Supply Chain Managers Focus on Ocean Carrier Solvency as New Alliances Get Under Way

Ocean carriers are “bleeding cash” as they rush to stem the flow by aligning themselves in new alliances, says a prominent industry analyst. But will that mad dash be enough for some of the most desperate cases?

“It's a bit too early to tell,” admits Chas Deller, CEO and Chairman, of 10XOCEANSOLUTIONS, inc.

Speaking at the recently concluded “Cargo Connections Conference” organized and sponsored by the Port of New Orleans, Deller outlined a rather bleak picture for those concerned about “Ocean Carrier Solvency.”

Given the number of choices facing beneficial cargo owners (BCOs), says Deller, their best bet is to lock into service contracts early and continue to measure performance on all routes and deployments.

“The Ocean Alliance wins out with the most services in three of the seven trades,” he says. “Meanwhile, the 2M’s focus appears to be in the U.S. Gulf region with a totel of 12 inbound calls, spread fairly evenly between the six regional ports.”

Port infrastructure (and the lack thereof) was also examined by the “Ocean Carrier Solvency” panel, as BCOs search for the most efficient ocean cargo gateways as Peak Season approaches.

For Tom Perdue, Chief Commercial Officer, Ports America, that season may also bring “a perfect storm” as carriers try to synchronize calls to various terminals that may not be prepared for sudden surges in volume.

“We are entering new territory here,” he says, “and many terminal operators are concerned about the critical mass of boxes being staged at one port or another.”

Donna Lemm, Executive Vice President of National Sales, IMC Companies, LLC, echoed that concern, noting that her customers are fairly frantic about securing enough container chassis as Alliances get their acts together.

“We have been given few assurances about how many chassis will be available, and who will be charged with providing them,” she says. “BCOs are also worried about finding enough containers for outbound moves when they are most needed.”

For Edward Zaninelli, President, Griffin Creek Consulting, this problem should have never manifested, as the carriers themselves had always controlled this part of the supply chain in the past.

“But it's too late to reverse that trend,” he says. “Now the focus is being kept on keeping the ocean carriers solvent for another year, while BCOs determine who provides the most reliable schedule integrity.”

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