 Forwarders see ocean unreliability eroding carrier threat |
Source |
American Shipper |
Post Date |
11/10/2020 |
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The business approach of asset-owning ocean carriers will always be heavily focused on filling vessels rather than providing the service levels required to control an -to- supply chain process, according to Thorsten Meincke, board member for air and ocean freight at DB Schenker.
¡°If you are an asset owner, your philosophy will always be driven by utilizing your asset,¡± Meincke told JOC.com in an interview. ¡°When you are a [non-asset-based] logistics provider, your philosophy will always be to have the best possible service for the customer. If you don¡¯t own the asset, you can do that.¡±
The competitive dynamic between forwarders and carriers is changing as shipping lines try to capture more direct control of their cargo bookings and offer services that are directly competitive with those of their forwarder customers. Maersk is leading the ge with its integrated container logistics strategy, and other carriers with significant in-house forwarding activity, such as CMA CGM and Cosco Shipping, are taking a similar approach.
However, Meincke said he does not see such an approach from carriers as a threat because of the inexorable pressure on vessel operators to keep their ships full.
¡°If a carrier buys a forwarder, that does not change the game,¡± he said. ¡°If you try to do it all at once, you will struggle between filling up assets and providing services. To fill a 20,000 TEU ship that is running every week needs massive volume. As an asset owner, you can always provide greater access to your assets for large customers, but you cannot do that for every customer. This is where I believe the logistics market is moving forward.¡±
Forwarders retain key role in ocean freight
Despite carriers securing a significant share of their business directly from beneficial cargo owners (BCOs), Meincke said forwarders remained a key part of the -to- process.
¡°For decades, 50 percent of the large and regular business has been on direct contract from ocean carriers,¡± he told JOC.com. ¡°We should not look at who is closing an ocean contract with a carrier, we should look at who is managing the process. The majority of that ocean direct business is managed by logistics companies like ours. If one carrier cannot do it because [it] is full, we find another carrier.¡±
Even so, DB Schenker will not be booking with Maersk after the forwarder drew a public line under its relationship with the world¡¯s largest container shipping company in mid-October. When Maersk announced it was pulling Damco customers into its logistics integrator network, DB Schenker issued a statement aimed at Damco shippers offering a ¡°stability package¡± to take over short-term service agreements of up to two months under the same conditions as agreed to with Damco.
The decision to cut ties with Maersk was made early this year over concerns that the company was becoming more of a competitor than a capacity vor. If there was any uncertainty about that being the correct strategy, all doubts were erased when Damco¡¯s customers were brought under the Maersk umbrella, Meincke explained.
¡°We are constantly looking at our supplier portfolio, and we recognized a long time ago that there was one carrier having more of a competition role than a supplier role, and with the latest announcement [on Damco], there is no question about it,¡± he said.
The decision to shift volume from Maersk was made before the COVID-19 pandemic, and by May, most of DB Schenker¡¯s container volume had been moved to other carriers. Meincke said cutting Maersk from its network was possible because of the alliance structure that allowed a forwarder to offer services across several carriers.
¡°Most carriers have forwarding activity, but they all separate that. We see Maersk differently,¡± Meincke said. ¡°You don¡¯t need to work with all of them, especially when one has a very clear strategy
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