TCL shippers: willing to pay for service that works

By: | Issue #659 | at 08:00 AM | Channel(s): Logistics  

The Wine and Spirits Shippers Association (WSSA), which represents some 600 members, moves quite a number of reefer containers. But despite being a major player, it doesn’t always get the kind of service it wants from carriers and ports.

Part of it has to do with rigid and outdated processes exacerbated by the application of technology. “If no gen set is available for the reefer,” commented Alison Leavitt, WSSA’s managing director, “terminals will not release the container even it’s going only 15 miles.”

Truck reservation systems at ports are meant to relieve congestion but have proved to be no panacea for TCL shippers like WSSA. They are often too rigid, leaving dray drivers in the lurch if a specific container is not available for pickup and the system doesn’t allow the driver to service another container.

“Automation doesn’t solve everything,” said Leavitt, to an audience at the port of New York and New Jersey’s 17th annual Port Industry Day in early October. “Sometimes you really need to get someone on the phone to solve a problem” but that’s increasingly difficult in today’s environment.

Alison Leavitt – Wine & Spirits Shippers Assoc. managing director
Alison Leavitt – Wine & Spirits Shippers Assoc. managing director

Ocean container shipping rates have been scraping rock bottom for several years, but the financial losses being racked up by the shipping lines don’t benefit shippers, Leavitt noted. Apparently, they’re getting what they pay for. “No one wants to pay more than the next guy,” she said, “but shippers are willing to pay for service that actually works. Carriers are in a unique situation where they keep on shooting themselves in the foot and operate at terrible losses.”

Those losses, which go back to around 2008, motivated carriers to consolidate and to form new alliances, seeking economies of scale, global operations, and a solution to the capacity glut. All that has left shippers with fewer options and leading Leavitt to question whether carriers can differentiate themselves in the current environment.

She pointed to the proposed merger of Maersk and Hamburg Sud as a case in point. “Hamburg Sud is known for its service,” Leavitt said. “It’s a huge regional resource for us in South America and Oceania. Many people have been there for 25 or 30 years and really know what they’re doing.

“What happens when Big Blue takes over?” she mused. “It’s disconcerting from a shipper’s perspective.”

The smaller, more nimble carriers of the past were able to provide better service according to Leavitt. “They could hold up a ship if cargo was late or skip a port call,” she said. “Alliances have changed how carriers operate.”

The same still holds true. “We get the best service from smaller carriers,” said Leavitt. “Some top-tier carriers are unable to perform pickups and deliveries on a timely basis.”

Ports remain a potential chokepoint for cargo. The WSSA primarily uses the ports of NYNJ and Oakland and the latter port has alleviated congestion with 24-hour gates made possible by a thirty-dollar gate fee.

“Thirty dollars is a low price to pay for 24-hour gates,” said Leavitt. “It eliminated congestion in just a few months.”

Peter Buxbaum's avatar

American Journal of Transportation

More on Peter Buxbaum
Peter Buxbaum has been writing about international trade and transportation, as well as security, defense, technology, and foreign policy, for over 20 years. Besides contributing to the AJOT, Buxbaum's work has appeared in such leading publications as [em]Fortune, Forbes, Chief Executive, Computerworld, and Jane's Defence Weekly[/em]. He was educated at Columbia University.