A few years ago I attended a conference about Port and Terminal Productivity at Charleston SC. One of the sessions was comprised of four (4) big shippers representatives and each one presented their points of view regarding the Shipping/Transportation By Sea Industry. In particular, I remember one of them discussing their expectations from the carriers, telling all the attendees that they view their relationship with the carriers as a strategic partnership, and then moved to details about their expectations for the carriers. The list was not short, but by all means doable. When he was done, one of the participants, representing an Ocean Carrier sitting in the audience, stood up and told the shippers representative that all the items on the list of expectations are doable but each comes with a price tag. He then asked if shippers are willing to pay for all that they are expecting from the carriers. The answer came promptly and was a very short and decisive NO, and the carrier’s rep reacted: if this is the case we are not interested in your partnership. The truth is that he used much harsher words, but I will not quote him here.
In the JOC article with the same title, the writer is asking if the transformations in the industry will result in benefits to the customers (=Shippers). Will all the decisions be taken by the carriers “primarily for their own benefit, with little regard to the needs of the customer? My views related to this issue are: 1) why should the carriers, who are struggling very hard to survive, is not always successful, 2) lose billions of dollars while trying to stay afloat in the stormy world economy conditions, and share their savings with their customers?
One has to remember that any steps taken by the carriers in order to reduce their operational costs, is very costly by itself. In order to reduce the slot cost, the carriers ordered and built the mega-ships that were costly and price varied depending on the size, some over $120 million dollars. The cost to merge, acquire or restructure is enormous. The process of Withdrawing capacity and idling ships is very expensive. Youngest-ever ships are being scrapped with huge losses to the carriers (owners). All of the expenditure comes directly from the carriers pockets. Did the shippers – Strategic Partners – tend their hands to help? The answer is very short and decisive: NO.
The shippers took advantage of the fragile state of the carriers, and instead of helping their strategic partners, did exactly the opposite and caused the freight rates to decline so low, that some of the carriers just could not survive anymore. Some carriers merged with others, some were sold and bought outright, and the “ cherry” of it all was the demise of Hanjin Shipping.
So, if the shippers are unlikely to benefit from industry transformation, they can only blame themselves.
Captain Chaim Shacham
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Cell: 201 414 6306
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