No one with even the slightest involvement in the container shipping business can help but realize that beginning in May, one of the biggest changes ever made will pave the way for the future of this industry.
Basking under the banner of U.S. ocean shipping reform, deregulation is coming. And just like the millennium and all its Y2K computer complications, there is no walking away from it, and turning your back on reality. This will happen.
There will be masses of opportunities for carriers and shippers to negotiate global contracts. There will be confidentiality over contract agreements, and everyone will be free to do as they please.
There will be nothing stopping half a dozen carriers in one vessel-sharing agreement from having half a dozen different contracts with one shipper, all at different rates. All they have to do is file their individual tariffs, and no one will be the wiser. It's called being competitive.
EVERYONE IS TRYING TO EXPLAIN DEREGULATION
Carriers with internet sites have ensured that the casual surfer is made aware of what is to come. Most carry the icon labeled simply, ''Deregulation - what does it all mean?'' A simple click and it's all there.
Unfortunately, in this world of ours, nothing is simple. Few of us are simple-minded people who glean simple information from simple sources. Most of us like to ask questions, and I even get paid for it.
I did just that because I was, and still am confused. Just how many carriers and shippers have their own global contracts, and just how much bargaining power really exists. And just how watertight is this ''confidential contracting.''
GIVING THE SHIPPER BARGAINING POWER
There are three major east/west trade lanes. The trans-Pacific, the trans-Atlantic and Asia/Europe. One of Asia's largest shipping lines told me that there is an increasing amount of bargaining power coming from the shipper, who feels that if a certain amount of business is given to a carrier on say, two of those trade lanes, bargaining leverage could be worked 'quite substantially' on the third.
Now bargaining is a part of life, but taken to the extreme, it can do damage in container shipping, particularly to a trade that is already fragile from the huge costs of moving empty containers around the oceans.
Added to that, of course, shippers are increasingly presenting themselves as individual groups containing a number of different companies.
Our Asian carrier believes such a group must wield more combined purchasing power than ever before. All this, of course, underscores the real belief that right now, only around 5 percent of shipper-carrier contracts are undertaken on global basis, and post-May, that figure is unlikely to rise beyond 10 percent.
MEDITERRANEAN SHIPPING CO. IS MAKING ITS MOVE
Certainly, there are the carriers such as Mediterranean Shipping Co., which has waited until now to enlighten the industry that it will in fact move into the Pacific trades after many years of intense deliberation. Not too sure when in May, it will happen, but it will.
Naturally, MSC is a different product. It prides itself on stand alone ability, and so it should. Cannot think of any major trade lane, east/west or north/south where this is not the case at the moment for MSC.
And this pedigree will be followed through onto the Pacific, where in an arena of vessel sharers and slot-swappers, the Geneva line will again stand alone. Brave? No, simply shrewd.
Because who really needs friends, when your chums next door, who are meant to be your ''partners,'' can put their own ''confidential contracts'' together with your customers, charge what they like, and never utter a word.
Of course we all know vessel sharing and slot swapping eases the problems on hardware usage. Why use your own when you can borrow somebody elses.
But are we not missing a point here. Without some kind of level playing field, whereby all the team pulls in one direction only, isn't this all just a recipe for disaster?
Then there is the question of how confidential is a ''confidential contract.'' With shippers increasingly operating in collective groupings capable of wielding more clout than ever before, and carriers in huge vessel sharing agreements trying individually to outdo each other, the likelihood of some pricings leaking out somewhere, must be very high.