During 2014 I hope we will see a change in how carriers recognize the need to improve how we operate together. The gain of this knowledge is that it could help stabilize our industry on the whole. The risk of dismissing this important variable is that we deteriorate all existing markets.
A large influence on this aspect will be the introduction of P3. Here we will see the three largest carriers combining resources on three major volume lanes. This will create a very interesting landscape at the inception for all involved in these trades. All within our industry should pay close attention to this dynamic. An important development will be if there will be acceptance by all stakeholders of this cooperative movement. Alternatively, it could create increased focus and competition between all carriers. If the latter, then a goal of a stabilized industry will move further down the line.
Under this scenario, it raises even more concern for the trade lanes that are not incorporated into such a large degree of vessel and cost sharing. These theaters could increasingly become more competitive as they could represent the last frontier where carriers will be able to independently control their “go to market” strategies and deploy resources under their own terms.
The concerning reality in this case is the lack of discipline in the history of carrier behavior. If the effect of P3 or other alternative consortiums created to run parallel becomes too strong, these ancillary markets may become unnecessary targets. The barriers to entry, which preserved them in the past, may now be viewed as a viable option versus going head to head against the majority players who dominate overall market share. Regrettably, in this type of environment, there will be no improvements in 2014.
Jonathan Yock is President of Safmarine North America