Shippers demand more say in choice of ports their carrier calls at

Shippers demand more say in choice of ports their carrier calls at

INDUSTRY executives used the TOC Europe Container Supply Chain event in Amsterdam to air their grievances that even the biggest shippers of ocean container freight have limited power to influence the choice of ports their carriers call at.

12 July 2017 - 20:00 - Update: 12 July 2017 - 23:40

Chief executive at Sea Intelligence Consulting, Lars Jensen, explained that due to the hugely diversified customer base using a single box ship, few customers had been able to influence carrier service strings.

"If it's a big ship, carriers will have 2,000 customers on board; if it's a small ship it might be 30 to 40. This simply leads you down an economic rationale where even the largest shippers in the world do not have enough volume to dictate a specific route," said Mr Jensen.

Principal consultant of the ports and logistics advisory at Copenhagen Business School, Peter de Langen, argued that shippers had far more power when they focused their efforts on hinterland transport.

"Shippers have had most effect on the inland leg of a container journey - whenever there has been a substantial shift of cargo from, say, road to barge, that has been driven by a major shipper. Where they haven't been active, these projects such as modal shift haven't met with any success," Mr de Langen was quoted as saying in a report by London's Loadstar.

"From a service provider point of view, the best gift you can get is input from your customers, and that is important in inland transport, which often accounts for as much as 90 per cent of the end-to-end transport cost," he added.

However, in some cases, ports are working to bring shippers together in an effort that resembles online crowd-sourcing to increase shipper power.

Port of Liverpool owner Peel Ports is predicating much of its ongoing development in the UK on dealing directly with shippers. Deputy chief operating officer David Huck explained that bringing shippers together could force lines to rethink their networks, and not just opt for the shortest sea route.

"What about the cargo owner, who is actually paying the bill? They are predominantly interested in the shortest inland leg, and what do I say to my customer who has 22,000 TEU and is located nine miles from Liverpool's port, but who sees all of his cargo come in through the UK's southern ports? He tells me that he hasn't enough influence with the carriers to get a service to Liverpool.

"The UK's largest scrap exporter is also located near Liverpool and has 28,000 TEU a year, but says the same," said Mr Huck. "But if I put those two together, suddenly I do have shipping lines interested. This has driven the investments at Liverpool and we are starting to change some of the dynamics of the marketplace.

"We have identified over 200 importers and exporters in our natural hinterland and brought them together, because they are saying they want other choices - 90 per cent of containers coming into the UK come in through southern ports, but 60 per cent of their contents are consumed in the north of the country.

"We have looked at it from cost, carbon and congestion perspectives, and how to redesign UK supply chains, and today we believe we have the tool kit to do that through a new deepwater terminal, Mr Huck said.

"Our 200 or so shipper partners cumulatively control 200,000 TEU, and that must be the sort of volume that can change carrier behaviour," he said.

But Mr Jensen also claimed that in the wake of the formation of the three main deep sea vessel alliances, shippers were actually being offered a greater array of port choices.

"But is that really what you are buying as a shipper? Or are you buying the ability to move cargo from port A to port B - or even better, inland point A to inland point B? What we are seeing is a drive to scale of not just ships, but networks," he said.




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