From American Shipper--
Qatar takes majority stake in UASC
Friday, July 25, 2014
By Chris Dupin
Qatar has become the majority owner of the United Arab Shipping Company (UASC), one of the most expansion-minded container shipping companies in the world.
A U.S. Federal Maritime Commission notice in Thursday's Federal Register reported that Qatar has recently attained a 51.27-percent ownership stake in UASC. The company was established in 1976 by the governments of Qatar, along with the United Arab Emirates, Bahrain, Saudi Arabia, Iraq and Kuwait, but until recently, none of the nations owned a majority stake.
The FMC said that increase in ownership triggered a request by UASC to petition the FMC to be excluded from "controlled carrier" regulations so that it can lawfully reduce its tariff rates, charges, classifications, rules or regulations, effective upon publication.
The Shipping Act of 1984 defines a “controlled carrier” as "an ocean common carrier that is, or whose operating assets are, directly or indirectly, owned or controlled by a government, with ownership or control by a government being deemed to exist for a carrier if (A) a majority of the interest in the carrier is owned or controlled in any manner by that government, an agency of that government, or a public or private person controlled by that government; or (B) that government has the right to appoint or disapprove the appointment of a majority of the directors, the chief operating officer, or the chief executive officer of the carrier."
According to the FMC, Congress enacted the regulations to ensure that controlled carriers, whose marketplace decision-making can be influenced by foreign governmental priorities or by their access to non-market sources of capital, do not engage in unreasonable below-market pricing practices which could disrupt trade or harm privately-owned shipping companies.
The FMC noted, "The controlled carrier list is not a comprehensive list of foreign-owned or -controlled ships or ship owners; rather, it is only a list of ocean common carriers that are controlled by governments. ... Thus, tramp operators and other non-common carriers are not included, nor are non-vessel-operating common carriers, regardless of their ownership or control."
UASC said the relief, if granted, will permit it to operate in the U.S. trades on the same terms available to other ocean common carriers, including many controlled carriers that have previously been granted similar relief.
The FMC last published a list of controlled carriers in 2012, listing four companies: APL of Singapore, COSCO, China Shipping and Hainan P.O. Shipping. It notes that four other companies had been removed from the list — Ceylon Shipping Corporation, Compagnie Nationale Algerienne de Navigation, Sinotrans Container Lines Co., Ltd., and The Shipping Corporation of India, Ltd. — because they were no longer operating liner services to the U.S.
Long an operator of ships in the trade between the U.S. and Middle East via the Mediterranean, UASC has been expanding its fleet and ordering new ships, some of which will be among the largest ever built. UASC entered the transpacific trade between the Far East and U.S. in 2013.
The FMC is inviting comment on the request for an exemption; comments are to be submitted no later than Aug. 8.
With China's rejection of plans by the world's three largest container carriers — Maersk, MSC and CMA CGM — to form the P3 Network, and the decision by Maersk and MSC to instead form the 2M alliance, there has been widespread speculation that CMA CGM might form an alliance with China Shipping and UASC.
UASC has an aggressive new building program. In February, it said it was exercising options with Hyundai Heavy Industries so that the Korean shipyard would build it 16 container ships with 14,000 TEU capacity and five ships (with an option for one more) with a total capacity of 18,000 TEU. The ships are to be delivered through the first half of next year.
Alphaliner lists UASC as the 19th-largest container carrier in the world with 50 ships with 298,909 TEU — 198,164 TEU on 26 owned ships and 100,745 TEU on 24 chartered ships. It said UASC has 17 ships on order with 262,726 TEU capacity, or about 88 percent of its existing fleet.
Those ships will be capable of operating with liquid fuel or LNG, once LNG bunkering infrastructure is in place. Qatargas is owned by Qatar Petroleum and a number of other U.S., European and Japanese companies — Total, ExxonMobil, Mitsui, Marubeni, ConocoPhillips, Shell, Idemitsu Kosan, and Cosmo Oil — including petroleum giants, with an annual LNG production capacity of 42 million tons per year.