Much as air travelers can buy tickets from one airline but fly on a partner carrier, so can ocean cargo booked with one steamship line travel on vessels owned by another.

That's what can happen when ocean carriers belong to "alliances" that share ships, shoreside facilities, equipment such as containers and chassis, and information. Unless specifically prohibited by the shipper, containers booked with one alliance member may be loaded on board a ship owned by another.

For the most part, alliances benefit both carrier and customer. Each alliance member contributes a few ships to the group, a move that slashes operating costs in comparison to going it alone. And because the alliance as a whole can field more ships than any one carrier could afford to do on its own, all members are able to offer more frequent sailings and increased capacity.

But there is a down side: Now that so many shipping lines are sharing vessels (and thus itineraries, equipment, and space) it's a challenge for shippers to identify who's best at moving which containers where.

"Ocean carrier services are becoming ever more commoditized," says Mark Kadar, director of Mercer Management Consulting's transportation group in Boston, Mass. "The alliance system has made the carriers difficult to distinguish from one another," agrees Barry Horowitz, principal of transportation consultants CMS Consulting Services LLC of Portland, Ore. "It may be the carriers' single greatest problem."

When schedules, transit times, and space availability are more or less equal, how do shippers decide among seemingly undifferentiated carriers? Their challenge is to sort truth from half-truth and to sift out the data that's relevant to their specific needs. Of course traditional criteria, such as pricing and on-time delivery, still play a role in the selection process. Ultimately, though, smart transportation buyers are choosing the carriers that best fit with their overall supply chain needs, for today and tomorrow.

The first step in choosing an ocean carrier is to appoint a carrier-selection team. Shippers that have adopted a long-range, supply chain outlook have had to change the makeup of those teams. At Eastman Kodak, for example, that group has broadened beyond procurement and logistics to include representatives from demand and supply planning as well as from manufacturing and customer service, depending on the type of cargo involved. "It's more of a cross-functional team now as we focus on integration of our supply chain," says David Wilson, director of global logistics at the Rochester, N.Y.-based company.

Once the team is in place, many shippers develop and issue a request for proposal (RFP). There has been a marked increase in recent years in the number of formal RFPs issued by shippers, says Jack Opet, director of marketing and sales support at Oakland, Calif.-based ocean carrier APL. Shippers typically use RFPs to choose three to five "core carriers" to cover all the ports and trade lanes in which they move cargo. (For more on ocean carrier RFPs, see the sidebar on page 54.)

After narrowing down the field, large shippers usually conduct simultaneous contract negotiations with multiple ocean carriers. Prior to the Ocean Shipping reform Act (OSRA) of 1998, shippers had to negotiate with ocean carrier conferences—rate-setting groups that determined pricing and operating rules for member carriers. Since then, shippers have been free to forge confidential contracts with individual carriers. OSRA also allowed for customization in those relationships, which has led to more complex discussions about the role of an individual carrier in the shipper's supply chain.

Small shippers—those moving fewer than 100 containers a year—often negotiate through shippers' associations. Membership in such groups, which leverage small shippers' collective shipment volumes, has grown by more than 10 percent in recent years, says Bill Clark, executive director of the American Institute for Shippers' Associations in Washington, D.C.

Nowadays when shippers evaluate carriers, they're likely to give more weight to areas where alliance members can differentiate themselves. Look at how the major lines promote themselves, and it's evident that they are focusing on those same areas. Every steamship company, it seems, emphasizes customer service with a personal touch, end-to-end logistics capability, and advanced "e-shipping." Let's take a closer look at those three subjects:

Customer service. Shippers want outstanding customer service, and ocean carriers' ads trumpet the "personalized" attention they provide. But although overall service levels have improved since the days of carrier conferences, customer service isn't always hitting high notes. "Ocean carriers are using more call centers where the standard of communication and the knowledge base are quite poor," says John Fossey, a director at Drewry Shipping Consultants Ltd. in London. Adds Manny Hontoria, a principal in Mercer Management Consulting's transportation group: "One of the complaints I hear is about leaving a voice mail [when there's a problem] and praying that someone calls back." Hontoria notes that some carriers are starting to hire account managers who can handle most of a customer's needs, but adds that in some cases they are little more than salespeople.

If ocean carriers want to satisfy shippers, Fossey says, their focus should lie not so much in carrying a box well but in being continually responsive and making the shipping process easy for their customers. That means efficiently handling everything from documentation processing to door-to-door delivery, from dealing with trade-security rules to advising on hazardous cargo.

It also requires proactively responding to problems when they arise. Storms will spring up in the North Atlantic, dock strikes will happen, and terrorism warnings will trigger alerts; smart shippers will be quick to spot the carriers that develop the best responses to those challenges.

End-to-end service offerings. Carriers such as OOCL, Maersk Sealand, APL, P&O Nedlloyd, and NYK, to name just a few, aggressively promote their ability to provide logistics services and manage shipments from initial order all the way through to final delivery. They do it not only to help generate more cargo for their ships, but also to get closer to shippers' total supply chain needs.

Currently, carriers with logistics operations tend to run them as separate businesses, but that's beginning to change. "Over the next five years, our ocean carrier and logistics services will become more tightly coupled," says APL's Opet.

Despite the availability of comprehensive logistics and transportation services, leading shippers won't rely on a single carrier for all of their distribution requirements. The more complex their intermodal and inland shipping requirements, the more that's true. Yet they won't reject end-to-end offerings out of hand. The ball now lies in the carriers' court: Shippers can certainly meet their door-to-door needs in many ways, so it's incumbent on ocean carriers to offer better alternatives.

"E-shipping." Top shippers pay attention to the quality of information service they receive from ocean carriers. The big carriers offer Web-based tools for tracking and tracing containers, validating paperwork, booking shipments, reporting exceptions, and more. Much of that information is available for shippers to self-service online. Many shippers like to use carriers that collaborate with third-party Internet portals, including INTTRA, CargoSmart, and GTN, to automate those transactions as well as billing and RFP management.

For many shippers—particularly those running just-in-time operations—real-time uploads are far superior to more-typical daily batch updates. Kodak's Wilson, for one, places a premium on the timeliness of the data on a carrier's Web site. He also finds merit in sites that are easy to use and are consistently structured worldwide. Shippers also look for carriers that can continue to track containers after they have left their purview and embarked on inland journeys.

Despite these technological advances, there is plenty of room for improvement. There can be unexpected delays, for example, if carriers' and shippers' data formats are considerably different. And problems can arise if there are discrepancies between the contract rates and effective dates that carriers file with the Federal Maritime Commission and the information on the Internet portals that shippers use for contract management.

Even though liner alliances make it more difficult to discern the distinctions between individual carriers, shippers must make the effort to understand what makes each carrier unique. As they shift their focus from discrete transportation transactions to supply chain performance, moreover, shippers will want to judge carriers on how well they support overall supply chain management and cost objectives.

That may require judging carriers on criteria that are difficult to quantify. For example, how well a carrier manages security and keeps its customers' cargo moving has become an important consideration for many shippers. And shippers need to know that the carrier they choose is prepared to handle an emergency, such as a terrorist attack.

Less tangible, but a key consideration nevertheless, is the value that shippers place on long-term relationships. "The carriers know our patterns, and we know the trade lanes they're strong in," says Jim Molzon, vice president of sourcing and logistics at Solectron, the Milpitas, Calif.-based electronics manufacturer.

Given a dynamic ocean marketplace, moreover, shippers will need to regularly refine their evaluation criteria if they are to more effectively align their carriers with their companies' supply chain improvement initiatives. Says Andrew Penfold, managing director of London-based Ocean Shipping Consultants: "There is no shortcut to evaluating the offerings of ocean carriers."