News / TPM: Shipper-carrier power pendulum now swinging towards liners

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Carriers have learned to say ‘no’, and are hiking contract rates as the shipper-carrier power pendulum swings in their favour. 

Sanjay Tejwani, CEO of 365 Logistics, told delegates at S&P Global’s TPM25 this week he had noticed “changed carrier behaviour” from 2018. 

“They started to have better capacity management and sometimes turned on business if it wasn’t profitable for them. During the Covid pandemic, they got first-hand experience that they could say ‘no’ and get away with it,” he explained.  

And, according to Mr Tejwani, “that behaviour is now carried forward today”, when carriers “dictate terms to the customer” with a “take it or leave it” choice.  

“It’s a completely changed world, compared with eight or nine years ago, where the carriers are in a dominant position from a long-term perspective to set terms for their customers,” Mr Tejwani told delegates.  

While he believed rates would fluctuate in the short term, during this year’s tender season, he said, carriers “will generally push for higher rates”.  

“And if you have customers who are pushing rates down, like they did before the pandemic, carriers may sign [contracts] but that contract is only valid until the next disruption.

“Once that happens, you can tear up the contract and they will revert back to the behaviour we saw in the past four or five years,” he warned.  

And Stephanie Loomis, head of ocean freight for Rhenus, added that while larger shippers “have more clout with carriers”, those shipping smaller volumes have less negotiating power – and these non-prioritsed SMEs are more likely to have shipments cancelled or changed. 

The founder of Inception Partners, Robert van Trooijen, advised those shippers with lower volumes and “less clout” to “hedge their bets” and ship their goods through a forwarder that will share their shipments across various carriers.