Shipping companies demand assurance from Venezuelan state companies, 15th June 2013
By ROBERTO DENIZ.- The Venezuelan State has become a large-scale importer, but shipping companies see it as a good client, not without its fair share of risk. Cases like the infamous Pdval imports, where the state-owned food retailer company attached to oil giant Pdvsa clung to containers for several years, continue to rear up, and shipping companies want some type of "assurance" prior to doing business with state-owned enterprises. "Every time a state company makes a booking, shipping companies demand some sort of assurance," said the director of one of world's largest cargo companies. In some cases, shipping enterprises prefer working with cargo consolidators, which act as intermediaries in maritime transport activities. "These are individual policies of each company. Some would rather work through a consolidator than directly with the state; many opt to change strategies." The explanation is simple: shipping companies find it easier to file legal actions against a logistics operator than against a state-owned corporation like Pdvsa. "The State is much stronger than a shipping company," adds the director. "It is easier to attack a cargo consolidator than to battle a state company," added a customs agent who also chose to remain anonymous. Even though this option may turn out more favorable for transport companies, it raises prices for the end importer, as the latter must foot the bill of the cargo consolidator, which is ultimately responsible for complying with the whole process from port of origin to delivery location. "This gives rise to an additional cost and makes products more expensive," explained the shipping company executive. Deep in default A notice issued by the Shipping Association of Venezuela was recently addressed to the office of Minister of Energy and Petroleum Rafael Ramirez, demanding payment of USD 196 million for delay in returning 2,900 containers owned by shipping companies. The contents of that notice indicate that part of that equipment was under concession of cargo consolidators and not the oil company. "Those containers entered the country either in the name of Pdvsa or through cargo consolidators, most having reached an average permanence within national territory highly unusual for this type of transaction," claims the letter dated April 25th. This is not the first time events of this nature take place. A document prepared by the Special Commission for Review and Recognition of the debt generated by Pdval confirmed that in 2011 that state-owned company owed nearly USD 121 million to 10 different shipping companies. Initially, the claim amounted to USD 303.3 million, but the parties agreed to settle for only USD 120.9. Back then, the obligation also emerged as a result of delays by Pdval, a subsidiary of Pdvsa, in returning containers. The equipment was used for food imports made by Pdval from 2008 to 2010. "State-owned companies lacked experience as importers and have been learning on the go, but ignorance of the business is no excuse," added the shipping executive. In just the first quarter of the year, public imports amounted to USD 6.35 billion, 20.7% more than in 2012, according to the Central Bank of Venezuela. Translated by Félix Rojas Alva