I believe there still are lessons to be learned on all sides of the supply chain. Looking back at 2010, I don’t think many people predicted the quick turnaround in freight rates and capacity issues, particularly in the trans-Pacific trade, that started in mid-January. Overall, I believe that wasn’t only healthy for the industry but also vital. Without the ability for carriers to make a decent profit, the longevity for all carriers is questionable.
I believe strongly the most important change in 2011 will involve the whole service contract negotiation process. The days of carriers and shippers or non-vessel-operating common carriers committing to large minimum quantity commitments are coming to an end – mutually. Last summer, for example, the difference in freight rates between the Fortune 500 companies and small to medium-sized NVOCCs was not far off on a port-to-port basis. From the carrier perspective, if ships were full every week, why not give the space to the highest-paying customer? From the shipper’s or NVOCC’s point of view, everyone was looking to “co-load” and buy space at a premium from whomever they could secure it, whether it was direct from a carrier or another NVOCC.
Going into 2011’s trans-Pacific service contract season, I think both sides will dramatically reduce the MQC, and the carriers’ ocean freight rates will be close to the same for all shippers and NVOCCs. Securing bookings will come down to relationships and trust that if you book the cargo, the cargo will show up for the sailing. There could be some deals made, of course, but overall, I believe the difference in freight rates per container on each ship will be minimal.
One thing is for sure: 2011 will again be full of unknowns. That’s why our industry never has a dull moment.