The Shipping Industry Chain Needs to Be Healed by Spirit of Contract

At 2016 world trade and container conference,Ding Zejuan, President of Maersk China zone raised three problems existing in the present container market i.e. freight fluctuation, services, and multiple cast, and emphasized that the container transport needs the spirit of contract. So, what are the intrinsic relationship between the container industry and the spirit of contract? Whether the spirit of contract is in conflict with the interests of all parties?

The “Spirit of contract” is a kind of “strong and invisible constraining force” in ensuring safe transaction and healthy and orderly development of the market economy besides laws and regulations. Currently, the situation of shipping capacity excess, weak demand, imbalance between supply and demand in the global shipping market have not been significantly improved, with many shipping companies taking part in the “price war” in order to scramble market share and business. However, the way of racing for price may ultimately make them more difficult to survive.Shipping area is similar to the bidding behavior, on the one hand it is contrary to the market discipline, on the other hand, it runs counter to the spirit of the contract. Currently,due to lack of attention and protection of the contract,and perfect default handling mechanism in the market,when the businessmen generally hold the idea of going for benefit and avoid harm and seeking the maximum interests, they always weigh the earnings, risk and loss of default and keeping promise, and eventually they often choose default and abandon the spirit of contract. Actually,in the current environment of serious homogeneity competition in shipping products and service, the side of high prices will bear the greater risk to lose customers, and thus suffer interest loss. The shipping industry chain also links customers and potential customers, suppliers and potential suppliers through the contract. Default behavior at any point will affect the stability and smoothness of the whole industry chain, said Yu Juan, the market analyst of Shanghai International Shipping Institute.

In the interview, Michael Fans, the former General Manager of Maersk Fujian area said frankly that the spirit of contract undoubtedly is very important for container industry and even for the whole shipping industry. For the industry, contract has two meanings. The first level meaning is the legal restrictions embodied by the bill of lading, and the bill of lading is the most important contract.The design of bill of lading, relevant laws and decrees have had more than one hundred years’ experience and specifications. The second level meaning is the contract of spiritual level. It can be said that the chaos of container shipping mentioned above does exist, it is not caused only by lack of spirit of contract, the factors contained therein is very complex.