Leading shipping line, Maersk, has decided to focus on its largest volume customers, in a move that jeopardises the future of SME forwarders and leaves many shippers potentially exposed.
It is widely reported in the trade press, that small and medium-sized freight forwarders fear for their survival, following Maersk’s decision to offer them only its web-based spot market product, which is quite often unavailable on many trade lanes and routes.
Metro have secured long-term contracts with our partner carriers and shipping lines, across the three shipping alliances, but smaller forwarders, it would appear, are unable to follow suit and will face problems securing space and rates.
With Maersk, smaller forwarders can only get spot rates, which means they cannot plan a shipment in advance, because the spot quote has a very short validity. It can expire on the same day if the selected vessel runs out of space and it is not valid on the next vessel, which really restricts options for the forwarder.
While Maersk is the only carrier to focus on its biggest direct shippers (or BCO’s – beneficial cargo owners as they are termed), it is inevitable that other carriers may be considering a similar approach and the trade press is reporting feedback from sources that this is the case.
None of the shipping lines have yet made a clear statement that it planned to leave out forwarders in the future, but problems have been reported with making bookings. Smaller forwarders have been told late that there is no available space, or carriers are elevating pricing to a level that renders a shipment unviable, which raises suspicions of intention, according to trade articles.
For some medium sized forwarders, contracts have been renewed by the lines, but sometimes the rate is significantly higher, which is raising concerns that Maersk’s decision is the first step for other shipping lines to follow their strategy.
The problem for SME forwarders is that the carriers are offering bigger forwarders like Metro longer-term deals and that is immediately impacting smaller forwarders worldwide, because those kind of contracts are not now within their reach.
Without clear signals, and in a market where no shipper or forwarder can afford to shut the door on one possible carrier option, forwarders see little room to manoeuvre, but they are bracing themselves for the Maersk-type scenario they dread.
A trade source told the media this week that Maersk’s removal of contracted capacity had prompted other lines to do the same, claiming that one shipping line had “unofficially” told him that it was reducing capacity for smaller customers by 40%.
Another source concluded: “You can count main shipping lines on the fingers of your hands, but I think a few should not be able to kill thousands of freight forwarders. This is the risk.”
This is not the first time that container shipping lines have sought to cut-out freight forwarders and while previous efforts have quickly floundered, the digitalisation of the freight process, means that this time around they can offer short-term access to services via their spot rate platforms, without supporting SME forwarders.
In our view the freight forwarder is more essential than ever before, in supporting customers overcome the continuing minefield of logistical problems and in supporting carriers operate their capacity effectively.
Increasingly reliant on digital tools, carriers do not have the mindset or capability, to provide the support, feedback and service that shippers – of all sizes – need today.
We help our customers go global with ease, with advice, online services and real-time visibility of every shipment’s journey.
Shipping lines manage expensive assets and resources, that move between ports on fixed routes, but modern supply chains are fluid and need to react quickly to keep pace with demand, which is where a forwarder like Metro is invaluable in identifying requirements, finding solutions and allocating the right resource. Credibility and loyalty to our partners in the supply chain built up over decades really does make a difference.
And unlike the lines, who will favour their own services, we scan capacity opportunities globally, so that we can direct your cargo where your deadlines can be met in the most efficient and cost-effective way possible.
Our goal is to help our customers improve productivity and profitability, to enhance their bottom-line and make them more successful. Through unique initiatives and innovation.
Please contact Elliot Carlile or your usual Metro account manager, to discuss the best route to market and current fluid situation in the global logistics environment. We will have the answers that you need to plan your business continuity, in a challenging environment.