Lessons Learned By Ocean Cargo Carriers This Year

Today’s news suggests that ocean cargo carriers have learned a few lessons that will improve their bottom lines. Industry analysts said several things have become clear:

*To save on ever-increasing bunker fuel costs, carriers will use “slow steaming” on major trade lanes whenever possible. At the same time, they will impose the “Bunker Adjustment Factor” (BAF) as a surcharge to mitigate sudden fluctuations in fuel rates.

*Many carriers have now grouped together on the core Asia-Europe trade to pool their largest ships into fewer services and to share costs. This was unlikely to have happened several years ago, but has been forced out of necessity.

*Carriers will make charter deals on a more short-term basis, too, as they do not want to run the risk of being in a locked-in contract when cargo demand suddenly ramps up. At the same time, cash-strapped carriers may alter this tactic somewhat by offering parts of their fleets on longer terms to generate sufficient revenue to remain operational.
* Indexed contracts will become more widespread, as both shippers and non-vessel-owning common carriers (NVOCCs) have a growing appreciation for them. That’s because indexed contracts enable carriers to differentiate themselves based on service rather than price.

While repairing their bottom lines, carriers will also seek to restore customer relationships, say analysts. Global multinationals as diverse as Western Digital, HP, Rolls Royce Marine, Johnson & Johnson, and Nokia comprise some of the most successful and demanding shippers.

By way of helping importers and exporters benchmark their performance, several carriers are encouraging constant feedback through social networks and regular surveys.

MOL (America) Inc., for example, gathers Key Performance Indicators (KPI) from its shippers in following categories: operations, customer service, and electronic data interchange (EDI). The results are available on a monthly basis. A set of goals has been established for each of these KPI in an effort to offer transparency to demonstrate the carrier’s commitment to service.

At the same time, independent market intelligence enterprises are introducing their own KPIs. For a subscription fee, shippers can engage analysts to provide them with metrics at the “container level” rather than the ship-level. These new KPIs will monitor not only the performance of the physical port-to-port shipping operation, but also the performance of commercial processes, as well as regional inland transport performance and port dwell times.

More transparency, accountability and comparability in other key aspects of container carrier performance is also being shared by shippers comprising special interest groups.

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