It’s often been said that the world of ocean freight changes at a glacial pace. Those changes in the container industry in 2017 will profoundly change the shipping landscape, even if many will not come into effect until we are on the other side of the 2018 contracting season.
Mergers and acquisitions, changes in alliances, the emergence of a small number of very large shipping houses, and a strong focus on digitalization, present shippers with promises, challenges, and a lot of questions.
On the “promises” list, it is hoped that the market consolidation will help carriers drive down their unit costs, for the benefit of themselves and shippers. If carriers can reinforce their newfound profitability with a better cost picture, they will hopefully turn their focus from finance to operations. Schedule reliability, a fundamental measure in liner trade, is abysmal nearly across the board, leaving shippers with no choice but to carry excess inventory, at high cost. On this list of promises, we also find carriers’ increased focus on digitalization, which we look forward to being a part of.
Unsurprisingly, the concern of many shippers around what the new landscape will mean for rate developments is on the “challenges” list. The consolidation of power into a few large shipping houses may or may not change the market dynamic; only time will give the answer to that.
The “questions” list is quite long. Because some of the market changes will not be effective for another six to 12 months, we understand that answers impossible at this point. But the fact that so many questions exist will make for a challenging contracting season indeed; shippers’ operations this year could be subject to a great deal of uncertainty.