The deployment of mega container ships on major trade lanes is a recent trend within the ocean shipping industry. To achieve maximum operation of their larger vessels, carriers have entered obliging global alliances on prearranged routes, resulting in new discharge patterns at U.S. ports. Standardizing process performance through supply chain integration and removing disorganization will be needed to stabilize the international shipping market. Read this article about carrier differentiation at seaports.
carrier differentiation at seaports: Global carrier alliances began during the period of 1995/96 in both the global Transpacific and Asia/Europe networks. Alliances have gone by different names since their introduction to major trade lanes in the mid-1990s. The growth of ocean carrier alliances continues despite differing organizational objectives and level of mutual trust between carriers and intra-alliance competition. There are three major East-West shipping alliances that control the majority of container freight transportation between the U.S., Europe, and Asia. In the past, Liner Shipping Conferences, composed of member carriers in different sea lanes, were utilized to stabilize rates, control capacity. The Conference system largely disappeared in major east-west trade lanes in the twenty-first century. VSAs typically were executed based on geographic coverage, port rotation, sailing frequency, the vessels in service.
Airline alliances vs. ocean alliances
carrier differentiation at seaports: Airline alliances were driven by the need to reach a broader market while constrained by the limits of the airline regulatory framework. The use of a common brand, a uniform service standard, and an identifiable asset can provide substantial integration of services. Ocean alliances, notably in the sheer scale of volume in the discharge of containers vs. passengers, ocean carriers can adopt some of the same benefits in terms of SCI. For customers, air service starts with getting to the airport and ends after discharge, baggage handling. For the air industry, the customer is the cargo. The increased chance for service failure reflects badly on the carriers, alliances, and overseas transit intermediaries, as well as the onshore carriers. Ocean carriers need to have marshaling yards and terminal gate operations that are part of the port terminal.
Supply chain improvement efforts
carrier differentiation at seaports: Alliances have come under severe criticism from shippers for the poor quality of service, disruptions to supply chains through the bunching of vessels. Efforts at enhancing SCI between ocean carriers and their stakeholders have been researched by Lam and Voorde. Tighter integration with prominent supply chains could provide a source of value added for ocean carriers. Rates offered to cargo proffered by BCOs and NVOs should cover costs as well as provide a reasonable rate of return to encourage investment. The fact that NVOs and other third parties are proxies for cargo owners reminds us that they must make profits as well. The business has converted from a two-echelon to a three-echelon model, and the BCOs and ocean carriers now have the problem.
carrier differentiation at seaports: Current and proposed models
There is a segment of shippers willing to pay for additional services such as faster transit times. With a morass of individually negotiated arrangements for performance, there is no common basis for choosing consolidated flows. While some carriers select common landside service providers, this is complicated due to long term contractual obligations. For on- terminal rail operations, improvement can be achieved, as shown in Fig. 1b. The MTO may contract this work on the VSA’s behalf if only to provide a common billing platform between alliance partners and marine terminal service providers.