Container shipping is beginning to recover from its worst-ever recession, but shippers and carriers need to develop long-term relationships to ensure stability in rates and service, Maesk Line CEO Eivind Kolding said.
Kolding was keynote speaker Monday at the 10th annual JOC Trans-Pacific Conference.
Carriers were battered last year by what Kolding said was a 29 percent drop in rates combined with a 10 to 13 percent drop in global container volume. He said he believed estimates that container lines lost nearly $20 billion last year were "fairly accurate."
Global container volume exceeded GDP growth by 2.3-to-1 in the 1980s, 2.9-to-1 in the 1990s and 3.8-to-1 from 2000 until 2008, when the ratio turned negative for the first time. Kolding said he expects that long term, it will recover to about 2-to-1.
He said, however, that as cargo demand recovers, shippers and carriers must find ways to develop a "new, efficient, less volatile and sustainable industry."
Kolding said that requires longer-term contracts that provide shippers with rate and service stability and carriers with an opportunity to eliminate costs and waste.
One example: overbookings by shippers, which he said now total 25 to 35 percent in the trans-Pacific. He said the solution lies in improved shipper-carrier cooperation, perhaps encouraged by a combination of incentives for accurate forecasting and penalties for overbooking.
Kolding also said carriers need to increase their use of automation to reduce documentation errors and simplify shipping processes. He said the industry needs "to make it as easy to book a container online as it is to buy a book from Amazon."
Kolding was keynote speaker Monday at the 10th annual JOC Trans-Pacific Conference.
Carriers were battered last year by what Kolding said was a 29 percent drop in rates combined with a 10 to 13 percent drop in global container volume. He said he believed estimates that container lines lost nearly $20 billion last year were "fairly accurate."
Global container volume exceeded GDP growth by 2.3-to-1 in the 1980s, 2.9-to-1 in the 1990s and 3.8-to-1 from 2000 until 2008, when the ratio turned negative for the first time. Kolding said he expects that long term, it will recover to about 2-to-1.
He said, however, that as cargo demand recovers, shippers and carriers must find ways to develop a "new, efficient, less volatile and sustainable industry."
Kolding said that requires longer-term contracts that provide shippers with rate and service stability and carriers with an opportunity to eliminate costs and waste.
One example: overbookings by shippers, which he said now total 25 to 35 percent in the trans-Pacific. He said the solution lies in improved shipper-carrier cooperation, perhaps encouraged by a combination of incentives for accurate forecasting and penalties for overbooking.
Kolding also said carriers need to increase their use of automation to reduce documentation errors and simplify shipping processes. He said the industry needs "to make it as easy to book a container online as it is to buy a book from Amazon."
