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Home News Shippers say service is worse, but the costs are higher

Shippers say service is worse, but the costs are higher

Unhappy shippers say that they are unclear what to expect from shipping lines since the Coronavirus pandemic hit the global economy as services are cancelled without consultation or understanding of the situation for shippers.

Carriers are continuing to cut services with approximately 20% of capacity on the main east/west trades having been cancelled in the third quarter, even as demand is said to be returning in some markets.

Beneficial cargo owners (BCO) are, however, unaware of when cancellations will take place until announcements are made, as there is no consultation with the carriers’ customer base, said a shippers’ organisation.

Jordi Espin, policy manager for maritime transport at the European Shippers’ Council (ESC), told Container News, “For Q3 our experience is that we do not know what to expect, since there is no trustable source for planning ahead.”

The ESC is clear that there needs to be stability in the market for all those involved within global logistics and all those involved along the supply chain should have visibility in what is clearly a volatile market.

“We understand the situation may not be stable, but it [service cuts] cannot be carried out without considering that shippers are getting less and less choice for importing and exporting goods, with still higher costs, longer transit times and no visibility on schedule reliability,” argued Espin.

Shippers have raised the issue of higher costs and a deteriorating service at a time when the carriers have again announced major service cancellations for the period starting in July up to the end of September.

A number of cancellations were announced by Maersk, Hapag-Lloyd and THE Alliance this week. The cancellations include services to the West Coast South America, Far East to Europe and South African services to the Subcontinent.

Those cancellations followed a slew of void sailings announced the week before, while the 2M alliance and THE Alliance gave notice of a slew of blank sailings in both the Far East to Europe and Transpacific services.

Meanwhile, the squeeze on capacity has allowed carriers to maintain high rates even as global demand has collapsed. Rate discipline is a new phenomenon in the container shipping industry according to one analyst who believes that when there is a significant increase in demand there is a possibility that the carriers may see that rigid stance on rates erode.

That time may come sooner on the Transpacific as US states open up their retail outlets, though consultant Jon Monroe is sceptical.

“Mall of America, the largest mall in the US opened on 10 June, but only with 150 of its 500 stores. In the meantime, a number of anchor tenants for malls are closing their stores,” said Monroe.

He added, “The volume of containers we are importing from Asia is not real demand. It is a combination of replenishment, Covid-19 products and a surge of containers for companies fearing another round of duties. Real demand will only be achieved when consumers are confident and making purchases in stores and online. By August, we may be seeing a very different scenario.”

NicK Savvides
Managing Editor

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