Consolidation market: back to the root of the problem

At present, the skyrocketing container liner market has attracted everyone's attention. This is no wonder-not only the spot market freight rates have set new highs, but the long-term contract freight rates of some routes are also climbing to historical highs. At the same time, cargo is under pressure, and ships in some major ports have to wait days or even weeks before they can berth to load and unload cargo. The scarcity of containers has made the competition for empty container resources extremely hot.

All these issues are true, and no one has objections. However, in the face of crises, we need to think about what is the source of the problem and what is only the surface of the problem.

In fact, the root of the problem lies in the mismatch between supply and demand of capacity, that is, there is not enough capacity supply to meet demand. The capacity mentioned here is a broad concept, including ships, equipment, ports, trailers, railways, etc. The reason for the serious shortage of capacity is that the container liner market has seen a completely different surge in demand. For example, in April 2020, the volume of imported containers in North America decreased by 15%, but in November 2020, the volume of imported containers increased by 29%.

From a global perspective, the container traffic volume in 2020 is expected to be the same as 2019, but the difference is that the volume in 2020 is not scattered across the months, but the volume fell sharply in the spring, and then rapidly in the second half of the year. Fill the gap in transportation volume throughout the year.

No transportation system with a relatively fixed capacity can cope with such a rapid increase in demand without causing serious problems. However, in order to avoid these problems in the future, it is not advisable to treat and meet the capacity demand in extreme situations as the transportation system planning goal. Because this means that the transportation system must have a large enough capacity buffer space to cope with such fluctuations in demand. In other words, in order to cope with the once-in-a-year demand surge, a large amount of capacity destined to be idle for a long time needs to be planned in the transportation system.

Therefore, the focus of solving the problem should be shifted to optimizing the contractual relationship between the shipper and the carrier, exploring how to enable the two parties to reach a "problem-oriented" cooperation framework, discuss and determine the priority of each issue, and jointly resolve the supply The problem of chain dilemma.

Consolidation market: back to the root of the problem

Although the current problems encountered in the logistics supply chain are difficult to solve, complaining must not solve the problem. What's more, in most cases, most of the goods are still being delivered in an orderly manner, which is marking the maturity of the shipping industry. The shipper and the carrier should build on the basic contractual relationship, understand each other and work together to overcome the current difficulties. This is the first time the container liner industry has encountered major troubles, but everything is temporary.

Freight forwarding and container liner companies are committed to making the industry more transparent, more digital, and customer-centric, solving customer pain points, improving customer experience, and making shipping schedules stable and more price predictable. This requires the joint efforts of both parties.