Questions confront our industry as we begin 2011. Will global trade growth maintain its upward trajectory? Will vessel capacity and equipment be sufficient to meet demand? Will service levels improve? The answers, not yet clear, should tell a great deal about the year ahead.
But there’s a more compelling question, one that holds the key to our immediate future: Have shippers and ocean carriers learned the lessons of the recent past? If they have, we can build momentum and continue the march back from 2009’s financial disaster. If they haven’t, expect renewed volatility in the market.
Because the industry lost $20 billion in 2009, it found a measure of self-discipline in 2010. Individual carriers were better at matching their deployed capacity to customer needs. Profitability became more important than market share. Reckless spending sprees fueled by easy money stopped.
The risk now is short-term memory loss. If carriers and shippers forget the lessons of the crisis, they’ll forsake the building blocks of recovery. That could hasten a return to demand and capacity imbalances and the market gyrations that characterized the past decade.
The old ways don’t work so well. The constant chasing of the lowest available rates in the spot market by shippers, for example, produced winners and losers but did little to modernize supply chain management, level out cyclical market swings or enhance rate predictability.
Shippers and members of the Transpacific Stabilization Agreement and Westbound Transpacific Stabilization Agreement, with the encouragement of the Federal Maritime Commission, began to meet in forums designed to address mutual concerns, including equipment and space availability, booking practices and service reliability.
This was a fitting outcome of the recovery of the container shipping industry. But if we ignore all that we learned over the past two years, it won’t be a lasting legacy. We’ll revert back to destructive old habits, and that would be an opportunity lost.