International Maritime

COMMENTARY

By Jeremy Masters

New deployments of ships may be needed , particularly with Red Sea diversions extending sailings , but throwing more ships into service isn ’ t always a surefire solution for more reliable service .

Shippers with substantial cargo volumes and just-in-time ( JIT ) inventories look for an optimum mix of frequency , transit time and schedule reliability in ocean services .

The ability of carriers to deliver these in a particular trade is dependent on the amount of assets they deploy . Transit time and schedule reliability in any port pair are , however , also contingent on how many ports are in a rotation and in what order those ports are served .

Carriers have experimented in the past with high frequency services , most famously “ Daily Maersk ,” which ostensibly offered JIT shippers a daily Europe service with a fixed transit time . It was advertised as dramatically changing shipping but fell by the wayside . Today , we still have relatively high frequencies in some trades in some port pairs , but unlike the ill-fated Maersk product , there is no pretention that the client gets a fixed transit time for all sailings or that there is a uniform gap between sailings .

Variable sailing details

For Shanghai to Rotterdam , consortiums / carriers ostensibly have the following number of loops , although there is a little bit of fluidity on which loops serve which port pairs : 2M has three loops ; Mediterranean Shipping Co . runs a single loop independent of its 2M partner Maersk ; THE Alliance operates two loops ; while Ocean Alliance leads the pack with five .

Carriers ’ advertised sailing details online are variable — even within the same consortiums . Looking at sailings advertised online on Sept . 1 , transit times from Shanghai to Rotterdam varied from 34 to 56 days across all carriers / consortiums and times between sailings varied between nil ( i . e . same day ) to seven days .

2M advertised the most consistent faster transit times . Ocean Alliance obviously advertised the best frequency , with a maximum time between sailings of three days but with transit times varying between 34 and 50 days . THE Alliance showed a similar range on transit times . The result of this highly variable transit time — caused by the number of ports and their rotation in different loops — was that later sailings were frequently showing substantially earlier arrivals at destination .

How much value do carriers ’ clients , and the carriers , get from higher frequency but fluid time between sailings and highly variable transit times ?

There may be some advantage for the high-volume shipper in being able to move product off their premises more regularly , but even with more sailings , average inventory cost could go up unless faster transit time loops are prioritized . Loops with longer transit times serving more ports between origin and destination also tend to make them less reliable , particularly when there are stresses in the system and ports become congested .

All of this begs the question whether the JIT shipper and indeed all clients would be better off with less frequency in a port pair but fast , reliable sailings on those that remain .

With the shuffling of partners and MSC going their own way , we are now at a key juncture in carrier ’ s decisions on what services to deploy and how they can positively differentiate themselves from the competition .

Gemini ’ s hub-and-spoke system — operating as much as possible through owned hubs — makes fast transit times and reliability of product core features on streamlined long hauls . The court is out on how well the spokes will work .

The Premier Alliance , the residual of THEA , should be encouraged that bigger is not necessarily better , particularly in individual port pairs . They can pick their spots and provide excellent physical and customer service to maintain loyalty .

MSC will have the most ability in 2025 to design ship systems that balance cost and service strictly on client needs . They will also have the enviable advantage that they can “ turn on a sixpence ,” and this will give them an ongoing edge to take advantage of short-term opportunities .

Of the consortiums , Ocean will continue to have the biggest wealth of assets , so has a leg up in the range / capacity of products it can deploy . In deciding how they maximize that edge , they can go lean and fast on key port pairs and use their extra capacity to serve port pairs other consortiums can ’ t manage .

email : jeremy @ shippingmastershk . com

“ All of this begs the question whether the JIT shipper and , indeed all clients , would be better off with less frequency in a port pair but fast , reliable sailings on those that remain .”

www . joc . com September 23 , 2024 | Journal of Commerce 17