GUINNESS SAYS PACTS WILL CUT SHIPPING BILL

GUINNESS SAYS PACTS WILL CUT SHIPPING BILL

Guinness PLC, the huge British spirits and beer conglomerate, says it will cut shipping costs this year by controlling its shipping arrangements from the United Kingdom to the U.S. East Coast.

The move will slash its shipping bill by 15 percent on the North Atlantic, the company says.Guinness has signed three service contracts covering its spirits and beer exports from the United Kingdom to U.S. East Coast ports. It signed contracts with the trans-Atlantic ocean shipping conference and two non-conference carriers - Maersk Line and Dart Containerline.

The contracts, which become effective this month, will cover 8,000 20-foot containers - more than 25 percent of the company's annual export volume. Last year, the company's shipping bill worldwide totaled more than $30 million, said Alan Stewart, a Guinness spokesman in London.

Guinness PLC's spirits exports to the United States, controlled by United Distillers, formerly were handled by distributors it owned or controlled.

This year, in addition to centralizing control of its shipping arrangements from the United Kingdom, Guinness has combined its beer and spirits exports for the first time in service contracts with shipping companies.

Guinness reported revenue of $5.3 billion last year. Its leading brands in the U.S. market include Dewar's and Johnnie Walker whiskies and Tanqueray gin.

Guinness declined to disclose the rates or volume commitments for the service contracts.

But Mr. Stewart said the rates from Danish-based Maersk Line and London- based Dart would be marginally lower than rates from the North Atlantic conference. Members of the rate-setting conference serving U.S. East Coast ports are Sea-Land Service Inc., Atlantic Container Line, Hapag-Lloyd (America) Inc., Trans Freight Line and Nedlloyd Lines.

The new contracts will cover a minimum of 12 months, Mr. Stewart said.

Last year, Guinness had service contracts for some of its business with various independent carriers, including Evergreen Line, the big Taiwan-based carrier.

We got some of that back, said Willem Brinkman, chairman of the North Europe-U.S. Atlantic Freight Conference from his London office.

The contract with Guinness represents a considerable volume for the conference, he said. It's the first time the distillers group has controlled this volume of business. The conference has traditionally handled the majority of wine and spirits shipments on the North Atlantic.

But this year competition has become more intense for that high-value cargo with the entry of Maersk on the North Atlantic service and the withdrawal of Dart from the inbound leg of the conference.

Guinness, one of the largest shippers in the North Atlantic trade, won more leverage in negotiating freight rates by consolidating control over its beer and spirits exports, shipping executives and distributors said.

One distributor said the rate Guinness negotiated is about 5 percent lower than the conference's tariff rates for spirits from the United Kingdom. The conference rate from U.K. ports to U.S. East Coast ports is about $2,300 for a 20-foot container.

Guinness has traditionally handled its beer shipments from the United Kingdom. But last year Guinness acquired Dallas-based Schenley, which distributes its Dewar's scotch.

It also entered into a joint venture marketing and distribution agreement in the United States with Moet-Hennessy of France. Schieffelin & Somerset in New York distributes cognac, wines and champagne for Moet-Hennessy and Johnny Walker and Tanqueray gin for Guinness.

The service contract with Dart was jointly negotiated with Moet-Hennessy,

Guinness said.