Live from 2010 TPM (Trans-Pacific Maritime Conference) – March 1, 2010
March 1, 2010 by 3plwire
Filed under Seafreight
So I wish I could have posted earlier, but I just managed to find some quiet time to sit down to put this together. The crowd this year is considerably larger than last year’s and when a panel or session ends it becomes almost impossible to get anything done due to all the handshaking and schmoozing going on. I actually went outside just to get some relative peace and quiet.
Anyways, everyone is abuzz over the fireworks in this afternoon’s session on “Shipper-Carrier Relations: After 2009, Where do we go from here?”. Barry Horowitz of CMS Consulting Services, LLC and JOC (Journal of Commerce) contributor introduced the 3 speakers to the panel who were Pat Moffett, VP of Global Logistics and Customs Compliance from Audiovox, Bjorn Vang Jensen (certainly the most provocative and entertaining of the three speakers), VP Global Freight and Logistics from Electrolux, and Jimmy Crabbe, VP Global Ocean Freight Services from UPS. The “panel” was basically these three gentleman slamming (mostly justifiably) the sad current state of affairs of the shipper/carrier relationship overall and blaming the carriers for their own troubles (again mostly justifiably, in my opinion).
Pat Moffett, I’m paraphrasing here, basically said the carriers were anything but stable and they put themselves in the position they are in. He said something to the effect of “the rates (meaning GRIs, ERC, etc.) are no longer being called in, they’re being mailed in”.
Bjorn Vang Jensen was particularly blunt and sharp in his criticism of the carrier community. He commented about the “unexpected surge” in volume that the carriers claimed several times in their morning presentations and basically called B.S. on the whole thing. Ever hear of a thing called Chinese New Year? It happens every year. Oh, and by the way, he said, that whole restocking of inventory? Started in October of last year – it didn’t just suddenly appear. He then went on to criticize the carriers’ woes of 30% of bookings not showing up by asking that the carriers put his 30% on their boats instead. Slow steaming as part of a green initiative? We all know it’s about saving bunker fuel costs he said. As for the argument that rates can not continue to deteriorate without a fall in service, Bjorn explained that service has never been worse and in fact rates are going up. Again I’m paraphrasing, but one of his choice quotes “we don’t like volatility any more than you do. But we are not the ones causing the volatility.” Lots of applause throughout his speech, he seemed pretty popular with the shipper attendees. He ended it by saying shippers who sign innovative contracts should be rewarded, we want the space we were promised, and we want arbitrary addons to go away. His line that drew arguably the most applause and reaction was “I’m waiting for carriers’ JBWC add-on – Just Because We Can”.
After that it was left up to Jimmy Crabbe from UPS to finish things up and I think he tried to toe a middle line, criticizing the carriers for obvious mistakes but also making clear that both sides need to work things out. He did make a point that when the bottom fell out of the market it was the carriers’ doing, not the shippers, citing examples of outside carriers offering 2-300 dollars less than contracts they had just signed. He explained that a lot of damage had been done to relationships and pleaded for stability. The one point he was sharply critical on, which I agree with, was that ocean carrier contracts are worthless. “I’ve never seen an industry where the value of a contract is worth less than in this industry.” Again, not his exact words, I’m paraphrasing. He talked about how before the ink is even dry, there are already add-ons, arbitrary charges, and other amendments that need to be filed. He ended by imploring the carriers to manage their P&L and not TEU counts. Market share seems to be the carriers’ primary objective and that is what got them into this mess in the first place.
After a couple of questions from the moderator, Barry Horowitz, he opened it up to carrier response from the audience. Bob Sappio from APL quickly took the mic and while he agreed that “carriers have acted stupidly” in the past as well as agree with some of the things being said, he strongly disagreed with the others and cited the emotion and scolding tone from the shipper community. “You’re telling me you’ve never used other carriers’ offers to drive down your rates? How many times have we been asked to participate in an electronic bid where service had no part in the offer and the only criteria was price?” Again, paraphrasing. There’s work to be done on both sides and we need to be more predictable in our contracts.
Then Caroline Becquart from MSC got up to the mic and went nuclear. She expressed surprise at the tone from the shippers to the carriers and said she was deeply offended. Fair enough, nothing wrong with that. But as she continued she basically let loose with both barrels. She accused the shippers of not knowing what they are talking about said “you don’t know anything about shipping!” which elicited quite the reaction from the crowd. She kept going, talking about the Asia to Europe trade and how they continually raise rates and customers are fine with it (?) which elicited some scattered laughter from the crowd. She then gave some career advice to the shipper community suggesting they apply for job in sales with MSC and tried to negotiate a contract. Again, this elicited quite the reaction from the crowd.
After the panel it was all anyone would talk about. So lots of fireworks here from TPM day one. I’ll have another report later tonight captioning the less exciting morning speakers, but I’ll just say that I spoke to a carrier who has been coming to TPM for years and he said that was the most entertaining, if a bit over the top, session he’d ever seen. It’s obvious that the shipper community is pissed off and not afraid at being publicly vocal about it. Some of that criticism of the carriers is well deserved, but as many at the conference have said it’s a two-way street and if we’re to fix things it has to be a joint effort on both sides. Certainly shippers have not always made things easy for the carriers, but they haven’t done themselves any favors with their behavior the past year plus.
Diane Grosso on Tue, 8th Mar 2011 9:45 am
I am with Pat I have been saying this for years. I thought when ANERA went by the way of the dinosaur the rates would be comparble to the at least the rate of inflation and would increase or stableize fairly. The contract is not worth the paper it is written on. And even if you do have mutually agreed language and you dont accept PSS EES etc you dont get the space. So the shippers are being held hostage. And as far as the european trade, stay there and don’t ship asia to north america and see if you can sustain your revenue.