Thursday, May 21, 2015

CONTAINER LINE SERVICE, SUPPLY CHAINS

How do you manage supply chains with this kind of service?  And this is an improvement!


Carrier schedule reliability improves in April, but do shippers really care?

By Mike Wackett
05.21.2015 · Posted in Loadstar posts FavoriteLoadingAdd to favorites
MSC
Transport consultant Drewry’s Carrier Performance Insight (CPI) for April records a 4.1% improvement on the previous month in the aggregate reliability of ships on the main Asia-Europe, transpacific and transatlantic trades – but it was still a less than impressive 67.6%.
Drewry attributes the upswing to a return to “normal” operations at US west coast ports after the agreement of a new labour contract, and the bedding in of the new and upgraded vessel sharing alliances.
Simon Heaney, senior manager of supply chain research said: “Drewry expected the upturn in reliability following the end of the exceptional circumstances.”
The CPI on-time performance in April was the highest recorded since its inception in March last year when Drewry began using data from CargoSmart; but this was a low starting base reflecting how badly schedule reliability had deteriorated over past years.
Indeed, despite slow-steaming, and the ability of carriers to make up time en route, operators have shown no interest in approving the requests from masters to increase speed to achieve container terminal berthing windows, contending that the extra cost in fuel cannot be justified.
The carriers argue that shippers will not pay for schedule reliability and are simply interested in price: they point to Maersk Line’s decision to abort its own premium service due to lack of support as evidence.
At conference after conference, shippers of higher-value cargo have advocated an express service between Asia and North Europe; but the fact is there are simply not enough of these VIP cargoes to justify speeding up one string of an alliance service, even with the current cheaper cost of bunker fuel.
Nevertheless, for April, Maersk Line was the top-ranked performer with 85% of its ships arriving on time, followed by OOCL at 77% and MOL and NYK both registering 74%.
Second from bottom of the rankings was the most-profitable carrier in the first quarter of the year, in terms of operating profit margin, Wan Hai, with 51%, and the table was propped up by niche carrier PIL with only 40% of its vessels on schedule.
Interestingly, MSC, which now shares its ships with Maersk within the 2M alliance, could only manage eighth place, scoring an on-time average of 67% during April.
This variation, explained Mr Heaney, is because MSC’s published schedules tend to be less accurate than its 2M partner’s.
Nonetheless, MSC’s association with the market leader and oft-heralded “most reliable” carrier has worked wonders for its schedule integrity, given that in the past it often picked up the wooden spoon for being the lowest-ranked container line for schedule reliability.
Indeed, for many years on-time performance has been regarded as perhaps not MSC’s best selling point, figuring low in terms of its priorities; although this did not seem to hinder the carrier’s phenomenal organic growth.
Drewry’s schedule performance review is only able to track the ships that actually sail, so the blanking of sailings, some with little advance notice, could actually makes the ‘reliability’ performance of carriers worse than is stated in the CPI.