This commentary appeared in the print edition of the Jan. 6, 2020, Journal of Commerce Annual Review and Outlook.
Ocean freight has become a seller’s market. With the reduced number of carriers and those carriers aligned in a still smaller number of alliances, the options for the freight buyer are undeniably few. The impact shows itself not only in pricing but also, perhaps more importantly, in service offerings, operational execution, and the general terms of engagement between the beneficial cargo owner (BCO) and the ocean carrier.
For all but those few BCOs with very powerful volumes, the ocean carriers dictate the rules of the game, and those rules are becoming increasingly challenging for BCOs to navigate. Consider how ocean carriers responded to the tight trucker market in recent years, publishing caveats that the cargo will bear demurrage and other incidental costs in case of any difficulty for carriers to secure timely truck power. Worse, the carrier may terminate the “door” bill of lading prematurely and abandon the cargo altogether.
What’s a BCO to do?
- First and foremost, value your ocean carrier relationships. Open communication can strengthen cooperation with these essential transportation partners.
- Lose any passive approach to ocean cargo management. Being proactive matters; actively track your cargo to avoid demurrage and rail storage bills. Setting a precedent matters. Be diligent about resolving all discrepancies or failures — not just the big-ticket items.
- Recognize what performance you cannot impact and reassign those service needs. Partner with right-sized truckers that will value your business.
- Make yourself bigger! Consider joining a larger organization, like your local industry club or a shippers’ association or an industry advocacy group (or all of the above) to get a better seat at the negotiating table.
- Do not forget that you have a voice. Our industry is overseen by multiple regulatory agencies. Speak up to share your views, and help our maritime trade to thrive.