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Logistics Management: “Helping supply chain managers navigate the new ocean cargo marketplace”

September 16, 2017

Helping supply chain managers navigate the new ocean cargo marketplace

Mollie Bailey, Director, International, LCB, at Transplace, recently provided SCMR readers with insights and advice on how to leverage the new ocean cargo carrier scenario in this exclusive interview.

Supply Chain Management Review: How has the transformation of four primary ocean carrier alliances into three new large ocean carrier alliances altered the competitive arena?

Mollie Bailey: In some respects it makes it harder for shippers to differentiate service offerings between carriers in the same alliance. Destinations serviced, transit times, port terminals are uniform for the trade lanes that the alliances call. Rates and customer service are the primary differences now between carriers in shared alliances.

Shippers looking for improved transits, alternate services, different trade lane port rotations or loops are hard pressed to find options outside of the 3 major alliances other than niche, regional carriers.

Overall, since the alliances have kicked off in April, there have been notable changes to carriers schedules, loops, direct ports of call vs transshipments and that has impacted transit time and port options. Some carriers have chosen to stop calling low volume, unprofitable ports and regions. If contracted rates were in place, then carriers notified shippers they would no longer accept cargo for those destinations and shippers had to scramble to find alternate carriers many times at a higher cost.

With the changes in carrier ownership over the past year, some of the “carriers” listed as an alliance member are now actually a brand of the carrier owner. Example: CMA CGM owns APL; Maersk is buying Hamburg Sud, Hapag Lloyd bought UASC, COSCO is purchasing OOCL, Japanese carriers will form a single entity in April 2018; consequently the overall pool of competitors keeps decreasing. This lack of competition has allowed the carriers to begin to regain profitability and control rate fluctuations and space availability however as a shipper looking for alternatives it’s worrisome that 5 or 6 global carriers control all major global trade routes.

Read more here.