Capacity bottlenecks, shipment delays and congestion in the container shipping sector have now lasted for months, severely impacting shippers and forwarders. But some shippers are rethinking how, as a “shipper of choice”, they can obtain capacity commitments and work better with carriers.
In early 2020, some Beneficial Cargo Owners underestimated their capacity requirements for the year ahead (not unreasonable, given that their forecasts were made in the early stages of the pandemic when caution and pessimism were gripping markets).
From mid-2020, however, most logistics operations managers (including many Drewry customers) have struggled to secure ship space or containers for their shipments. Despite carriers returning welcome capacity to the market during 4Q20, persistent high levels of demand have increased pressure on both space and equipment and amplified the supply chain bottlenecks that pre-existed, resulting in considerable market disorder.
The current difficulties experienced by shippers can take different forms:
Learning from this, many shippers are looking to better define their volume commitment and the carriers’ capacity commitment in their next contracts and to improve the way they work with carriers, to ensure security of supply.
Our consultants are currently advising shippers on these challenges and assist them in several key areas, including:
There is no doubt that carriers now have the upper hand in the market and will be more disciplined in how they allocate contract shipper capacity this year.
The objective for some shippers this year is to become a “shipper of choice” with whom carriers will be able to work efficiently and with confidence; knowing that expected volumes are aligned with their internal capacity plans. Realistically however, higher rates on many trade lanes will be part of this shipper-of-choice equation, but only part of it.
If exporters and importers pay much higher freight rates under their current and next contracts, it is not unreasonable for them to expect to benefit from improved visibility and a more reliable service.
We're now working with some of the world's largest retailers and manufacturers helping them benchmark their ocean freight costs and bring efficiency and effectiveness to their ocean freight procurement processes.
If you would like a no obligation one-to-one call with one of our ocean freight procurement experts and learn more about how we are helping organisations like yours plan, prepare and implement their ocean freight strategy this year, contact us at firstname.lastname@example.org.