Liner conference
A group of two or more vessel operating carrier which provide international liner service for the carriage of cargo on a particular route or routes within a specified geographical limits and which has an agreement whatever its nature within the framework of which they operate under uniform on common freight rate and any other agreed condition with respect to provisions of liner service.
Types of liner conferences
1. Open conferences –
- an open conference particularly has to accept any shipping lines that applies for membership.
- All conferences operate to and from US are open conference.
2. Closed conference
- A closed conference admit new member at the discrete of existing members. Most of European based shipping conference are closed conference.
What are the common factors of liner conference?
Following are the factors of liner conferences
- Uniform rate
- Control of supply of shipping space through regulation of trade. participation of each member such as sailing , tonnages and port restrictions.
- Loyality arrangement with shipper such as contractual discount service contracts.
Advantages of liner conference
- Provide stability of freight rates, service and schedule for shippers.
- No discrimination between shippers served by conference.
- This service creates confidence for both shipowner and shipper that the business is secure.
- The elimination of competition between members lead to service competition like upgradation of equipments of cargo handling
Disadvantages of liner conference
- The monopolistic character of conference is one of the main disadvantage.
- The very limited competition among the member.
- Effect of loyalty agreements.
- Elimination of outsiders.
- The major disadvantage of shipper view is level of freight rate.
How freight rate are fixed.
The following factors are taken into account for the formation of freight rate.
- The weight and the measurement of commodities being shipped.
- The value of the commodity.
- The distance of transfer of cargo.
- The efficiency of the port of origin and port of destination.
- Maintenance cost of the container
- Port charges including tag higher pilotage and port dues.etc
- Cargo handling expenses
- Various taxes.
- Cargo broker commission
- Nature of cargo
- Fuel and bunker cost and fuel efficiency of Ship.
- Canal dues
- Cargo availability at Port for call.
- Equipment repositioning cost
- Vessel frequency and speed of the vessel and transit time.
- Some value added services
- Other ports located in the same origin.
Non conference liner
A non conference line is a shipping line which operate on the route served by the liner conference but which is not a member of that conference.
Competition
- nowadays liner trade companies do not necessarily have to be member of conference which until about two decades ago conference lines clearly dominated liner trade with a share of 90%.
- non-conference shipowner individually or in cooperation with others increasingly managed to supply competition service of an equal quality, thereby eroding the share of traffic held by the conference line.
- Due to a growing use of containers for the transport of general cargo and the introduction of large container vessel the show of this so-called outsider in liner trade today account for up to 50% depending on the route.
- The number of liner conference is declining day by day.
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