The only constant is change. As we enter 2018, it is worthwhile to consider the dramatic industry changes witnessed over a short snapshot of time. The effects of supply side overcapacity on carrier performance have precipitated the most sudden and striking wave of industry consolidation imagined. Concurrent with carrier consolidation, we witnessed a period of swift technical evolution in ship design leading to the launch of 20,000-plus-TEU ships not envisioned a decade ago. Carriers have exhibited an acute focus on the arms race for slot cost efficiency and the realignment of carrier alliances to eventuate a return to profitability, sometimes relegating service levels to a second order priority.
Overcapacity driven by large ship loops was most keenly felt on the US East Coast where we saw the rapid evolution of post-Panamax tonnage enabled by the enlarged Panama Canal.
Against this backdrop of change, we experienced the continued commoditization of ocean transportation by carriers. This trend has enabled the continued expansion of 3PLs in the trans-Pacific trade and an influx of startups focused on the digitization of shipping.
Shippers enter 2018 confronting daunting challenges placing overwhelming pressure on supply chain operations. The continued growth of e-commerce, omnichannel shoppers, and rapidly changing consumer tastes require supply chains built to be nimble, dynamic, and sufficiently resilient to pivot in real time to changing market dynamics.
In 2018, service providers will bifurcate their offerings into standard service and service differentiated products, allowing customers to tailor price and service options to meet their specific needs. The rapid innovation of new technology will continue to impact shipping. Going forward, technology will be leveraged to empower shippers and carriers to more seamlessly communicate and transact business. Shippers’ evolving needs for improved supply chain visibility and resiliency will be the catalyst for innovative technology-enabled service offerings.