President and chief executive
At the end of 2001, I said I would like to look back at this column in a year and say, "Well, what a gloomy outlook, and isn't it interesting how I was proved wrong." I was wrong. It got worse.
Rates started 2002 at a very low level and trended even lower. All parties in international trade misjudged the demand side, resulting in sub-optimization, an inability to fully satisfy trade requirements and an inability to achieve a needed return to profitability for the ocean carriers. Add to that, security issues, a West Coast labor dispute resulting in a huge backlog of cargo, and lack of capacity and containers.
I have said before and it bears repeating: Carriers and their customers have to work more closely together. We need one another and we should make full use of what is available to us in this respect under the Ocean Shipping Reform Act.
I said in my comments at the JoC Trans-Pacific Maritime Conference in 2001 that shippers needed to forget about May 1 - that time and circumstances had moved on. When shippers commit a low minimum quantity so they can shop around during the contract, they are shooting themselves in the foot. They cause carrier costs to be higher than necessary, and they will ultimately have to pay. It takes away joint planning and preparation and means the carriers don't have the capacity or containers, and the customers don't have their cargoes.
Let us look to 2003 to being the year where we work together, where we create a predictable, secure and well-functioning supply chain, where we regain sustainable profitability for ocean carriers and then maintain a stable rate regime going forward. This would enable shippers and carriers to plan much further ahead as joint partners in this portion of the supply chain.