Let’s face it, shippers and non-vessel-operating common carriers are wed to their liner carriers, for better or worse.
The economics of the container shipping industry are such the carriers that are here today will be the ones there tomorrow for shippers and NVOs. Even during the depths of the recession several years ago, the existing top 15 carriers held on despite dire predictions of bankruptcies and consolidation from the analysts.
What has changed in recent years between carriers and their customers is how they interact with each other.
Carriers are squarely focused on rationalizing their big-ship capacity, routes and partnerships to achieve sustainable financial results, while shippers and NVOs entering 2014 will likely face extremely volatile rates and declining service quality in terms of containership reliability.
London-based Drewry’s analysis reveals container shipping’s reliability has fallen in the last three quarters of 2013 and the consulting firm does not expect an improvement in the fourth quarter as missed sailings and winter schedule adjustments wreak havoc.
On top of this, carriers must come to grip with new alliances, such as the P3 Network among the giants Maersk Line, Mediterranean Shipping Co., and CMA CGM, and adjustments to long-time groups, such as the G6 (which is a combination of the Grand and New World alliances) and CKYH alliances.
“The motivation for the big VSAs (vessel-sharing arrangements) is simply to cut costs by pooling resources. They have not been designed to improve the product on offer to shippers even if there are some side-benefits to shippers from wider and more frequent port coverage by individual lines,” Simon Heaney, researcher and consultant at Drewry told American Shipper. “Ultimately, while carriers are in survival-mode any innovation is aimed at improving the bottom line and not the customers’ experience.”
To ensure a strong marriage, shippers and NVOs have no other choice but to improve their interaction with liner carriers through investments in transportation management systems. Face and telephone time are becoming a thing of the past as carriers reduce headcount within their customer service departments and invest more in IT themselves to handle these functions.
Fortunately, and as pointed out in American Shipper’s research, there are a variety of TMS programs now available for purchase, with capability levels determined by the amount the shipper or NVO is willing to pay to acquire a system. Even small and less technologically sophisticated shippers may tap their NVOs for affordable TMS connectivity.
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