Commentary Trading Places

By Peter Tirschwell

Many BCOs remain stuck in a mindset of wanting to “ get back what was taken from them .”

More than a year after global health agencies declared an end to the COVID-19 pandemic and nearly three years after the peak of the supply chain impact , the scars in the ocean container world have barely begun to heal . And given that market turbulence looks set to continue with a second Trump presidency , that healing may not have an opportunity for months or years to come .

Advisors to beneficial cargo owners ( BCOs ) say mitigating future disruption requires BCOs to proactively engage with ocean carriers and forwarders , seeking to build partnerships even if past experience suggests they end in disappointment . Yet , those advisors say , many BCOs remain stuck in a mindset of wanting to “ get back what was taken from them ” during the pandemic when rates soared to historic highs .

Yet despite whatever evidence may exist of external causes of the COVID-19 supply chain crisis , some shippers , echoing politicians up to and including President Joe Biden , continue to hold a grudge against carriers to the point that they are unwilling to engage in the relationship-building that advisors say is critical to managing ocean supply chains through an era of disruption .

And that environment only looks set to continue assuming president-elect Trump makes good on threats to wage trade wars and given the possibility of further East Coast labor disruption in January .

“ The strained relationship between BCOs and ocean carriers post-pandemic has been significant , primarily due to repeated disruptions and lack of transparency throughout 2020 – 22 ,” consultant and former Walmart logistics executive Kevin Parkerson told the Journal of Commerce . “ During this period , many BCOs felt they were deprioritized as ocean carriers reallocated capacity to secure spot rates that soared due to demand and port congestion ,” Parkerson said . “ This experience created a level of distrust that BCOs have struggled to overcome , as they now view carrier partnerships with caution and sometimes skepticism .”

In the aftermath of historically high rates combined with historically poor service , and with the experience being repeated on a smaller scale in 2024 , being willing to engage with carriers is proving a tall order for many BCOs . Even when logistics teams themselves understand the value of engaging , they lack support from internal colleagues with long memories and festering resentments .

Such is the magnitude of grievance that the aim of some shippers is not just to drive rates back down to pre-pandemic levels , but to “ take revenge ” by recovering money perceived to be unjustly taken from them during the pandemic .

“ For the last couple of years , everyone kind of had 2024 and now 2025 on the calendar as a recovery year ” Parkerson said . “ In other words , the time period when you can recover or get back what you feel like was taken from you , in the days of the tens of thousands of dollar rate levels . And unfortunately , a lot of that is still the sentiment .”

The process would be easier if carriers themselves wanted to engage with customers , but even that seems to have broken down . Some carriers do wish to engage with certain customers , a trend that may pick up steam next year if the market softens under the strain of overcapacity .

For their part , carriers — or at least some of them — seem to have moved on from a prior mindset of seeking to work closely with customers . With a focus on blank sailings and a possible resurgence of slow-steaming next year to manage capacity , actions that benefit carriers at the expense of their customers , evidence of a partnership , such as quarterly business review meetings , has gone by the wayside .

But BCO advisors say that however difficult or counterintuitive it may be for shippers to engage with carriers , protecting their interests and extracting maximum value out of the containerized supply chain demands it .

“ I strongly advocate for building solid relationships with carriers and logistics service providers ,” Parkerson said . “ Cultivating strong , collaborative relationships with your carriers and logistics service providers can help mitigate some of the impacts of disruptions . While it may not eliminate challenges entirely , it can certainly soften the effects .”

Others agree . In a recent Journal of Commerce commentary , former Newell Brands logistics leader Kristian Ording described an effort to improve volume forecasts provided by carriers , only to see the relationship get undermined under the strain of tight capacity .

“ 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 ( less ) than allocated ],” he wrote .

Nevertheless , Ording said , he would still not give up on trying to strengthen partnerships with carriers when other opportunities arose .

email : peter . tirschwell @ spglobal . com

46 Journal of Commerce | November 18 , 2024 www . joc . com