News / Concerns voiced over mega-alliances, but shippers admit there are positives

05/03/2014

Shippers attending TPM 2014 in Long Beach this week are uneasy about the implications for their business from the rush by ocean carriers to form bigger and bigger alliances.

However, in most cases they believe they that the positives outweigh the negatives.

Indeed Klaus Schnede, manager marine, air & facilities procurement at Eastman Chemical, said he welcomed the P3 alliance on the basis that he expected the dismal schedule reliability of carriers to improve, with Maersk Line dragging its P3 partners up to its 77% onetime level rather than the lowest common denominator of MSC’s dismal 33%.

This was also the quandary with the G6 grouping, where the New World Alliance of APL, HMM and MOL had a 66% reliability record in the final quarter of 2013, whereas the Grand Alliance of Hapag-Lloyd, NYK & OOCL could only manage a 50% performance.

Nevertheless, Mr Schnede did express some concerns about the alliance concept in that, in some circumstances, all his 600-700 containers a week from Asia to the US could end up on the same vessel, giving his risk management team headaches.

Meanwhile, the G6 has advised that it will probably follow the P3’s example by having one single operation tonnage centre (TC), given the complications that would otherwise exist with six carriers trying to reach agreement on operational matters.

But this was viewed by US shippers as a negative, as the TC would probably be thousands of miles from US shores, and thus lack understanding when taking operational decisions related to their business.

Adam Hall, director of international logistics at Dollar General, and a panelist on a TPM session, complained that there had been a “dearth” of communication from the P3 carriers. He said consultation with the trade had been “non-existant”.

Others were worried about the power of the mega-alliances to indirectly manipulate rates by using the “pricing tool” of cancelling sailings.

One shipper said that, in such cases, carriers say that if you want to get on board a heavily booked ship you could be asked to pay $200 or more to guarantee the space.

However, Lars Jensen CEO and partner at SeaIntel, eased shipper worries about rate collusion by arguing that the dismal failure to implement GRIs proved that the carriers would, in fact, “be inept” at collusion.

Mr Hall said the challenge for shippers today was “getting on the boat”, but others suggested it was getting cargo released from congested terminals where infrastructure was “not-big-ship-ready”.

Antiquated infrastructure, a shortage of chassis and trucks are all seen by shippers as major obstacles that would make the introduction of larger ships by the mega-alliances problematic.