Ocean Cargo: Post-pandemic strategies take hold
By Patrick Burnson
Long “the sick man” of the transportation ecosystem,
...the container-shipping industry stands on the brink of a new era of sustainable profitability. But can carriers now step off the boom-and-bust treadmill and continue to balance capacity against demand?
As the world slowly moves toward recovery, industry analysts wonder how global ocean carriers will respond to a shift from consumer spending on goods to a restored concentration on services. At the same time, experts consider how vessel operators might reverse their long legacy of unreliable schedule integrity.
Brian Nemeth, a director in the transportation and infrastructure practice at AlixPartners, a global, multi-industry consulting firm, says that due to this current environment, logistics managers may want to approach new contracts from a high-value strategic perspective this summer. “With time-sensitive shipments, they will want to lock in guarantees at the premium price,” he says. “From a tactical point-of-view, however, they can play the spot markets if they can handle the risk exposure. It’s a delicate balance this year, for sure.”
Smaller shippers may not have the volume to “segment” their loads, however, and may even spread their business through different ocean cargo gateways. “Given the congestion at ports in San Pedro Bay, we’re seeing more interest in booking freight through Mexico and Canada,” says Nemeth. “This is a trend that we expect to continue through the next Peak Season.”
Meanwhile, ocean carriers are taking all available measures to improve the speed and efficiency of cargo movement, including employing all available vessel tonnage. When demand dropped some 20% to 30% in the second quarter of 2020, carriers curtailed services and idled vessels. However, as cargo volume rose, carriers redeployed those assets as quickly as possible.