Global Maritime Focus

Special Report

COMMENTARY

By Kristian Ording

Did taking these steps help build partnerships and confirm space on the ships ? Sometimes .

Over the past few years , the lack of true partnership in international container shipping has been laid bare . Carriers are quick to point fingers at shippers bailing from contracted rates to dip into spot market bookings when supply exceeds demand . Shippers point to carriers refusing bookings when the supply-demand balance tips in their favor .

Is there a solution ? Can true partnerships be built , trusted and maintained ? The answer is not always , and attempts can lead to frustration , but they are decidedly worth it for shippers trying to get the most value out of their ocean container supply chains . An anecdote helps explain . In 2014 , we had a decentralized operating environment but a centralized procurement team responsible for gathering , leveraging and contracting all requirements for 10 individual business units . Our approach was to bring historically decentralized negotiation processes together , resulting in master contracts at the corporate level featuring consistent key terms for each of the businesses — for ocean freight matters such as floating bunker , payment terms , free time , etc .

While our process was certainly more analytical and pragmatic in nature , we spent a lot of time building relationships and eventually partnerships across several carriers . This included developing a virtual quarterly business review ( QBR ) process and in-person annual reviews at the carrier headquarters in Europe and Asia to track contract progress and maintain open dialogue at senior levels .

In August 2017 , following our company ’ s merger with another large consumer package goods company , our team coordinated meetings with our top carriers and forwarders to present our integrated company but also , in the spirit of partnership , to request feedback regarding what we could be doing better as we combined our approaches .

We solicited feedback regarding our legacy request for proposals ( RFPs ), but also about contracting , key terms and post RFQ items such as allocation management , QBR cadence , etc . We even had special labels printed on Yankee Candles featuring our new company logo and the phrase “ Shoring Up the PartnerShip .”

Among other things , the carriers said that longer contracts would add value and longer , more accurate forecasting would help pre-confirm our space .

Our 2018 RFP incorporated much of what the carriers had suggested , including building a biweekly , eight-week , forward forecasting system starting with our trans-Pacific volumes that would be communicated directly to the carriers ’ origin offices .

As our businesses operated in separate ERPs , all the information had to be normalized and converted to a meaningful container forecast . Consolidating business unit container forecasts on a week , container size , lane and carrier basis took a lot of effort , but the hope was that there would be real , mutual value .

Some carriers were quick to engage with our forecasting process , every two weeks confirming or denying each updated allocation using our requested format and approach . Our forwarders and booking entities were instructed to document any booking rejection including a reason code . We also built an internal mechanism to analyze successive forecasts against previous ones but more importantly to monitor actual bookings against forecasts . This information was then included in our carrier QBRs to elevate transparency and foster trust .

Did taking these steps help build partnerships and , at the end of the day , confirm space on the ships ? Sometimes .

We built and refined the forecasting process and continued allocations during both slack and peak , lower market and higher market . However , as capacity tightened , unfortunately many of the carriers resorted to not confirming forecasts until the last minute , and in some cases either not confirming at all or accepting less bookings than forecast ( and at times even than allocated ).

In other words , we tried but didn ’ t quite get there with all our partners . Should we continue trying ? Absolutely .

Ultimately , the keys to partnership are communication and trust . The former is relatively easy to do and maintain , but the latter takes many , many years to build and can unfortunately evaporate very quickly .

That said , despite sometimes disappointing outcomes , it is still worth the effort to take the steps toward building partnerships with carriers and forwarders that can withstand the ever more frequent swings in the market . I hope shippers keep this in mind as we all gear up for the 2025 contracting cycle .

Kristian Ording is senior director of logistics at Revelyst and a former supply chain executive at Newell Brands .

email : kristian . ording @ revelyst . com

26 Journal of Commerce | December 2 , 2024 www . joc . com