With several major carriers debating mergers and others possibly being sold, the changes in tonnage, world routes and vessel-sharing alliances will be at the center of any conversation regarding container shipping in the next 12 months. What we will be witnessing are attempts by many steamship lines to revisit their approaches to better survive, and possibly thrive, in the “current world.” At a time and age where global trade growth is expected to be modest at best (probably 3 to 4 percent annually), fleet capacity and pricing strategies will undoubtedly have to be re-examined by all players in the field.
These factors alone have turned an allegedly unsophisticated business into a rather complex (and unstable) one. Exceptionally and historically low freight rates, along with constantly raising operational costs, have contributed to create somewhat hostile conditions for carriers in terms of profitability. The capital-intensive nature of our business, which demands investments to be made continually across the supply chain, needs to be sustained in the long run for the overall health of the Industry itself. That is where significant changes are needed in 2016, and it is a matter of both shippers and lines acting responsibly, together, through logic and common sense.
It is without a doubt that with so many changes coming our way in 2016, shippers will strongly rely on those providers who can offer stability, reliability and the best client services available.
The second front where massive changes are definitely required, and desired, is the quest of increasing cost-effectiveness for all land-based services. While ocean rates are extremely depressed, intermodal, port and labor costs continue to rise well above inflation rates, especially in the United States. Therefore, to effectively cope with new realities, updating old-fashioned labor practices and boosting terminal productivity through the adoption of a wider range of new technologies available will be a must.
Fabio Santucci, President, Mediterranean Shipping Co. (USA)