NORASIA, MEDITERRANEAN ARE PLANNING JOINT SERVICE EUROPE-FAR EAST TRADE IS TARGET

NORASIA, MEDITERRANEAN ARE PLANNING JOINT SERVICE EUROPE-FAR EAST TRADE IS TARGET

As the fashion for partnerships between liner shipping companies spreads, two medium-sized but expanding carriers based in land-locked Switzerland are joining forces.

Senior executives from Norasia Lines and Mediterranean Shipping Co. expect their new alliance in the Europe-Far East trades to be fully operational by the middle of next year.Although the deal is firm, executives from both lines say they are still in the process of "fine-tuning" the arrangement.

According to Norasia's president Hans Steiger, a crucial element still to be determined is how to rationalize their joint resources to maximize efficiency. This includes the possibility of improving sailing frequencies and swapping equipment.

Capt. Pasquale Formisano, a director of Mediterranean Shipping, agreed that ''we are trying to find the right package."

Outstanding issues include the choice of routes, and the question of additional new partners.

The two lines are planning a joint service in the Europe-Asia trade with Norasia providing seven open-hatch container vessels, each able to carry 2,800 20-foot containers, and Mediterranean Shipping contributing two ships of 3,300 TEU capacity each.

ROUTE CONTINUES SERVICE

Norasia views the new deal as a continuation of the Europe-Middle East-Asia service that the Fribourg-based company has run together with Sea- Land Service Inc. since 1989.

This arrangement will terminate in the middle of next year following the decision by the U.S. carrier to enter into a global deal with Maersk Line of Denmark.

The move also will bring to an end the direct service between Northern Europe and Asia that Norasia and Sea-Land currently operate together with South Korea's Hyundai Merchant Marine Co.

In an interview Capt. Formisano said that discussions are currently underway with Hyundai. But at the moment Hyundai is only considering a simple slot-chartering agreement for both westbound and eastbound ships.

Norasia and MSC are looking for another partner since a single string of ships in the Europe-Far East trades is not sufficient, Capt. Formisano asserted.

But while there is a good chance of Hyundai coming on board, at this stage the talks are just exploratory, Norasia's Mr. Steiger cautioned.

NEW SHIPS TO BE USED

All of Norasia's ships on the Europe-Asia service are new and were built at Germany's Howaldtswerke-Deutsche Werft yard. They have a speed of 22 knots. Two are still under construction.

MSC is also to provide new vessels to service the route. The ships, which cost $52 million apiece, are still under construction at the Fincantieri shipyards in Ancona, Italy and will be delivered in the spring of 1996, or just in time for the commencement of the phase-in period with Norasia.

In the last few years, Norasia has changed its whole fleet and replaced the ships built between 1985 and 1989 with newer and bigger vessels.

Mediterranean Shipping Co. views the decision to join forces with Norasia on the Europe to Asia route as "a normal expansion."

It already operates on the Atlantic and north-south routes to southern Africa, Australia, east Africa and the Red Sea, the Arabian Gulf and Indian Ocean, and from the U.S. West Coast to the west coast of South America.

Mr. Steiger described the deal with Geneva-based Mediterranean Shipping as ''very positive" and noted that both have a lot in common and are fundamentally very close.

Like Norasia, MSC is also privately owned, and most importantly "cost conscious," he said.

Norasia's annual revenue last year was $400 million, and Mediterranean Shipping estimates that revenue this year, just from its container division, ''should exceed $800 million."

ALLIANCE SPARKS OPTIMISM

Aside of the alliance, both Norasia and MSC are upbeat about their respective operations in the future, even though they are far from optimistic about the state of the liner shipping industry.

Mr. Steiger said Norasia will expand - "that's for sure." But at the same time he expressed concern that profit from container shipping "is still insufficient."

He also expects freight rates in some sectors to remain stagnant or drop slightly lower, and singled out the problem of excess cargo capacity as many more containerships now under construction are delivered over the next few years.

A confident Capt. Formisano is bullish about the outlook for Mediterranean Shipping and predicts the fast-growing company will continue going forward.

Since its formation in 1970 with just one small cargo vessel, the Geneva- based company today operates a fleet of 67 ships, including three cruise liners, and containerships with a combined capacity of 150,000 TEUs.

Next January the company, which has 6,000 employees in more than 40 nations, expects to begin services from Europe and the United States to Brazil and Argentina, Capt. Formisano said.