Ocean carriers seem doomed in their struggle to project future capacity requirements while guaranteeing reasonable ocean transportation costs for customers’ needs.
A worldwide economic crisis casts doubt on 2012. In the short term, capacity exceeds supply, affecting carrier revenue. As carriers need to control costs, they’ve begun to limit capacity in the near term, but will 2010 be repeated?
We wonder how the U.S. economy will perform in 2012. As it drives production demand in foreign countries, will U.S. consumers continue spending while questioning the economic outlook?
For example, U.S. housing appears years away from recovering after real estate crashed in 2008. As retail importers remain tepid, they tightly control inventories, which specifically affects trans-Pacific inbound volume.
That can only change with confidence in increased retail sales in America. The world population recently exceeded 7 billion people. U.S. exports increased because of demand for agricultural products that help feed the world’s population.
One challenge carriers continue to grapple with is balancing U.S. import movements against equipment needs for exports. Carrier client relations were bruised in 2010 because of unexpected demand resulting from retailers restocking after the 2009 Great Recession.
There seems to be concern that 2012 might end up with some of the same complications. We question how carriers will balance capacity against fickle demand while providing enhanced services at acceptable rate levels. We’ll have to find ways to equitably negotiate future contracts.
Some questions we’ll have to “soul search” are, How do we negotiate multiyear contracts? What barometer do we use for rate adjustment in subsequent years? How can clients provide meaningful forecasts so carriers can better plan space availability and empty equipment? And how do we deal with minimum commitments in volatile markets while living up to commitments?