Monday, March 21, 2016

Container Alliances Offer Inconsistent Freight Services According to Shippers

Complaints of Slow Transits and Variable Performance Continue
Shipping News Feature
UK – WORLDWIDE – All may not be as well as expected as concerns the bevy of container line shipping alliances which proved so popular last year when the four ‘super alliances’ emerged after much negotiating. The sudden urge to cooperate with competitors arose from a desire to maximise use of the new breed of ultra large box vessels and to rationalise each company’s individual policy and investment. Now it seems services from one carrier to another can vary alarmingly as freight gets held up by one company, yet arrives much faster via another line, despite identical departure details.

A week or so ago we pointed out that the Global Shippers’ Forum (GSF) levelled a complaint against the alliances saying that shippers have been subjected to unwarranted disruption of services. We have spoken to various importers and highlight a typical case in point.

On the 26th January the Cosco Italy sailed from Shanghai bound for Felixstowe with an ETA of 21st February. Bad weather in the preceding week had caused severe congestion at the UK port and UASC diverted four of their ships into London Gateway which suffers far less from the vagaries of the weather. Cosco however preferred another course and omitted the UK call altogether, sailing on to Rotterdam to arrive on the 25th February 2016.

Aboard the Cosco vessel were containers for various partners in the CKYHE Alliance (K Line, Yang Ming, Hanjin and Evergreen) and all UK bound cargo was offloaded at Rotterdam with customers told that freight would be transferred onto a Yang Ming vessel, the YM Witness, due to arrive on the 4th March.

One of the customers with containers coming off the Cosco Italy was freight forwarding agent W E Deane, coincidentally near neighbours of Coscon UK, both being headquartered in Barking, Essex. Jeff Lovejoy of Deane’s takes up the story:

“We had boxes from both Cosco and Yang Ming on the Cosco Italy and were told by both that the congestion at Felixstowe meant all cargo wold transfer to the YM Witness, loading on the 4th March and due to arrive in Felixstowe the following day, which she duly did. When she arrived only the Yang Ming boxes had been loaded, not the best service but just about acceptable given the circumstances.

“Next we were informed by Cosco that their containers would arrive on the YM Worth which shipped from the Euromax Terminal in Rotterdam on the 12th March but in fact nothing was loaded. We had to await the arrival of the Munchen Bridge which finally docked in Felixstowe on the 18th March for our freight, that meant it took exactly the same amount of time (26 days) to reach the UK from Rotterdam as it had to travel from Shanghai to the Netherlands.

“Cosco are not the only ones who treat customers in this way. It is hard to understand why, given the promises of improved services and transit times, shipping lines cannot employ the services of the numerous feeder services available at what can only be said to be a minimal cost in comparison to the overall freight rate.”

We spoke to Yang Ming who assured us there was no preference given to their containers over those of their partners and that 98% of the containers off the earlier ship had been transferred onto the YM Witness. At the time Coscon UK (ships agents for Cosco) issued a statement saying:

“Due to adverse weather conditions the Cosco Italy was forced to omit Felixstowe. Ongoing weather conditions have caused serious disruption to all European schedules affecting berthing conditions and port operations. Containers will now connect to Munchen Bridge, ETA Felixstowe 17 March. We apologise for any inconvenience caused, unfortunately the situation was out of our control.”

The argument that the ocean carriers are reluctant to use feeder services can be partially explained by the feeder providers themselves. Whilst the cost of transport between the European ports is relatively low the same congestion problems which face the ocean lines affect the feeders. At Felixstowe its exposed east coast position frequently means that inclement weather can quickly generate a backlog of ships resulting in a shortage of berths for the smaller ships as well as the larger vessels.

The feeder companies are dependent on quick turn rounds to make the services viable and therefore, whilst they may be rapidly loaded, they cannot wait outside a port for days before they themselves see their ships offloaded. Shippers are looking for consistency and above all even handedness from the lines, something which they are plainly not getting at the moment. Already slow steaming has become the norm in the name of sustainability and environmental protection, bringing with it already longer transit times.

As Chris Welsh, Secretary General of the Global Shippers' Forum pointed out in his recent speech, shippers have generally backed the rise of the container line alliances and would continue to support them as long as it can be seen that there are tangible advantages to them. If however they result in restrictions and extra costs then regulations might need tightening to ensure future levels of service.