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Digital solutions will save the Container shipping industry billions: Hamburg Süd COO

Frank Smet, Chief Commercial Officer at Hamburg Süd, told delegates at the keynote session of the TOC Americas Container Supply Chain conference in Cartagena recently that the only way to reverse the carrier industry’s eroding margins was to eliminate the multiple additional costs it often needlessly incurs: and the best way of achieving that was through digitisation. 

We need to take out the inefficiencies from the system says COO, Hamburg Süd. 

“We need to take out the inefficiencies from the system – and I don’t mean just squeezing the weakest link in the chain through procurement, because this doesn’t lead to acceptable returns either and cannot be a long-term strategy,” he said. For example, increased use of predictive analytics could improve vessel utilisation:  

“The common estimate is that 10% of slots on the headhaul sailings remain unfilled. The top 10 carriers have around 16m TEU capacity, so if we can reduce this to 5%, then at a conservative figure of $10 per slot you could see a combined saving of $5bn in industry savings.

Every delay, every shunt of a box to another terminal brings with it extra cost 

“The reason for the empty slots is because shipping lines have become so lenient with no-shows, which are becoming more commonplace – during the peak season no-shows can be up to 25% of a vessel’s bookings, and if all the carriers sailed with just 75% utilisation they would go belly-up,” Mr Smet added. 

The carriers’ standard response to this has been to overbook by 25-30% which leads to cargo rollovers and that creates new cost for customers, he said. 

“Every delay, every shunt of a box to another terminal brings with it extra cost: it affects the entire container supply chain because no one lives up to their commitments, and carriers are reacting by rolling out new platforms where this commitment is reintroduced with penalties, and I am convinced that this will improve utilisation.”

 

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