The commercial and data-driven future of liner shipping Ship’s crew

By Barry Parker (gCaptain) –

On day three of the Connecticut Maritime Association’s well-attended Shipping 2023 conference, the Liner Shipping Panel comprised a panel of experts who addressed both the commercial and technical aspects of the business. During the discussion, questions arose about the future of carrier alliances, not surprising given the recent dissolution of the 2M alliance (Maersk and MSC) and the dissolution of TradeLens efforts (Maersk and IBM) to build an industry-wide blockchain platform for liner shipping.

PJ McGrath, Hapag-Lloyd’s panel member and sales representative for the North East, had clear views on how the business could develop. In a panel banter, he hypothesized whether freight owners might be willing to offer a premium for more reliable service that statistically ranges from 70% to 80%, in a way analogous to how a handful of carriers do this allows shippers to pay for guaranteed space on a ship. When the subject of alliances and ship-sharing agreements came up, he said, “You’re seeing some cracks in that model today…there have been some hints and rumors that the US may be trying to abolish alliances.”

He didn’t want to predict the legalities in either the US or the EU, but said: “I think that in five or 10 years the alliance structure will look different than it does today … and that these changes will allow certain lines to have more reliable services at a premium.” He suggested that many cargo owners could continue with the conventional model, but some (presumably those carrying higher value cargo) would pay for expedited services, albeit on smaller vessels (and therefore likely outside the alliance umbrella).

Another aspect of possible changes would be the way the alliances are set up, with McGrath pointing to previous arrangements such as the New World Alliance and the Grand Alliance where airlines operated their own services or used the best ship for the service.

Analyzing the importance, he explained that the shipping company that books the cargo may not operate the ship that accepts the cargo. This perhaps led to a more efficient and cheaper integrated service – but one where it was harder to tell one service from (another within the alliance). McGrath elaborated further and then asked a rhetorical question: “This is where we will start to see a difference… and then the market will tell us… is it time that the service is really wanted, or is it guaranteed storage space on Origin?” “

The topic of better information management ran through the entire session. Panel member John McCown, a liner shipping veteran, offered predictions of outsized profitability for liner companies in 2022, adding: “In 2023, the industry will be more profitable than it was before the pandemic…one of what you’re going to see is.” more aggressive capacity management.”

Session participants also gained some valuable insights into technical tools. Panelist Gurinder Singh, Director of Digital Insights at the recently formed ABS Wavesight, emphasized the importance of data transparency, telling the panel, “We’re really sub-optimal as an industry… as each entity has its own data sources… from a systems perspective, it’s a significant workload.”

He highlighted the ongoing digitization efforts at the Port of Singapore, which he described as showcasing the type of investment needed to bring these systems online that would bring transparency between owners, operators, ports and terminals, and service providers. Mr Singh then linked his comments to those of Hapag-Lloyd’s Mr McGrath, saying: “The reliability improvements are very much driven by commercial considerations, but at the end of the day there is still efficiencies to be gained and that is here. Hopefully the industry wants to move.”

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