Shippers raise concerns over ocean liner alliances

Beneficial cargo owners fear that service levels will decline to the lowest common denominator when carriers pool their cargo on one vessel.

Shippers raise concerns over ocean liner alliances

Beneficial cargo owners fear that service levels will decline to the lowest common denominator when carriers pool their cargo on one vessel.

Shippers raise concerns over ocean liner alliances

Beneficial cargo owners fear that service levels will decline to the lowest common denominator when carriers pool their cargo on one vessel.

 
Container lines are swapping partners faster than an eligible singles at a ballroom dance, but the new alliances being formed are almost as worrisome as outright consolidation through mergers, says a leading advocate for shipper interests.
    In less than six months, the liner industry has witnessed the acquisition of APL by CMA CGM of France; the combination of China’s two ocean carriers, COSCO and CSCL; the wrecking of the G6 Alliance and the CKYHE Alliance; and the formation of the four-member Ocean Alliance and The Alliance, with six carriers.
    For detailed analysis of carrier maneuvering, read American Shipper's June issue cover story, “Will liner shipping see further consolidation?
    Vessel-sharing agreements are an effort to utilize excess capacity and stem financial hemorrhaging, but will likely result in worse service for their customers, Agriculture Transportation Coalition Executive Director Peter Friedmann said last week.
    “If you’ve got three or four or five carriers all loading cargo on the same vessel, it does reduce competition,” he said in a keynote speech at the Virginia Maritime Association’s annual conference in Norfolk. When ocean carriers put their cargo on a common vessel, the different cargo and document cut-off times that differentiated the companies become the same, the Washington-based attorney said.
   “Those are areas that carriers heretofore competed in,” Friedmann said, noting that Hong Kong-based OOCL works with customers until the last minute to get a shipper’s documentation in order and in the terminal before the window closes for loading containers on its vessels, while other carriers won’t even accept containers without documents provided days in advance.
    Last month, Don Pisano, chairman of the Ocean Transportation Committee of the National Transportation League told American Shipper that "It should be clear that shippers do want reliably strong supply chain partners who are capable of competing fairly in both rates and services. The NIT League has been a supporter of carrier efforts to drive efficiencies which ultimately offer shippers greater options and cost benefits in the markets they compete in. But that support has always been conditioned on the maintenance of rigorous competition between carriers. We trust that the FMC will perform a thorough analysis of this latest VSA proposal to ensure it will serve the greater good with continued competition and service to shippers."
    The European Shippers' Council has called for creating a monitoring system for competition data regarding alliances.
    "Alliances that were supposed to bring better services for shippers, appear to bring more consolidation on the market and lessen the number of ports directly called in services between Asia and Western Mediterranean," it said.
    And last November, Chris Welsh, the secretary general of the Global Shippers forum said “A serious debate is needed to investigate whether mega-alliances such as 2M, G6, CKYHE and O3 deliver real competition in the marketplace, or if shippers and the containership industry as a whole would be better served by fewer lines competing head-on.”
There's clearly bipartisan support to modernize and revitalize our infrastructure, so now we're calling on Congress to act.

Spot container rates from Shanghai to North Europe stood at $714 per TEU as of March 15, whiles rates from Shanghai to the Mediterranean totaled $748 per TEU, down 5.3 percent and 3.6 percent, respectively, from a week prior, according to the Shanghai Containerized Freight Index.

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Shippers raise concerns over ocean liner alliances

Beneficial cargo owners fear that service levels will decline to the lowest common denominator when carriers pool their cargo on one vessel.

on May 20, 2016AmericanShipper.com

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Shippers raise concerns over ocean liner alliances

Beneficial cargo owners fear that service levels will decline to the lowest common denominator when carriers pool their cargo on one vessel.

on May 20, 2016AmericanShipper.com