Stand By Your Shipper

The story of 2010 for container lines and their customers isn’t just one of carriers reneging on their contracts. Many did, pushing to the limit the opening they had to jack up rates during a time of staggeringly tight capacity. Often loosely written contracts were interpreted to deny shippers needed capacity, severing long-term relationships, shattering trust and sending many shippers into the arms of non-vessel operating carriers.

But that isn’t the entire story. Some carriers, despite the need to recoup historic losses in 2009, stood by their customers.

In doing so they provide a lesson in ways that shippers and carriers can find a way to move forward together. Some carriers are being acknowledged for this. One is MOL, who recently was named “Transportation Partner of the Year” by Michaels Stores, an arts and crafts retailer with over 1,000 locations in the U.S. and Canada, which moves more than 20,000 40-foot containers per year.

The award was not unrelated to the experience of 2010, said Richard Markovich, director of international logistics and compliance for the Irving, Texas-based retailer. “MOL acted with integrity and an eye toward a long-term, mutually beneficial partnership with Michaels during the worst year ever in terms of import shipping,” Markovich said, noting that his team reached out to internal and external supply chain stakeholders to help determine the most deserving recipient.

Markovich added the following to further explain why MOL was given the award:

• "While MOL increased rates to compensatory levels over the collapsed 2009 rates, they acted with integrity and didn't take advantage of us.

• They didn't use the capacity reductions as an excuse to reduce the support and space commitments.

• They supported our service level expectations, which remained very good in terms of equipment availability ajd on-time sailings.

• Most importantly, they gave us a firm space commitment at the beginning of the contract term — larger than other carriers and it was given without a bunch of restrictions on which strings we could use. Week after week, they met their commitment, often giving us additional space above their commitment when it was needed.”

He added, “While other (carriers) flat out violated some of the agreements that we had in terms of capacity, Mitsui stood by their capacity commitments and if there were times where they had more capacity available, they made us aware of that and helped us out.”

The point of mentioning this isn’t to re-open old wounds or re-hash again what occurred in the market last year. What’s done is done. But the industry is still recovering from 2010, still trying to restore trust and find ways to add value to relationships so carrier services not simply reduced to a commodity.

What in Michaels’ award to MOL is instructive to the market? What lessons here are valuable? How can this window into a good relationship inform the upcoming 2012 negotiations?

-- Peter Tirschwell is senior vice president of strategy at UBM Global Trade. Contact him at ptirschwell@joc.com, and follow him at twitter.com/PeterTirschwell.

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