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Iron Curtain: No Care for Profit

2 minute read
TIME

On an international scale, the Iron Curtain countries have learned at least one time-honored tactic of capitalistic competition: a surefire way to win business is to chop prices below those of your competitors. For more than a year, West European shipping lines have watched helplessly as East-bloc ships captured a growing share of European cargoes by underbidding established rates by as much as 50%.

Unlike West Europe’s struggling merchant fleets, the state-owned Communistshippers—mostly Polish and East German—have no qualms about operating at a loss, and can thus carry goods at almost any rate they please. Their motives are far more political than economic. They seek political prestige by showing their flags on the world’s seaways, and are glad to get badly needed foreign exchange even if the state has to pay a premium for it.

Poland made $43 million in exchange from its ships last year.

Agents for the Iron Curtain fleets have snatched away from West German shipowners almost all the $10 million worth of dried-fruit shipments from Greece and Turkey to Europe by cutting rates from $16 per ton to $9.” They have knocked $6 per ton off the price of shipping cotton, $4 per ton off the rate for iron ore. The Poles will haul steel beams from Benelux ports to Cairo for $1.30 less per ton than West European lines; the East Germans won a contract to deliver 25,000 Dutch TV sets to Syria with a bid nearly 60% lower than any other.

The way the Communists play the game, there is no give and take. With a state monopoly on all imports and exports in their own countries, they bar the door against any Western price competition in Iron Curtain ports. The merchant fleets of West Germany, Britain, France, Belgium and Holland are feeling the pinch, and fear that it can only get worse. The Poles and East Germans have modern fleets totaling more than 300 ships, and they plan to double that number by 1970. The Soviet Union has 1,280 vessels, and it, too, is aiming at twice as many by the end of the decade.

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