Maik Breckwoldt, Corporate Vice President, Logistics, Leggett & Platt

https://www.leggett.com
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Maik Breckwoldt

There is no doubt the shipping industry will continue to face challenges in 2017. After all, the logistics world is ever changing. The effect of Hanjin’s bankruptcy, carriers’ bleak financials, mergers, acquisitions, and the formation of three new vessel-sharing alliances have sent ripples through the shipping world. How we address and manage these changes are our biggest challenges.

Our two major changes and concerns for 2017 will be the carrier’s financial stability and the new alliances that have been formed. Will there be another bankruptcy this year? What will the services look like this year? How we better manage our carrier selections based on their finances along with new carrier mergers and acquisitions that have formed the three new alliances will be critical.

Despite their best efforts to address the overcapacity created by larger ships, vessel operators have yet to find a way to manage excess space adequately, and are still struggling to capture revenue and restore shareholder value. Although the industry has recently faced a space crunch brought on by Hanjin’s bankruptcy, space should be readily available for 2017, creating concerns on the carriers’ financial stability.

If after May 1, rates fall again below vessel operators’ profit margins, could we see another bankruptcy or merger? Can the carriers learn to manage their capacity to stabilize the market?

These financial concerns along with the new alliances and service strings will make our carrier selection more critical and difficult to manage. How we research carrier financials and new services is key. Shippers will need to spread their volumes out among the alliances and be more cognitive of the carriers they choose to partner with.