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 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.”