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40 DC VELOCITY NOVEMBER 2018 www.dcvelocity.com
and acquisitions over the past two years has reduced to 12
from 24 the number of lines claiming global market share.
This is expected to yield better operating efficiencies, reinforce pricing discipline, and keep shippers and BCOs from
engaging in such price-destructive behavior as double-book-ing without any type of consequence.
But there is still much work to do, with basic block-ing-and-tacking at the top of the list. A recent survey of shippers and freight forwarders by Drewry Shipping Consultants
and the European Shipping Council (ESC) found that
between 2016 and 2017, carrier performance fell in terms of
the availability and quality of overall service. Respondents
also expressed dissatisfaction with price. Carriers got higher
marks for sustainability and financial stability.
Friedmann of the Agriculture Transportation Coalition
said that, on balance, users will benefit from the carriers’
expanded footprint by having more service options. “It’s
not who is providing the service, but what the service is,”
Friedmann said. Ideally, carriers will compete both on the
range and relative quality of their services, he said.
Larger forwarders shouldn’t be too concerned by the
carriers’ expanded service initiative, Okan Duru, an assistant professor and director of the Master’s in Maritime
Studies degree program at Nanyang Technical University in
Singapore, wrote in an e-mail. The reason, he said, is that
freight forwarders control enormous volumes, and they
have the economic resources and savvy to blunt the carriers’
recent marketing push that emphasizes selling directly to
shippers and bypassing traditional 3PLs and forwarders.
In fact, carriers would be better served determining how
to better accommodate shippers’ ever-changing sourcing
arrangements given their invariable supply chain reconfigurations, Duru wrote in the e-mail. Often, that means more
freight emanating from lower-wage Asian countries such as
Vietnam and India.
Carriers now have full plates. They have begun pushing
value-added services while fine-tuning capacity to better
address fluctuating demand handled by the latest generation
of carrier alliances, which haven’t yet meaningfully bolstered
members’ profit. In the short term, “alliances exaggerate
[spot] price volatility,” said Gino Marzola, Singapore managing director/ocean shipping for Panalpina, the ocean- and
airfreight forwarding giant.
This isn’t the first time that steamship lines have tried to
extend their value proposition beyond sailings. Prior efforts
have yielded little traction. Despite their insistence that this
time is different, it remains up to the marketplace to judge
whether it will value the full range of services offered by carriers seeking to become more financially secure.
Ira Breskin is a senior lecturer at SUNY Maritime College in the Bronx, N. Y. He is the
author of the recently published The Business of Shipping (9th edition).
