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New ocean carrier alliances to “shake things up”?

GENEVA/BRUSSELS: March 22, 2017. The impending operation of three ocean box alliances on April 01 has prompted fears of capacity constraints and rising prices according to FIATA and CLECAT, two organizations representing the interests of over one million forwarders and logisticians worldwide.

In a review of the services provided by 2M, Ocean Alliance and THE Alliance, Drewry Maritime said that while there is plenty of coverage and overlap between the busiest trading regions, it acknowledged there are "some areas with limited competition...which will hopefully change in time".

CLECAT and FIATA claim this isn't happening as maritime capacity to Asia has "decreased dramatically" despite a rise in demand, with shippers having to wait for weeks for availability.

"We witness an increase of vessels being taken out of circulation, which in our opinion contradicts the current increase in demand," said Jens Roemer, chairman of the FIATA Working Group Sea. "On some routes shipping lines only accept bookings for sailings as far away as in four weeks' time. Furthermore, it has been extremely difficult for the industry to deal with blank sailings."

MSCBoth organizations also question the application and justification of a 'Peak Season Surcharge' on existing contracts: "Surcharges by definition relate to sudden changes in variable costs incurred by carriers, such as bunker prices, port congestion and currency fluctuations. FIATA and CLECAT question whether such changes in the variable external costs have actually occurred in this situation."

Robert Keen, chairman of FIATA's Multimodal Transport Institute added it was time freight forwarders stopped accepting at face value what he called "opaque and unjustified surcharges".

"In the past, we have seen Administration Fees, Peak Season Surcharges, or ISPS-add on surcharges. Of late, we have had examples of container cleaning fees and container sealing fees, without any evidence of the expense actually being incurred," he claimed.

Carlos Hernández, co-founder of Miami-based online forwarder iContainers, also thinks the new shipping alliances will lead to a shortage of options for freight forwarders.

"Given the sharing of vessels and routes, this basically translates into multiple carriers having the exact same schedule. Instead of having seven or eight carriers offering a sailing of their own, we will perhaps only be getting three," he explained.

"Generally, this means having fewer alternatives when customers need to meet certain deadlines, which can be rather frustrating."

One capacity option for iContainers and its peers on trades between the Americas is a greater reliance on small niche carriers: "Some of them may hope to increase market shares or possibly even add to their service portfolios - depending on the services the big alliances are offering in the area," said Hernández.

Commenting on the impact of the new alliances on ocean trades he added: "Hopefully, this will shake things up a little and we can see a healthier industry again. One where good service forms an integral part of shipping lines' attraction and not just a component of an ocean freight quote."

Meanwhile the lack of capacity is causing a rise in airfreight demand according to IAG Cargo Commercial director David Shepherd: "This spike in demand comes at a time when constraints on sea freight capacity across Asia Pacific routes have been widely reported. While this boost is likely to deliver a short term positive impact, we believe our network makes us well placed to demonstrate the long term value air cargo can offer to forwarders."

IAG Cargo said its cargo volumes from Europe to Asia have risen 23 percent in the first two months of 2017 compared to the same period a year ago.

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