Ya'll Nibbiars
The Tata NYK how it brought down the P and O to it's Knees.
The on death anniversary, a story on Jamsetji Tata. He loses in the story but sets the stage for bigger wins. The 300 years ago India was the hotbed for shipbuilding. However by 1890 the dominant nation were the British. The 50 percent of world tonnage was on British owned vessels. The India was under the British and it's merchants were dependent on British vessels. An open cartel existed then led by the company British P and O. They charged high fixed rates as well as maintained control on quantity that could be exported. Merchants had no choice. The Enter Jamsetji Tata. He had seen the unfavourable terms first hand while transporting cotton. And decides to start a shipping line with two foreign companies to take on British P and O. The two companies soon abandon him and instead join P and O.
The In 1893 Tata forms a JV with Japan's NYK. A new shipping line is launched Tata Line.
It charged 12 to 13 per ton in comparison to the P and O rate of 14 to 19 per ton. Indian merchants were delighted with the new fare. And P and O doesn't take this new competition from Tata easily. It slashes its rates to per ton and a few months later to only 1.5 per ton. And In a short period it's rates have come down from 19 per ton to 1.5 per ton. The predatory pricing was hurting Tata. He tried to take the matter to the political level. Administration ignores the appeal and says a price war was a business matter between two players. The Tata wrapped up its operations in 1895 after sustained losses.
The Japanese partner NYK, however, continued by adding more of its vessels to the route. And Pand O was still not happy. It wants to compromise with NYK and tame competition. The British Foreign Office gets involved. The An agreement is finally reached. A new tariff of INR 12/ton on Indian cotton was set the rate initially charged by Tata Line.
The Jamsetji Tata lost. But set the stage for higher competition in the seas and lower tariffs for Indian merchants.