Rapid changes in the ocean freight industry have generated anxiety throughout the global supply chain, with shippers, ports and marine terminal operators facing uncertainty as new carrier alliances emerge in an industry-wide effort to cut excess vessel capacity and trim operating costs.
Three new alliances, which include 11 of the world’s largest container shipping lines, became operational in April 2017. These alliances represent nearly 80 percent of global container trade and roughly 90 percent of container capacity on major trade routes.
The international trade community is bracing for potential port and terminal disruptions as the alliances work out and implement new processes. Already, fleet reductions have created a capacity crunch, resulting in higher rates and longer lead time for shippers.
Additional service interruptions could include chassis dislocations, lengthy wait times for truckers, fluctuations in terminal gate volumes, and changes in rail connections. Analysts also expect a decrease in the number of direct port calls, precipitating an increased need for transshipping of containers.
In this brave new world of ocean freight alliances, importers and exporters can safeguard their supply chain and avoid financial penalties by shifting to a proactive approach—beginning by choosing a reputable logistics provider, and work with them to develop a comprehensive, individually tailored plan.
Logistics providers that have excellent buying power and strong relationships with reliable carriers can help ensure your space is protected when capacity becomes tight. Likewise, stable carrier relationships are also vital because carriers forced to leave containers behind in an attempt to improve profitability tend to target shippers with short-term, supply-and-demand-driven carrier relationships.
Shippers can also reduce the risk of shipments being stranded if a shipping line goes bust or withdraws from a trade lane by choosing a logistics provider with strong, long-term relationships with more than one reliable shipping line on any trade lanes where the shipper requires transport services. This approach allows providers to switch shipments between carriers and reduces the risk of shipments being stranded if a shipping line goes bust or withdraws from a trade lane.
In order to navigate the highly nuanced, highly regulated ocean freight industry effectively, you need a strategic partner. To learn more contact our Ocean Export Manager firstname.lastname@example.org, or our Ocean Import Manager email@example.com 1-877-755-5413
The Ocean Alliance is made up of CMA CGM, and its recently acquired American President Line (APL), Orient Overseas Container Line (OOCL), Evergreen and COSCO Shipping Lines Co., which consists of the now-merged China Ocean Shipping Company (COSCO) and China Shipping Container Line (CSCL).
THE Alliance is comprised of the big three Japanese carriers, Mitsui O.S.K. Lines, Nippon Yusen Kabushiki Kaisha (NYK Line) and Kawasaki Kisen Kaisha (“K” Line), Hapag-Lloyd, United Arab Shipping Company (UASC) and Yang Ming Transport. The three Japanese carriers plan on combining their container operations into one company by April 1, 2018. In addition, Hapag-Lloyd and UASC are scheduled to merge by May 31, 2017.
The 2M Alliance is an existing alliance made up of Maersk Line and Mediterranean Shipping Company (MSC). Maersk is scheduled to take over Hamburg Sud by the end of 2017. And the 2M Alliance recently concluded a strategic cooperation agreement with Korean carrier Hyundai Merchant Marine.