Improved shipping reliability adds to retailer woes as more stock pours in
Less congestion on the high seas has put additional pressure on some retailers, already struggling ...
By Sam Whelan
China Cosco Shipping executive vice president Wang Haimin has rubbished the idea that carriers can be sole service providers of end-to-end container supply chains.
Mr Wang (pictured) drew comparison between competitors Maersk and CMA CGM’s push to become fully integrated container logistics providers and, at the other end of the spectrum, MSC and Hapag-Lloyd’s apparent focus on pure port-to-port shipping.
“Cosco is somewhere in the middle,” he told delegates at the TPM Asia conference in Shenzhen this week.
He believed: “One solution provider can’t provide all the required services, logistics is too fragmented. In terms of manpower, freight forwarders work five times harder per teu shipped.
“Logistics chains can’t be provided just by shipping lines, so Cosco is willing to work with ports, freight forwarders and shippers to create a harmonic ecosystem and enhance cooperation so each segment creates value.”
For example, Mr Wang said, total logistics solutions for shippers must include more intermodal connections, such as ocean-rail, which can’t be done by one provider.
However, while noting that digitalisation would “redefine the container shipping business model by enhancing customer experience,” he admitted the digital-frenzy had sidetracked the industry from service quality.
“On-time arrivals are very important,” Mr Wang said. “So, at the end of the year, we will publish an index of timeliness and produce standards and bespoke solutions using big data.”
According to Alan Murphy, chief executive of Sea-Intelligence, schedule reliability has recovered this year after falling to all-time lows in 2018. A major part of the problem, he said, was that carriers’ marketing departments needed to “stop lying” about unrealistic transit times.
Bjorn Vang Jensen, vice president of global logistics at Electrolux, one of the world’s largest shippers, added: “We’ve seen a remarkably strong increase in port arrival reliability with all of our carriers this year, because we made an effort in negotiations to say ‘stop this nonsense, you never arrive in Long Beach in 14 days, so quote 16 days instead’.
“I place value on knowing I can trust a carrier,” he said, noting that Electrolux’s factory planners in Europe and the US rely on receiving components from Asia, and that cargo delays can result in closures that could cost €400,000.
“Where we see things falling down is on the inland side,” he continued. “It is hugely important and, here again, we find that while carriers have got better at being honest on port arrival times, they’re still fudging the numbers on the inland leg.”
Mr Jensen said the “jury was still out” on whether the solution was to replace global forwarders with the integrated logistics offerings now being touted by the likes of Maersk and CMA CGM.
“We haven’t tried those integrated products yet; they’re still figuring out how to do it,” he noted. However, he hinted at an upcoming pilot with Maersk in the US.
“These kind of services have potential, but it’s not easy to integrate logistics units into liner operations, they’re fundamentally different,” Mr Jensen said.
Comment on this article
Aaryav Gupta
October 12, 2019 at 5:47 pmAgreed, there are too many blocks to be fitted correctly in a complete supply chain each one with its own requirements and challenges. Although the idea of integrated solution is extremely noble but it has to be extremely flexible, robust and agile to be successful.