upcoming events

Nov 2019
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Thu - 28/11/2019
Status: Active
Thu - 28/11/2019
Status: Active
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1. What do you consider the largest Risk for your company?

2. What are the Risk Mitigation Strategies you apply?



This event is open for all professionals interested or currently working in Starups in Hanoi, or supply chai professionals in Hanoi, or who are interested in looking for business collaboration for U.S. market through meeting with a delegation of Baylor University (U.S.), Executive Master Program.



Ferguson Global is seeking a Sourcing / Business Development Manager to assist in our Southeast Asia sourcing expansion. This position will report directly to our Regional Manager based in Taiwan and work closely with our staff at Ferguson Enterprises, LLC headquarters in Newport News, VA, USA.


The Project Manager (PMO) is a highly visible role that is responsible for driving the transformation activities for Singapore Replenishment Center (SRC) and 3rd party service providers’ warehouses migration from current location to a new location. This leader will lead cross-functional internal and external resources and has overall accountability of the execution and performance of projects and transformation initiatives.


Manage DC daily operation activities at warehouse facility. To ensure strict execution of the SOP and meet KPIs.

Has Container Shipping Become a Commodity?

2015-03-24 15:53:24

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There was a time when ocean carriers fashioned themselves as providers of premium, door-to-door transportation. Not anymore.
After that first flush of intermodalism in the late 1970s and early '80s, the big container lines shed their stack-train and inland transport units. More recently, they exited the chassis business and have been selling off their interest in marine terminal operations.
What's left? Huge, slow ships that travel from port to port, ferrying the containers of multiple lines in space-sharing arrangements that muddle the distinctions among nominal rivals. And, when it comes to service, conjure up that dreaded word: commodity.
As least that's what Martin Stopford thinks. Speaking at the recent TPM 2015 conference in Long Beach, sponsored by the Journal of Commerce, the director of Clarkson Research Services Ltd. wondered whether carriers have fulfilled the promise of containerization.
This year marks the 60th anniversary of the sailing of the Clifford J. Rodgers, the world’s first purpose-built container ship. One year later, trucker Malcom McLean launched the Ideal X, considered to be the first successful container-shipping venture. The technology offered the promise of total, unbroken control of a freight container across all modes.
But Stopford said today’s container lines have failed to achieve the degree of integration necessary to make that dream a reality. Granted, shippers can move their goods on a single bill of lading, but they still encounter potential glitches and delays when a box transfers from ship to train or truck.
“At the beginning of containerization, it was all about through transport,” he said. “Somehow over the years that has all but disappeared, and the industry has become commoditized.”
Today’s container-shipping product is relatively cheap, he said, but it’s neither flexible nor carbon-efficient. As ships have grown bigger, carriers have emphasized economies of scale and standardized service. The idea has been to drive down per-unit operating costs, but the strategy has also had the effect of suppressing rates. As a result, few carriers today are making money. Their margin on gross sales is just 1.5 percent, Stopford said, and their return is around 3 to 4 percent.
We already know that the big ships are no panacea for carriers’ economic woes. But Stopford doesn't think they're the issue. The most important factor in dictating carrier profitability, he said, is the quality of management.
Stopford related the history of efficiency in the liner shipping business, which turns 150 this year if you trace it back to the first long-distance commercial steamship. That’s when the SS Agamemnon was built for service between Britain and China. It was ten times bigger than a sailing ship, and ten times faster. Since that time, vessels have grown dramatically in size, to handle volumes that are greater by a factor of 500.
Throughout the years, operators worked to boost efficiency by scrutinizing every possible aspect of service. It was this intense focus on cost management, rather than the introduction of ever-larger ships, that led to better financial results, Stopford said.
Containerization allowed for a huge leap in productivity, but it also led to a loss of differentiation among carriers. At the same time, they concentrated services at a smaller number of ports that could accommodate the big ships. Shippers were left with fewer service options, longer transit times and a marked disconnect between the elements of an intermodal move.
A 1967 report by McKinsey & Co. Inc. likened the coming of containerization to the birth of automation in the car industry decades earlier. The expectation was that carriers could reduce their freight costs by more than half. But McKinsey also predicted that the technology would lead to the integration of transport from origin to destination. And that is clearly not a reality today.
“What McKinsey didn’t realize was that the business model they were predicting forced you down the road to commoditization,” Stopford said. “It’s the only way you can run these big companies.”
So who’s in charge of the total intermodal move today? Freight forwarders, said Stopford. Once limited to booking ocean freight in exchange for a paltry percentage, they’re now responsible for stitching together the various modes, and offering shippers at least the semblance of door-to-door control of freight, documentation and status information.
Maybe that’s why financial analysts today are more bullish on forwarders than carriers. Doug F. Hayes, vice president of equity research for freight transport with Morgan Stanley, told TPM that it’s a “pretty easy choice” for investors. He said the shipping lines continue to be plagued by oversupply, which will persist into 2016. (This year’s forecast is for growth of 6 percent in supply, and 4.5 percent in demand.)
Since 2009, Hayes said, the container-shipping industry has lost nearly $4bn in earnings before interest and tax (EBIT) – and that includes a positive contribution of $5bn from Maersk Line and CMA CGM, two of the financially strongest carriers in the trade.
The latest wave of space-sharing alliances, which includes Maersk’s partnership with Mediterranean Shipping Co., is intended to wrest even more efficiencies out of vessel operations. Whether they’ll succeed is “the four billion-dollar question,” said Hayes. Judging from the experience of the airline industry, the answer might well be no. Only a net reduction of the number of players will have a meaningful impact on the industry’s long-term health, he said, although the barriers to that occurring are much higher in the liner sector than in the airline business.
So we’re left with a cheap, fragmented and undifferentiated service that probably isn’t sustainable over the long run. Karl Gernandt, chairman of the board of global forwarder Kuehne & Nagel International AG, said discounts being offered to shippers today are being “subsidized to the tune of $10bn by carriers.” Modern supply chains require a higher level of reliability – not an exclusive focus on cost and economies of scale. And carriers need to be fairly compensated for their investments. Said Gernandt: “This system is not going to last long.”
Source: Supply Chain Brain