Shippers caution against “Hunger Games of the Sea”

While U.S. shippers may have been surprised by China’s decision to oppose the P3 Network, there had been rumblings of discontent voiced by their counterparts in Hong Kong for some time.

By ·

While U.S. shippers may have been surprised by China’s decision to oppose the P3 Network, there had been rumblings of discontent voiced by their counterparts in Hong Kong for some time.

“Shippers can never be sure whether A P Moller-Maersk, MSC and CMA CGM – the P3 Network carriers – have talked about rates or not,” notes a bulletin issued by the The Hong Kong Shippers Council early last week.

“Shippers are suspicious about whether these shipping lines are just service sharing, or consolidating all the operations,” it adds. “If they have such a big market share, they will easily come up with very unfavorable freight charges; they may even demand double freight rates during the peak seasons.”

According to the association even without “collusion,” freight rates could easily be hiked from the smaller competition pools created by the alliances. Here are two other major points directed to Hong Kong shippers:

*Negative Carrier Alliance Effect on Shippers - Increased Risk



This one is more for larger shippers. Spreading out shipments between different carriers supplies risk mitigation from cargo damage by having their cargo containers on different ships. It’s kind of like the old platitude of not having all your eggs in one basket. 

With alliances sharing ships, this strategy becomes difficult as the two carriers could easily sail the shipments together.


*Negative Carrier Alliance Effect on Shippers - Additional Fears





These fears include transit times increasing use of transhipment hubs, alliances growing to include feeder services like inland rail from hubs, powerful carriers being able to put pressure on terminal operators, and carriers having increased influence on jobs all across the supply chain.

 If the carrier alliances were to move forward as planned, it seemed to Hong Kong shippers that it would be inevitable for smaller carriers to be pushed out of the market.

 They note that the international shipping industry’s freight rates have always been volatile.

Time will tell how all the moves made by the various carriers as they fight for dominance in the “Hunger Games of the Sea,” but there’s plenty of room for speculation now, say shippers in Hong Kong.


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

Container · Freight · Ocean Carriers · Shipping · All Topics
Latest Whitepaper
The Essential Guide to High Value, Low TCO WMS on the Fast Track
A warehouse could become your weakest link if you can’t execute with speed and accuracy. Your bottom line will be negatively impacted, so will your customer’s experience, and they are only one click away from buying from your competitors!
Download Today!
From the November 2017 Logistics Management Magazine Issue
An inside look at how a large pharmaceutical firm transformed its vendor and supplier relationships into true, collaborative partnerships—and greatly strengthened its logistics and supply chain operations in the process.
34th Annual Quest for Quality Awards: 2017 Awards Dinner
Trucking Regulations: Washington U-Turns; States put hammer down
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Logistics Showcase: Rising to the same-day delivery challenge
Today’s delivery puzzles are very different than traditional DC to store or warehouse to DC puzzles. It’s not just the shorter time frame for delivery; the basic requirements are significantly different and more complex as well. In this session you'll learn how to address same day delivery challenges while also driving down costs and increasing customer satisfaction.
Register Today!
EDITORS' PICKS
2017 NASSTRAC Shipper of the Year: Mallinckrodt; Mastering and managing complexity
An inside look at how a large pharmaceutical firm transformed its vendor and supplier relationships...
2017 Alliance Awards: Recognizing outstanding supply chain partnerships
In an era where effective supply chain collaboration is both highly valued and elusive, Logistics...

26th Annual Study of Logistics and Transportation Trends: Transportation at Digital Speed
While a majority of companies strongly agree that transportation is a strategically important...
34th Annual Quest for Quality Awards: Winners Revealed
Which carriers, third-party logistics providers, and North American ports have crossed the service...