Peter T. Leach, Senior Editor | Aug 30, 2012 2:23PM EDT
Liner companies that serve trade lanes to and from China, and that includes most of them, may have to pause before cutting freight rates in the future.
China’s Ministry of Transport promises to investigate and possibly ban port calls by carriers that offer zero or negative freight rates in order to compete for business, the Ministry of Transport said in a statement earlier this month.
In order to maintain fair competition, companies are forbidden from providing international sea freight services at rates lower than the reasonable level, the ministry said in a statement posted on the central government's website.
The statement suggests that the government is moving to regulate the market and prevent price competition as global trade slows.
The ministry said it will initiate investigations into those companies that disrupt the market order, and penalties will range from restriction of service frequency to suspension of operating licenses in the country.
"Actually the rule on international freight rates has been in place since 2009 and the penalties are in accordance with China's regulations for international maritime transportation. We reiterated the rule because the global shipping market is weak this year," Zhang Lin, an official at the international sea transportation department with the ministry, told the Global Times, an English-language newspaper.
Domestic shipping companies have been struggling with waning demand, excessive shipping capacity and rising costs, the ministry said in the statement.
Contact Peter T. Leach at pleach@joc.com. Follow him on Twitter @petertleach.
