacity.”

According to Mr Hansen internal discussions within the association had considered whether a legal case to stop the Hapag Lloyd aid could be launched, however the plans were dismissed because a challenge would be unlikely to solve any wider problems.

Plans to enforce fleet reductions on any owners receiving state support, however, would helpcompanies avoid bankruptcy wile simultaneously addressing the urgent concerns of fleet overcapacity, he said.

“It is not good that one year into the crisis these companies are asking for subsidies,” said Mr Hansen. “What are they going to be asking for in two years time? From our point of view it is worrying.”

Despite forecasting losses of $2bn this year, Denmark’s biggest shipowner AP Moller-Maersk has repeatedly shunned any suggestion that it would look for government support. As Mr Hansen pointed out there is also little chance that the Danish government would be financial able or willing to offer it.

“We are a small country but a big shipping nation and our state finances could never afford to subsidise the industry. For France and Germany as big countries with smaller shipping industries, perhaps it is easier for them,” Mr Hansen said.

“We could never compete on state aid. We want to compete on fair, commercial free competition.”