As the annual contract season progresses DHL has outlined its view of the future of negotiations and the necessity to understand the resetting of the supply chain with higher ocean rates and two-way commitments between shippers and carriers.
[s2If is_user_logged_in()]Speaking at the virtual Transpacific Maritime Conference 2021, Dominique von Orelli the executive VP and global head of ocean freight at DHL said that the logistics industry must learn from the past, but that all stakeholders need predictability.
“Delivering against commitments is essential,” von Orelli told the audience and, echoing AP Moller Maersk CEO ocean and logistics Vincent Clerc in saying that two-way commitments with penalties for failing to meet these commitments were critical going forward.
He went on to stress that shippers are more concerned about service than price at this time, and again harking back to Clerc’s view von Orelli added that delivering against the commitments will be essential, while “Supply chain resilience will win over the lowest cost”, he emphasised, “Cost is important when it is tied to capacity and lead times, and we must get used to this.”
Closer relationships with carriers will need to the integration of systems and closer ties and discussions, he concluded that carriers “were not proud of the current service levels,” adding that “high freight rates are OK, but the service needs to be there.”
Furthermore, von Orelli warned the carriers stressed the need for better capacity management, while also castigating some lines for “opportunistic behaviour,” which he said was “Not sustainable in the long run”.
DHL accept that the period where low rates were common is over, “Shippers are more worried about space than rates,” he reiterated, adding that the industry needs to “Totally change our mindset, low rates of the past few years will never come back, all in 12 month deals are a thing of the past, no matter what I ship.”
While DHL through von Orelli were discussing the new trading environment other shippers were adding their voice to the debate through the chat room. It was clear that shippers with smaller cargo quotas than a company of DHL’s size would have far less negotiating clout and they were adding their view.
Isabel Irizarry, of UFP International, wrote, “Right now carriers can write their own tickets on freight and still have a line of companies and cargo right behind it ready to ship. In some markets they are back to over booking and closing out sailings to catch up.”
Johnny Jeong, of Herbalife, added, “If you [carriers] are going to add some surcharge to the current rate due to the market demand, as a shipper, we understand, bluntly reject bookings and go to higher pricing from the forwarder, it’s the dead-end to a good relationship.”
While Audrey Ross, Orchard Custom Beauty, explained, “As I mentioned in previous comments – most of us prefer consistency in pricing and stability in securing bookings.”
Nick Savvides
Managing Editor
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