The Liner Shipping panel at the well-attended Connecticut Maritime Association’s Shipping 2023 conference on Day 3 included professionals with knowledge of both the commercial and technical facets of the industry. Questions about the future of carrier alliances surfaced throughout the debate, which was not unexpected given the recent dissolution of the 2M Alliance (Maersk and MSC) and the failure of the TradeLens initiative (Maersk and IBM) to develop an industry-wide blockchain platform for liner shipping.
A wild guess
A panellist and Hapag-Lloyd sales representative for the Northeast, PJ McGrath, had strong opinions about the direction the company should take. He made a wild guess during one round of panel banter about whether cargo owners could be ready to pay more for service that is statistically more dependable (70–80%), similar to how some carriers allow shippers to pay extra for guaranteed space on a ship. When the subject turned to alliances and vessel-sharing agreements, he said: “you are seeing some cracks in that model today… there have been some hints and rumblings that the U.S. might take a look at doing away with alliances.”
He did not want to predict the legalities in either the U.S. or the E.U., but said: “I do think that the way that the alliance structure looks will be different in five or ten years than it looks today… and that those changes will allow certain lines to put in more reliable services, at a premium.”
Improvements to alliance structures
He predicted that while many cargo owners would likely stick with the normal model and move cargo of lower value, others (mainly those transferring a cargo of higher value) would pay for faster services using smaller ships (and therefore, likely, outside the alliance umbrella).
McGrath mentions past agreements like the New World Alliance and the Grand Alliance, where carriers operated their services or utilised the best ship for the service, as examples of possible improvements to alliance structures.
He clarified the idea by pointing out that the line that booked the cargo might not be in charge of the ship taking it. Perhaps as a result, integrated services were more effective and affordable, but they also became more difficult to identify from one another.
Explaining further, and following up with a rhetorical question, McGrath said, “That’s where we will start to see a difference… and then the market will tell us… is it on-time is that service that the customers will want, or whether it’s guaranteed space on origin?”
Aggressive management
The theme of better information management permeated throughout the session. Panel member John McCown, a liner side veteran, offered predictions on the out-sized profitability of liner companies in 2022, and added: “In 2023, the industry will have a profit greater than one that it’s had before the pandemic… one of the things you will see is more aggressive management of capacity.”
Session attendees also gained some valuable insights into technical tools. Panel member Gurinder Singh, Director of Digital Insights for the recently formed ABS Wavesight, emphasized the importance of data transparency, telling the panel “we are sub-optimized as an industry… with each entity having its data sources… from a system perspective, there is a significant amount of work to do.”
He highlighted digitalization efforts underway at the Port of Singapore, which he described as showcasing the kind of investment that’s needed, to bring those systems online, which would bring transparency between owners, operators, ports and terminals, and service providers. Mr Singh then tied his remarks to those of Hapag-Lloyd’s Mr McGrath, saying: “The reliability improvements are very much dictated by commercial considerations but, at the end of the day, there is still efficiency to be gained, and that’s here. Hopefully, the industry is looking to move.”
Did you subscribe to our newsletter?
It’s free! Click here to subscribe!
Source: GCaptain
