Conquering the high seas: What’s shaking the global liner shipping industry?

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Massive ships. Slow steaming. Alliances and consolidation. Rules for container traffic between Europe and Asia are being rewritten and this has had profound implications for West European terminals: Supply fluctuations have resulted in a fragmented terminal capacity. While container terminal operators certainly feel the pressure, freight forwarders and the shipping lines themselves have a few planning puzzles to sort out on their own.

Make way for the colossus of the seas

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Graph 1. Capacity of container ships handled in 2014

In 2014, 39% of all container ships travelling worldwide had capacities of over 14,000 TEUs and the number of megaships continues to grow. This means that major trade arteries (such as the Suez Canal) are racing against the clock to let ships move from one ocean to the other.

Last month we looked at this trend from the terminal operators’ point of view and how it causes planning headaches at multiple points of a container terminal. Big carriers have their own share of new planning puzzles; they need to figure out the best way to:

  • Plan 14,000 units on a single ship adhering to all cargo specifications and constraints
  • Minimize the number of unit moves during a call port
  • Optimally reposition empty container units in the supply chain

With small container ships now a disappearing minority (18% of all container ships), shipping lines are looking for solutions to plan and optimize the ultra-large vessels.

Mass consolidation

VSAs or vessel-sharing agreements are also on the rise. In fact, the top 16 container shipping lines can now be counted as 4 huge service providers (see graph 2).

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Graph 2. Shipping lines alliances

As you can imagine, alliances between two, three or more competitors results in even more difficulties.  Each provider still has to adhere to contractual commitments and customer service level agreements (SLAs), so sharing a vessel with another shipping line means obeying constraints of two sets of customer SLAs.

For example, imagine that your priority is that your customer’s 200 containers arrive on time in Belgium, while the partnering shipping line has to deliver to the UK as soon as possible. Both shipments are urgent but which should be treated as the higher priority? Should they be put on the same ship and can both shipments make it on time if combined?

With many other conflicting goals, it takes more than manual planning to satisfy both parties. Smarter voyage planning and optimization will boost the shared and individual KPIs of the partnering shipping lines. Find out more.

As ports get deeper, port calls get fewer

Naturally, the first two trends result in a rather unsurprising third one – bigger ships call at container ports less frequently.

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Graph 3. Decrease in port calls for big ships since 2009

As Graph 3 shows, the number of port calls in 2014 was the lowest in the past 10 years – more than 50% decline since 2009. While this represents a significant saving on port call charges (which start at €150,000 per call), the requirement for inland transportation planning rises up sharply. With more units to be de-consolidated at the terminal and transported to their end destinations, the question remains: How to optimize hinterland logistics while making the best use of barge, rail and truck operations? Are planners empowered with the best insights to deliver the best customer service at the lowest total cost?

Conquering the high seas…

17th-annual -global-liner-shipping conferenceThese trends, along with how to overcome the challenges they present to carriers and freight forwarders, are among the key points Quintiq COO, Arjen Heeres, will cover in his presentation at the 17th Global Liner Shipping Conference in Hamburg on April 21 and 22.

Arjen’s keynote ‘Planning and optimization technology as a distinguishing factor’ will focus on:

  • Why visibility in the global logistics network is not enough
  • How to strengthen your competitive edge with smart planning and optimization
  • Breakthrough innovations that set companies apart

Register and book a 1:1 consultation with Arjen at the 17th Global Liner Shipping Conference.

Follow #GLS2015 on Twitter to view the latest updates from the conference.

External reference:

“Alliantievorming leidt tot uitdagingen voor terminals”, Nieuwsblad Transport, pages 10-11, Print Issue 14-20 January 2015, http://www.nieuwsbladtransport.nl/

CATEGORY

Transport & Logistics

AUTHOR

Hristina Stefanova.

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Hristina Stefanova

About Hristina Stefanova

My obsession with Scrabble and puzzles brought me to the fascinating world of Quintiq. Joining the company “connected the dots” between my enthusiasm for marketing, interest in operations management, and background in maths and programming. As a marketing executive in the Logistics team, I make sure businesses with logistics operations are aware of Quintiq and our unique approach to solving their planning puzzles. Outside the office, I enjoy mountain hiking, rollerblading, loud music and Mediterranean cuisine.