CBER and the 2M prognosis – look out for WAGS on the loose
Like a WAG on a massive retail therapy binge
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By Mike Wackett
Shippers around the world are suspicious of the proposed P3 alliance. They argue that on east-west trades the three top-ranked container carriers will reduce competition by controlling too much capacity.
There are also concerns that the sheer size of the alliance will force weaker carriers out of business, cutting booking options for shippers and restricting the choice of destination ports.
Shippers of time-sensitive commodities are particularly nervous that using hub ports to accommodate the increased deployment of ultra-large containerships will extend transit ...
Comment on this article
Andrew Lubin
December 11, 2013 at 6:06 pmLovely. So the shippers are only happy if the carriers slowly bleed to death? Exactly what do they think will happen to rates if Zim and a few of the more aggressive carriers disappear? And no, no one’s shipping fresh food from Asia to EU or US…if every ship adds 2 days sailing time then there’s no loss of competitive advantage. There’s a short-sightedness and duplicity here that’s appalling.
Mike Wackett
December 12, 2013 at 8:47 amHi Andrew,
The time-sensitive commodity comment came from the Med-American Shippers’ Association whose members apparently have concerns about their wine shipments.
I think the big advantage of the FMC summit next week will be to air all of these fears and in many cases to vanquish them.
David Thompson
December 12, 2013 at 9:27 amAndrew,
Shippers have every right to be cautious about the effects of the P3 alliance. One of main arguments in favour of P3 is that it will bring stability to volatile routes, but that overlooks the fact that the cause of the instability is the shipping lines themselves. Their unseemly chase for market share by rate cutting – sometimes twice in one week – is the problem. Shippers, and in particular, forwarders, don’t want roller coaster rates, and we are seeing some lines becoming more aware of this by offering longer term validity without requiring onerous commitment levels.
If lines could implement the kind of financial discipline with regard to prices that their customers must operate under, they would be in much better shape.
With regard to transit times, slow steaming has already taken its toll, and further increases in lead time would impact heavily on the supply chain. In a world where technology has brought about huge improvements in manufacturing processes, the only thing getting slower are the ships. With labour and production costs in China increasing year on year, buyers are looking closer to home for their products. Wit shorter lead times and lower prices, eastern Europe and Turkey are now very attractive to manufactures. By increasing transit times, lines are destroying their own markets.
In their recently announced proposed schedules and service loops, P3 have missed an opportunity to deploy some of their smaller (<10000 TEU) vessels on a fast transit Asia Europe service at premium rates.
P3 may well prove to be exactly what the industry needs, but such a huge change deserves and requires closer scrutiny, and calls by Shippers and forwarders for such action is neither short-sighted nor duplicitous, but simply sensible, given the inability demonstrated by shipping lines to manage their services profitably.