SHIPPER: OCEAN CARRIERS SHOULD ?JUST SAY NO?

SHIPPER: OCEAN CARRIERS SHOULD ôJUST SAY NOö    A logistics manager of a large U.S. produce and meat shipper said ocean carriers should “just say no” to accepting or offering rates at below operating costs.
   “There’s a lack of discipline (with pricing) from the carriers,” said Michael F. Hampel of Atlanta-based PM Global Foods at the Agriculture Ocean Transportation Coalition meeting in San Francisco Friday.
   Container rates have fallen to all-time lows across all the major trades and increasingly shippers are less concerned about pushing rates down further. “I now see reductions from the carriers that I don’t ask for,” Hampel said.
   While some shippers say they still feel some pressure from customers to reduce ocean transportation costs, most just want to focus on improving relationships with their core carriers.
   Carrier executives agree that the current pricing scenario has become damaging to the ocean shipping business.
   “We believe in partnerships and relationships,” which bring “value and benefits for both parties,” said Ed Zaninelli, vice president of the transpacific trade for OOCL (USA). “”What’s happening is that relationships are being destroyed.”
   However, with overcapacity in the liner market and slow improvement in the world economy, carrier executives expect rates to remain relatively flat through 2003.
   Many carrier executives are studying ways to reduce internal operations costs. Nick Hay, vice president of APL Ltd., outlined five strategies that carriers may take to trim their operations costs:
   * Adjust capacity according to seasonal demands.
   * Improve customer service through centralization of certain operations, such as documentation, and take advantage of lower labor costs overseas (APL is preparing to centralize its Asian documentation work in Shanghai).
   * Increase use of electronic commerce transactions with shippers.
   * Improve management of empty containers back to manufacturing markets overseas.
   As a shipper, Hampel urges carriers to get on board with e-commerce systems development if they want to continue to handle his business. Last year, PM Global Foods saved more than $100,000 in internal operations costs by using Web-based carrier systems, in addition to improving the company’s carrier relationships. “If carriers don’t have it they won’t have a contract with me in 2003,” Hampel said.