The Global Shippers Forum (GSF) has called for a manageable but rigorous set of monitoring KPIs that can provide the required level of confidence to customers that ocean shipping alliances can deliver tangible benefits in terms of reduced costs, competitive ocean rates and improved services for shippers.
GSF Secretary General, Chris Welsh recently outlined the need for shipping alliances to reach out to customers and start showing demonstrable improvements in service quality and innovative solutions for shippers.
A necessary first step is to sort out the current lack of reliability and predictability of their joint operations which is adversely affecting shippers’ maritime and logistics supply chains.
“Shipping alliances need to take responsibility for monitoring, measuring and benchmarking their performance on key trade routes to demonstrate enhanced alliance performance, and make that information transparent to regulators and their customers as evidence of their commitment to showing the pro-competition benefits of improved alliance services,” declared Welsh.
Welsh added that the first thing the alliances could do is sort out the reliability and predictability of their joint operations.
“Such confidence building measures are necessary in view of the concentrated market power of the four main alliances covering the world’s main trade lanes and smaller niche and regional liner markets which are directly or indirectly impacted by the alliances,” he said.
According to GSF, that “confidence and trust” will be withheld so long as alliance members continue to discuss, fix or agree rates or rate guidelines in conference or discussion agreements, such as the Transpacific and Inter-Asia discussion agreements.
The GSF said the alliance agreements represent a new breed of enhanced cooperation agreements in the liner shipping sector that go well beyond traditional consortia or vessel sharing agreements. While alliance members are competing with each other for cargo and market share, they have established mechanisms for sharing strategic information on costs, future capacity investment decisions, trade lane capacity deployment, port and terminal operations, and potentially even prices and surcharges in the context of conference and discussion agreements.
“The alliance lines leadership should take the ultimate confidence building step of pulling out of all conference and discussion agreements to give assurance that the exchange of sensitive information, including pricing information, on a regular basis within alliances does not lead to abuses of their market power or erect barriers to market entry,” said Welsh.