Tuesday 25th Oct 2016 - Logistics Manager

Shippers forced to source closer to home

Shortage of capacity on some major shipping routes could encourage shippers to source products closer to the final point of consumption. That’s the warning from Jean Louis Cambon, who has just taken over as chairman of the European Shipper’s Council’s Maritime Transport Council.

Cambon, who is head of Michelin’s Ocean Management Committee, said: “Uppermost in shippers’ minds, right now, is the shortage of capacity on some of the major shipping routes in the world.

“Carriers must understand that by restraining capacity below trade demand and creating cargo roll-overs, they will encourage the increasing number of shippers who want to shorten their supply-chains to shift sourcing of their products to origins closer to consumption markets, which eventually will reduce the ton/miles transported and the fleet necessary to carry them.”

“Those carriers introducing slow-steaming to reduce their own costs must understand the possible impacts this has on their customers’ supply chains: lengthening lead-times, increasing inventory cost, disorganising transhipment patterns, and making changes to schedules and port rotations with little or no warning. Carriers should pay more attention to their customers needs and take the time to learn about their customers’ businesses. That way they might focus less on chasing market share, over-ordering new ships and selling rates, and focus more on identifying and delivering the right services and improved service quality.”

Cambon wants the ESC to seek a constructive relationship with the carrier community but at the same time, argues that shippers should not leave some of current practices unchallenged.

“It is time move beyond the old cycle of boom and bust, rate volatility and instability in the liner shipping market; we all have a vested interest in the long term stability of the liner shipping sector; equally the liner shipping sector has a vested interest in the sustainable economic growth of their customers. There is still much to be done, and I look forward in playing my part in the achievement of these goals.”