COPENHAGEN: March 08, 2016. The 2016 Transpacific Maritime conference was the first major industry event in my new role as the Maersk Line CCO, and proved at great opportunity to engage with customers and get a more in-depth chance to discuss issues at hand:
Reflection 1: Our customers' world is in flux
While the US economy is expected to continue its strong trend – imports are expected to grow by 3.4 percent in 2016 and exports are expected to grow by 2.3 percent – the global outlook is not positive. Shippers are genuinely concerned as they find their industry influenced by disruptive forces, their margins are under pressure and consumers less loyal than in the past. We should be mindful of these shaky fundamentals.
Reflection 2: Our customers are seeking stability
Our industry continues to struggle with significant overcapacity and low demand. Consolidation and shifting alliances is a welcome choice by carriers to drive down unit costs – but for customers the result is often a very poor service. After a tumultuous and stressful period for customers that saw four major alliances come on-line at the start of 2015, we are now seeing indications that the alliance structure will again change. Clearly, in my mind, our very fragmented industry would benefit from consolidation. There are significant efficiencies waiting to be unlocked within fixed and variable costs. In addition, shippers need stability: We have worked hard to ensure that our East-West Network (2M) remains stable – while offering a seasonal deployment that enable us to cater to customers' demand for capacity in peak seasons without disruptions.
Reflection 3: Our customers want contemporary service
The service that carriers are offering is not contemporary and 'shopping' ocean transportation today is therefore an antiquated echo of the past. We need to become easier to do business with – and provide a much better experience: Supply chain transparency – track and trace opportunities not only on reefer containers but also on dry cargo as an example – will soon be a must. Our customers expect us to significantly up our game and I could not agree more.
Reflection 4: Our customers expect benefits from SOLAS
Effective 1 July 2016, Safety of Life at Seas (SOLAS) will require that shippers of a packed container, regardless of who packed the container to verify and provide the packed container's verified gross mass. Clearly, knowing the actual weight of the cargo – as opposed to estimating the weight, which is the current practice – increases safety and efficiencies across our industry.
Also, the customer benefits of a properly implemented and enforced regulation are important to have in mind. The SOLAS initiative will avoid potential accidents in other parts of the supply chain – for example when loading and discharging of containers or during haulage.
The many talks at TPM underlined the need for being ready. If not, we will surely see delays and temporary bottlenecks to global trade. It is crucial that local authorities make available timely, aligned and clear guidelines for the implementation – and that we become better at communicating the benefits for shippers.
- Vincent Clerc is CCO at Maersk Line.