Apparently I’m not the only one who thinks Maersk is staking out a monopoly position, discriminating against forwarders.
I think Maersk and others are in danger of killing off forwarders, and also customers. Larger customers will look at private transport. Small customers will mistrust Maersk’s platform, and evaluate its performance against the others out there, such as DP World’s. So it better work lots better than the others, not likely an advantage that can be sustained for long, nor for every type of customer. Many forwarders have end-to-end booking platforms.
I bet even large forwarders will start chartering ships if current price conditions for container shipments continue for long, like till Spring 2023.
And actually, I did not have to wait long. IN THE SAME LOADSTAR, on 10/22/2021, I found the second article.
DP World has not waited to announce their complete booking and shipping system to compete with Maersk’s announcement.
Maersk has Tradelens, a booking systme using blockchain concepts, which is a partnership with IBM, and purports to allow a shipper to book end-to-end delivery of cargo.
The DP World version is called CARGOES. According to the article, DP World claims that while blockchain is not part of their system now, they are looking at including it.
And why would they want to, if the standard database technology works well? It surely would not perform as well, and once they have the permissions set up, registered users can query whatever they set up to allow.
But more important, both of these announcements tend to render ocean freight brokers less relevant for smaller shippers. While there are other services brokers could perform, the one-stop booking and tracing they offered can be obtained elsewhere.
Brokers can still provide customized help with freight services. And they may have a customer relationship that cannot be obtained through an app. And remember, brokers still buy 40% of ocean shipping space, so that competing with brokers may cut off your nose if they shift where they buy their space for resale.
It’s most useful now, with rates at an all-time high for containers, from say Asia to EU or US. The platforms may help the firms keep some of the margin they are able to command right now. They won’t have to discount so much for brokers who book larger volumes Bu tthe ocean shipping firms can’t expect to maintain their blanked sailings and late deliveries as a means of holding prices up. That’s anathema for shippers, who can’t see their cargo tied up in shipping delays of various sorts.
The high prices are going to create big incentives to figure out how to cut them out. We already see large shippers such as Amazon and Walmart and IKEA turning to chartering their own ships. There will be more of that.
These chartered ships are going to create dedicated fleets. And there is no reason they cannot offer some of their unused capacity for sale to some partners. Ocean liner companies may well be creating a secondary carrier set and find themselves serving far more small shippers and fewer of the megashippers, which were their primary source of revenue for years.
That would put them in a long-term starvation system, with megaships to fill and not enough large shippers to fill them. There would be massive retrenchment and only a few carriers would survive. That could be the future 10 years from now, after the supply chain disruption blip of the Covid period.
It’s good to remember that apps by themselves can’t create huge value; it’s the actual services and products they provide that are the real source of value. The shipping itself has to be conducted in a way that’s worth it for the customer.
By Charlie Bartlett, European Correspondent 21/10/2021
Triple figures is worth reporting, even though we’ve been hearing about this problem for a long time now. And it seems no one will put up the money to do something about it.
Opening terminals to 24 hour operation would clearly improve things. It would not be a total solution, because the drayage trucks and warehouses, and container flows and availability, would still need to be coordinated. But it would be a start.
But 24 hour operation for terminals means more longshoremen and staff would need to be employed. Terminals will not be willing to hire these new longshoremen as union workers, because they don’t see a long-term need for them. When the rush abates, they can’t fire them readily.
It’s a similar story for drayage, though they have more flexibility, with the ability to use owner-operators if they can get them. But with the driver shortage, this kind of transport is one of the hardest hit– drayage carriers have been so ready to alter contracts for delivery and pickup of cargo and chassis that drivers don’t want to do this work. They’d rather be doing construction work.
The situation with warehouses is similar. Keeping a warehouse open for extended hours to be sure trucks can get in and out requires more staffing, and the firms don’t want to put out the money. Warehouse workers are often on 90-day contract time frames; many these days are supplied by temp agencies rather than the warehouse operator. The warehouse operator would need to commit to a much larger workforce, and on overtime at that, to handle extended hour deliveries.
I am starting to think it all comes down to businesses not wanting to extend their labor requirements. People don’t want to give work to people, or institutions and rgulations are now flexible enough to allow people to go to work and get the job done.
It’s more than just jawboning the port authorities, who have little to say about their terminals’ operations or labor practices, and almost no influence. Ports themselves have no leverage except as a contract for port spavce comes up for renewal. And most are nmany year contracts. That’s the dilemma of current port governance practice.
19 October 2021
Jack Donnelly
Ports and Terminals, Shipping Lines
Supply Chain and Logistics 