As I look at 2015, I find it hard to concentrate on any subject other than the mess on the U.S. West Coast and the time and money that everyone involved in the shipping industry has spent dealing with the myriad issues that led to the downward spiral in the ports. The quagmire on the West Coast will lead to major discussions and important changes, primarily in the communications between terminals, port authorities, steamship lines and labor, and the management of chassis pools. Any importer or exporter who can avoid the use of West Coast ports will continue to do so until these ports can reach a point of efficiency and stability, and rebuild trust.
Capacity will continue to grow with more mega-ships coming on line, and supply will continue to outstrip demand. Stowage on the vessels and management of the space, however, will be a key to the success of utilizing larger vessels within the alliance structure and implementing the carriers’ desired reduction in cost per slot. Alliances have solidified, resulting in more carriers loading on a single vessel, and cooperation among the carriers and load planning will be essential. More capacity in fewer hands will potentially result in unforeseen consequences and reduced supply chain flexibility. Carriers that can differentiate themselves by their service levels will gain support.
Vessel capacity may keep rates at the low level that the market is accustomed to, but expect additional costs for low-sulfur fuel and higher trucking costs because of the combined effects of the congestion issues, chassis costs and the driver shortage. With the average age of truck drivers at 57 years old, it is imperative that new young drivers enter the field, and pay scales will need to increase.
Alison Leavitt, Managing Director, Wine and Spirits Shippers Association