Longer-term contracts are key to stability in the container shipping industry and will help dampen volatility, according to Nicolas Sartini, Senior VP of CMA CGM, Ifw-net reports.
At Containerisation International’s 13th Annual Global Liner Shipping conference in London yesterday, Sartini (pictured) said large-sized shippers that were dominant in the industry were attracted to long-term contracts that include fixed-price rates, as they help to stabilise rates and supply and demand in the industry.
“These customers are more and more attracted to long-term commitments with reliable partners offering a global network. They realise that over a period of time, prices are stable although they can be volatile during short-term intervals.
“Basically, they are willing to contract for long-term periods.”
“Long-term contracts will see prices fixed for two or three years and this does not change until a ‘trigger’ occurs, which is agreed between the shipper and the carrier and can vary.”
He told delegates supply and demand, bunker prices, availability of containers and congestion in ports created volatility, but were factors that could be controlled.
But there were factors that couldn’t be controlled, such as the problems in the Ivory Coast that have created a trade embargo on the country, the situation in Libya with no vessels entering the country, the possible closure of the Suez Canal and the disruption in Japan.
According to Sartini, there are three tools carriers can use to minimise the impact of volatility: pricing discipline and intelligence, capacity management and a new approach towards customers.
At Containerisation International’s 13th Annual Global Liner Shipping conference in London yesterday, Sartini (pictured) said large-sized shippers that were dominant in the industry were attracted to long-term contracts that include fixed-price rates, as they help to stabilise rates and supply and demand in the industry.
“These customers are more and more attracted to long-term commitments with reliable partners offering a global network. They realise that over a period of time, prices are stable although they can be volatile during short-term intervals.
“Basically, they are willing to contract for long-term periods.”
“Long-term contracts will see prices fixed for two or three years and this does not change until a ‘trigger’ occurs, which is agreed between the shipper and the carrier and can vary.”
He told delegates supply and demand, bunker prices, availability of containers and congestion in ports created volatility, but were factors that could be controlled.
But there were factors that couldn’t be controlled, such as the problems in the Ivory Coast that have created a trade embargo on the country, the situation in Libya with no vessels entering the country, the possible closure of the Suez Canal and the disruption in Japan.
According to Sartini, there are three tools carriers can use to minimise the impact of volatility: pricing discipline and intelligence, capacity management and a new approach towards customers.