Shippers caution against “Hunger Games of the Sea”
June 23, 2014 - LM Editorial
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.
Subscribe to Logistics Management magazine
entire logistics operation. Start your FREE subscription today!