By Karen E. Thuermer, AJOTWith today’s economic news overall pessimistic, retailers and manufacturers are increasingly implementing immediate cost cutting measures that include a hard look at transportation and logistics costs. “It’s all about the economy,” comments J. R. (Reg) Kenney, executive vice president, DHL Global Customer Solutions, The Americas. “Across the board, customers are taking aggressive steps—with almost no tolerance for time—to reduce costs against a backdrop of reductions in their own trading activity.” Consequently, they are leaning more heavily than ever on their international freight forwarders to help do the job. “Transit times are less important,” says Matt Walker, director of International Operations at A.N. Deringer. “There’s more shopping than ever before for competitive bidding.” Customers still look to their forwarders to increase their transactional efficiency and productivity, but today, low shipping quotes reign. “Customers are inquiring more frequently about rates on their traffic lanes,” says Butch Conner, director of ocean operations at Glen Burnie, MD-based John S. Connor. While Connor reveals he has seen some rate decreases among steamship lines, most are not large and contingent on the carrier and lane. The bigger issue among ocean carriers, he says, is an effort to stabilize their rates. “This should come about because there seems to be so much tonnage being pulled out of the trades,” Conner remarks. “We have seen some of that, at least on the westbound trans-Pacific.” Meanwhile, carriers are trying to penetrate new business. As Thomas Krusin, vice president of Product Management - Ocean Freight, at Miami-headquartered Hellmann Worldwide Logistics, sees it, opportunities are very limited. “Carriers may have the market share of the business for a short time,” he says. “But customers keep shifting their business to the lowest rate carrier. When a carrier drops its rates, the business shifts again. But then another carrier drops its rates, and the business shifts again.” As a result, contracts hold little weight. “If you sign a contract with a shipping line, there’s no guarantee the rates will remain the same,” Krusin says. “Contracts today only serve as a platform in which to do business. They offer no rate guarantees.” That’s because when there’s an up tick in the market , carriers increase prices. Therefore, shippers rely more heavily on their forwarders to plan and stay on top of contracts. The task can be daunting, particularly for forwarders that have multiple shipping line contracts and many carriers charge different surcharges. Hellmann Worldwide Logistics, itself, works with 10 Tier 1 steamship lines. Of course, a steamship line’s strengths differ vastly, especially when across trade corridors, transit times, and service levels. “My advice is while it’s important for a shipper’s partner/provider to be competitive, don’t expect them to be the cheapest,” Krusin says. “At Hellmann’s we believe in long term partnerships since there’s more behind the big picture.” TREADING WATER Without a doubt, today’s economy is playing havoc across the board in every business. Its impact on ocean services can be traced to early 2008 when high volumes of exports and steady imports through the summer of 2008 strained equipment availability. “In the United States, especially the Midwest and the Ohio Valley, it was challenging to secure ocean containers without early notice,” recalls Kevin Krause, director of ocean services, AIT Worldwide. But in September and October, ocean volumes for both imports and exports began to fall, particularly for cargo coming from Asia. “These volumes have not yet rebounded, but there were signs of increased volumes in late February 2009,” he says. Meanwhile, the credit crunch in Fall 2008 saw ocean carriers, NVOCCs /freight forwarders, customers and suppliers tightening credit and sometimes revoking credit for existing customers.