Ocean service as passenger plane

Ocean service as passenger plane    There's a stirring occurring among shippers to compel the liner carrier industry to truly start differentiating the service it provides to ocean shippers.
   This goes beyond adding a particular port, speeding up transit time by one day, or adding a 24-hour helpline. It gets at carriers re-imagining the way they interface with customers, the products they provide, and (let's face it, the most important aspect) how they price those products.
   If you're having trouble envisioning this reformation, think of the various carriers like passengers do the airline industry. You have your low-cost, no-frills airlines. They charge cheap, commodity-style prices, offering the same rates and services to the guy in a T-shirt and flip-flops as they would to the Sultan of Brunei.
   You have your mid-range airlines, trying to cater to a variety of customers by offering a clearly delineated set of services ' the more you pay, the better services you get, be it more legroom, a seatback TV, or real cutlery.
   Then you have your premium airlines, clearly targeting those with the highest demands on service and quality, and not undercutting themselves by selling off seats at below cost prices just to fill their planes.
   To some extent, this division already exists in the container shipping industry. Shippers know which lines they turn to if they have high-value goods that absolutely, positively need to be at their destination port on time. They also know which lines to call if their goods aren't particularly valuable or transit times aren't important, but cost is.
   What shippers are seeking is a greater variety of price points, with the service corresponding absolutely to those price points. As the system largely exists now, a shipper asked to pay 50 percent more than another for premium service doesn't get 50 percent more value, so that shipper will typically turn down the premium service and go with the commoditized rate.
   Which means that $20 shoes and $5,000 flatscreens ride side-by-side and, more or less, get the same treatment. In any other line of business, this wouldn't work. If you go to McDonald's, you don't see an $85 Wagyu filet mignon being prepared next to a Quarter Pounder. At Nobu, you don't see a $50 tuna roll being prepared next to fish sticks.
   The integrators have done a masterful job of differentiating on price points and service levels, with catchy product names that customers remember. Some carriers have dabbled with the same. But with more technological tools at their disposal than ever before ' either developed in-house or through the growing suite of functions third-party companies like GT Nexus and INTTRA are providing ' the time for excuses is running out.
   Of course, it takes two to tango. Shippers need to be armed with data and willing to share it with their carrier partners in order for those carriers to develop price points that make sense on annual service contracts. Shippers can't merely say, 'Give me a luxury price, a medium price and a bargain price.' They need to tell carriers not just what volume they expect to move, but which volume is most important, which is more delicate, which can take more time on the water ' and then allow carriers to develop price points that reflect those needs. Some shippers do this already. More need to in order for the carrier industry to overwhelmingly respond.
   Freight all kinds is a designation that should only apply to a limited percentage of a carriers' volume. But no matter the commodity, it often seems as if all freight is moving like all kinds. The way forward is for that to change.

Advertised versus actual
   A hot button issue of late has been the service reliability of ocean carriers, but another closely related aspect ' how advertised schedules vary from actual schedules ' merits some attention too.
   The transit times a carrier advertises to its customers may differ greatly from what it actually provides, and that can be a situation that vexes not only shippers, but other carriers too. The situation has been exacerbated to a degree by the industry's adoption of slow steaming measures.
   Slow steaming allows carriers more flexibility in how they serve markets ' the most notable of which is how transit times in the headhaul direction are much faster than those on the backhaul.
   But how a carrier actually operates a service in the real world is entirely up to them and their customers. And it can vary greatly from a printed or online schedule. Some carriers inevitably find that keeping rigidly to a predetermined schedule isn't their top priority.
   Issues like port delays or inclement weather can easily throw a schedule out of whack. And some shippers are fine with that, provided the freight rate is low enough to outweigh the delivery uncertainty. These shippers may find that time can be made up in other parts of its supply chain, such as the leg from port to distribution center, or from distribution center to store.
   But for most shippers, when a carrier regularly deviates from its advertised schedule, it doesn't go down too well. And with so many visibility tools at their disposal these days, it's no longer a case where shippers have to throw their hands in the air and take their carriers' words for why a vessel isn't in port when the schedule says it should be. Further ratcheting up the issue are the public proclamations by some lines about their focus on schedule integrity. It's certainly brought the issue from the back burner to the front burner this year.
   It's troubling that some carriers take the issue of keeping to advertised transit times lightly.
   An advertised transit time is one of the few genuine competitive edges carriers can use to differentiate themselves. And when a carrier is advertising one thing and delivering another (while others strive to keep to their schedules), it can skew that service differentiator to the point where shippers don't really know which carrier provides the best service. Until, that is, they find for themselves that their chosen carrier doesn't keep to the transit times they've advertised.
   Perhaps a third party clearinghouse is needed not only to show how often carriers are on-time, but also to ensure promised transit times are generally met and not just illusions dangled in front of shippers. And that carriers are called to answer when their actual transit times rarely match their advertised ones.