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Snugglybear

What Difference Will This Make

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From the Sindy today

"Argos sues Maersk for £8m over price rise on goods from Asia

High-street chain accuses shipping giant of reneging on contract and boosting container costs threefold

Argos is suing A P Moller-Maersk, the world's largest container shipping company, for more than $13m (£8m).

The high street chain, owned by the FTSE-100 Home Retail Group, accuses the Danish logistics group of reneging on a contract to ship 5,000, 40ft containers from the Far East to the UK in each of 2010 and 2011, as well as attempting to impose a "unilateral" three-fold price increase in January.

Documents filed by Argos with the High Court claim Maersk "wrongfully repudiated and/or renounced the contract.... [Argos] had to find another shipping line in order to ship containers from the Far East to the UK. [Argos] duly obtained alternative space protection for a period of two years from Kuehne & Nagel. Accordingly, aggregate losses are $13,877,660."

Maersk announced in January that it was increasing its prices on cargo shipped between South Asia and Europe, and in a statement claimed: "The trading conditions for the carriers operating in these markets are still subject to unacceptable rate levels and the situation is unsustainable in the longer term. The rate increase is necessary to continue to operate our services with the high level of reliability our customers have come to expect from Maersk Line."

The company has since increased rates between the Far East and West Africa, West Central Asia and Europe, and on transatlantic routes.

The legal documents add: "On 15 January 2010, [Maersk said it] would no longer provide any space protection for [Argos] at the agreed rate [$930 per container] and was instead unilaterally imposing an increased rate of $2,730 per container."

It is not clear what goods Argos employed Maersk to import from the Far East or if the row over the contract caused any shortages in its stores. However, many of the products the retailer sells are manufactured in the region.

Both companies declined to comment on the case.

A P Moller-Maersk is one of Europe's largest companies and last year made a pre-tax profit of $2.8bn on revenues of $48.5bn, although that represented a drop from $10.4bn and $61.2bn in the previous period. The company says it handles more than four million container movements to the UK each year.

Argos has revenues of just over £4bn a year, by far the largest contributor of sales to Home Retail Group, which also includes the DIY chain Homebase. Home Retail Group reported pre-tax profits of £293m on sales of £6.02bn last year."

Font thingy isn't working for me, so below are the bits I find interesting.

".attempting to impose a "unilateral" three-fold price increase in January"

""The trading conditions for the carriers operating in these markets are still subject to unacceptable rate levels and the situation is unsustainable in the longer term."

"A P Moller-Maersk is one of Europe's largest companies and last year made a pre-tax profit of $2.8bn on revenues of $48.5bn, although that represented a drop from $10.4bn and $61.2bn in the previous period."

At what point do shipping costs start affecting imports? Especially when taken together with falling expenditure on consumer goods as a greater proportion of income is spent on taxes and necessities.

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At what point do shipping costs start affecting imports? Especially when taken together with falling expenditure on consumer goods as a greater proportion of income is spent on taxes and necessities.

I can't really feel that an extra $2,000 per container is going to have much impact on the kind of tat that Argos sells... in most cases that probably comes to at most a few pence per item. Where it would have an impact is on items that are large and low value, but then you probably wouldn't want to be shipping them that far in any case.

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I can't really feel that an extra $2,000 per container is going to have much impact on the kind of tat that Argos sells... in most cases that probably comes to at most a few pence per item. Where it would have an impact is on items that are large and low value, but then you probably wouldn't want to be shipping them that far in any case.

too right a 40ft shipping container is 77cubic metres you can fir an enormous amount of stuff in that. The now abandoned 2011 plan was to stick 8 motorbikes in one for a big ride...

We found however we could stick in 16 easily with a simple metal frame... disassemble them a bit and you can cram in even more.

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I can't really feel that an extra $2,000 per container is going to have much impact on the kind of tat that Argos sells...

In which case, why is Argos arguing about the extra $1,800 per container Maersk wanted?

Because on 10,000 containers, that makes a difference of $18,000,000, presumably. $9m a year doesn't seem a lot when compared to a profit of £293m. Still, Argos' management obviously feels it's worth paying lawyers over.

So $9m on 5,000 containers is enough of a cause for worry that they hire lawyers. What sum per container is enough to compromise the business model?

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I'd be ****ing furious if my shipper tried tripling his prices to me after I'd signed up a 3 year fixed-price deal.

OK - £600 a container is an absolute snip - I pay three times that rate, but I'm small-fry, and I only book about 10% of a container at a time, so the rate is exponentially higher. However, I don't expect any shipping line to arbitrarily increase by 200% AFTER a contract has been signed.

Whether you love or hate Argos, a contract is a contract. Good luck to them. Whether Sindy dolls and Night Garden merchandise are cheapo tat is utterly irrelevant.

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I'd be ****ing furious if my shipper tried tripling his prices to me after I'd signed up a 3 year fixed-price deal.

OK - £600 a container is an absolute snip - I pay three times that rate, but I'm small-fry, and I only book about 10% of a container at a time, so the rate is exponentially higher. However, I don't expect any shipping line to arbitrarily increase by 200% AFTER a contract has been signed.

Whether you love or hate Argos, a contract is a contract. Good luck to them. Whether Sindy dolls and Night Garden merchandise are cheapo tat is utterly irrelevant.

True contract is a contract by Maesk probably have them by the balls... So Argos wins?

Jack up the prices EVEN more when it comes to shipping in the future for the Argos group of companies, there aren't that many shipping companies on the planet.

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In which case, why is Argos arguing about the extra $1,800 per container Maersk wanted?

Because they can get millions of pounds of compensation.

Ultimately, they're going to have to add a few pence to the price of their products unless they're willing to take the hit to profits; which won't have a big impact on sales. It's not like a trebling of shipping prices will treble their sale prices.

Edited by MarkG

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True contract is a contract by Maesk probably have them by the balls... So Argos wins?

Jack up the prices EVEN more when it comes to shipping in the future for the Argos group of companies, there aren't that many shipping companies on the planet.

I don't get it, Ken. How do Maersk have them by the balls? Are you talking some kind of force majeure get-out clause in a particular type of contract?

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I don't get it, Ken. How do Maersk have them by the balls? Are you talking some kind of force majeure get-out clause in a particular type of contract?

Shipping is one of those monopolistic businesses whereby there are only a few companies on the planet which do it.... from China and back companies like:

COSCO, China Shipping Container Lines,Orient Overseas Container Line,Sinotrans and Hanjin are tiny compared to Maesk..

It is like car insurance if you crash you get a pay out but you also get loaded premiums...

therefore if Maesk loses they can simply up the charge for Argos if they are ever used in the future. Since they ae monopolistic with there only being a few firms doing it they can make phone calls and go cartel against argos (they probably do run a cartel anyway) so argos in the long run ends up paying more than it bargained for forwhatever it wants.

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Shipping is one of those monopolistic businesses whereby there are only a few companies on the planet which do it.... from China and back companies like:

COSCO, China Shipping Container Lines,Orient Overseas Container Line,Sinotrans and Hanjin are tiny compared to Maesk..

It is like car insurance if you crash you get a pay out but you also get loaded premiums...

therefore if Maesk loses they can simply up the charge for Argos if they are ever used in the future. Since they ae monopolistic with there only being a few firms doing it they can make phone calls and go cartel against argos (they probably do run a cartel anyway) so argos in the long run ends up paying more than it bargained for forwhatever it wants.

I would have though that a giant like Maersk would be hedging on the Baltic Dry to at least cover its existing obligations.

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  • 140 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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