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FreightWaves explores the archives of American Shipper’s nearly 70-year-old collection of shipping and maritime publications to showcase interesting freight stories of long ago.
In this week’s edition, from the October 1979 issue, FreightWaves looks at a tumultuous time when U.S. shippers started protesting a decree from South Korea — officially the Republic of Korea — favoring that country’s own cargo.
Shippers fear Korean move will result in excessive freight rates
The Republic of Korea’s implementation of a new cargo preference law reserving 100% of that nation’s cargo for Korean flag vessels has produced a flood of protests from American shippers, both at the Federal Maritime Commission and the U.S. Department of State.
A common thread running through all of the protests is the fear that a Korean-flag monopoly will result in increased freight rates and cause instability in other U.S./Far East trades.
The complaints represent the heaviest influx of shipper activity before the Commission in recent memory. Judging by the comments filed with FMC, it appears the protests resulted from a well-organized effort on the part of the shippers. (The Commission has tried to stir up shipper interest in FMC matters, but until the Korean decree hit the headlines, their views were rarely aired before the regulatory agency.)
Continental grain/NARI protest
Urging immediate FMC action to bar Korean flag lines from following the cargo preference decree, Continental Grain Co. and the National Association of Recycling Industries (NARI) sent identical protests to the Commission.
“Such an insidious action [the Korean decree] will be highly disruptive to the U.S. trade and create extremely inflationary forces in the international marketplace,” Continental Grain and NARI said. “Not only does this Korean action violate every principle of American open competition, but it will seriously disrupt American trade, exacerbate U.S. balance of payments problems, and result in needless cost to American companies. Recycled commodities represent a major portion of the Korean trade, and the impact of this action would be so severe that we urge expedited action to prevent the Korean shipping companies from instituting this unilateral and highly damaging policy.”
Furthermore, the parties feared being forced to use Korean vessels “on a prejudiced, priority basis at excessive rates without regard for competitive opportunities provided by U.S. and other friendly-nation carriers.”
Nevco speaks out
Nevco, a division of U.S. Industries Inc. and a large importer of Korean goods, gave low marks to Korean flag vessels as far as service goes. Aside from fearing excessive freight rates, Nevco Import Manager Steven Steinman said, “We bitterly protest any effort to freeze out other shipping lines and require us to ship by Korean lines, whose inefficiency, slowness, and difficulty in settling justified claims are notorious.”
National sporting goods
Ira J. Hirsch, president of the National Sporting Goods Corporation, said the Korean action “will represent a loss to us as an importer of routing control and autonomy as to carrier selection.” Hirsch also feared service instability in other Far East trades and serious inflationary effects.
U.S. flag service praised
Lester Serenco of Fairway Manufacturing Co., St. Louis, said his firm’s best service has come from American flag vessels. “Our best results in import cargo out of Korea have been on ships of American flag, and we feel strongly that should this new regulation go into effect, there will result increased freight rates and poor service since there will be no competition for this trade,” he said. “Unless these changes are part of negotiations with the Republic of Korea with resulting gains for the United States, as well as Korea, I feel that a strong protest should be lodged in regard to these changes. We do not like to be told that we cannot have a free choice of shipping lines to handle our cargo out of the Republic of Korea.”
DuPont needs containers
E.L. duPont’s J.C. Jessen doubted Korean flag vessels could provide the needed container capacity and sailing frequencies the giant shipper requires in the U.S./Korea trade. Most of DuPont’s shipments, according to Jessen, are out of the U.S. Gulf on “traditional carriers,” such as Seatrain Lines, Sea-Land Service, U.S. Lines, and Maersk Line.
“We ship as much as possible in containers, and customers will not normally accept two to three week frequency,” the DuPont official told FMC. “Actually, one Korean customer requests containers monthly on one ship.”
Jessen said DuPont would be able to support “any reasonable action required to permit continued export to Korea using traditional carriers.”
Leonard Belove, president of Beloved Toys Inc., Kansas City, Missouri, sent letters to the White House, State Department, Commerce Department, Missouri Senators Tom Eagleton and Jon Danforth, and the FMC, stating:
“We hope you will do your best to block the South Koreans’ move which gives a shipping monopoly to South Korean ship lines. It’s hard to believe a country which relies so heavily on American aid and trade would even contemplate such competition-stifling action. We hope to learn you have induced a change more fair to our American interests.”
FreightWaves Classics articles look at various aspects of the transportation industry’s history. Click here to subscribe to our newsletter!
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