The relief in 2010 from the disastrous impact of 2009 came at a price — the further widening of the gap in understanding between shippers and ocean carriers. Following on the heels of the withdrawal of the EU antitrust exemption in October 2008, others have jumped on the bandwagon, claiming carriers’ desperate attempts at returning to profitability are disguised attempts to unfairly exploit shippers.
U.S. Sen. Blanche Lincoln, D-Neb., wrote to the Federal Maritime Commission last year about concerns that “service problems threaten agriculture (exporters’) ability to expand overseas sales and boost income.” There were similar sentiments in Europe, Asia and among U.S. retailers.
The underlying reason for the gap in understanding is the lack of comprehension of carrier costs. The carriers themselves have done a poor job in fostering understanding of their costs.
Why should we not have a Shipping Cost Adjustment Factor akin to the cost index for railroads at the Surface Transportation Board? On the revenue side, published indices such as the Shanghai Shipping Index provide a barometer for current market rates. If a respected cost index is available that goes somewhat beyond the Rail Cost Adjustment Factors and publishes in absolute numbers the cost of moving containers in specified trade lanes, over a period of time the gap in understanding could be narrowed.
FMC Commissioner Rebecca Dye’s final report into vessel capacity and equipment availability is being eagerly awaited. The FMC could very well be the voice of reason by creating mutual Key Performance Indicators and processes with regular reviews that allow parties to concentrate on their core business and their value to each other.
If 2011 could usher in a period of reconciliation and mutual understanding, the equilibrium in supply and demand that is the cornerstone of international trade could be assured.