Shippers seek collaboration, not regulation, to fix supply chain

9:56pm 1st August 2021

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Further regulation of container shipping is unlikely to provide a pathway out of the current supply chain crisis, and the sector should look towards co-operation to prevent similar problems occurring in the future, according to Global Shippers’ Alliance chairman Denis Choumert.

Choumert said the outbreak of the pandemic “put the strategies and forecasts of all parties out the window”, noting that “the weak elasticity of the supply side was not able to absorb the rebound in demand from the US consumer. This led to a chain reaction of destruction of efficiency all over the supply chain”, in which problems that would normally be considered minor escalated and had impacts upstream and downstream as the system ground to a halt.

But while carriers and large forwarders had survived and thrived, for shippers – especially small and medium-sized enterprises – the import model for low-cost goods is completely unsustainable.” 

He said the market had to find ways to improve practices, especially for SMEs, which were very fragile when facing “the monsters” that are the alliances. “The solution is not breaking up the alliances, because no carrier is able to serve with good connectivity and port pairs on their own,” he acknowledged.

He called instead for greater transparency in pricing, and for surcharges for fuel and congestion to be abandoned. “The carriers have to take some risk, with contingency being built in their prices. We cannot have a situation where any disruption or minor disturbance leads to a surcharge because freight rates have been too low for them to absorb the risk.”

But shippers, too, needed to be more transparent with their demand forecasts, and use technology “to forecast better across the supply chain to prevent the risk of disturbance from mismatched supply and demand”, he said, adding: “This is the best way for the market to achieve co-operation.”

Greater adoption of enforceable contracts would also help counter uncertainty – and greater collaboration with carriers, forwarders and shippers to “look for solutions to increase the efficiency of supply chains and use scarce resources better”. 


By James Baker
Source: lloydsloadinglist.com

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