TPM Asia Takeaway

My 2011 conference year just came to a close with the final sessions of the 5th Annual TPM Asia Conference in Shenzhen, China. Not that conferences are no longer on my mind — we’re well under way with our program planning for TPM Long Beach 2012, coming up next March, but for now I’m sitting in my hotel room thinking about my journey to Shenzhen and my experiences and impressions of the just-completed event.

In late September at the Canada Maritime Conference in Montreal, one of the speakers made a passing reference to the similarities between the airline industry and the shipping industry. I have some experience on the air side (and not only as a passenger), and didn’t actually agree with this speaker’s viewpoints. But after my journey from Portland, Ore., to Hong Kong for the TPM Asia event, I was forced to re-evaluate my position.

I admit my routing was unorthodox — red-eye from Portland to Chicago, then Chicago to Hong Kong — but there were very good reasons. Still, I have no one to blame but myself for the almost nine-hour delay in Chicago for what was apparently a “minor” electrical/lighting glitch. Any flight, or any ship, can leave or arrive late, but it’s what the service provider does after the problem that’s important. There are still wide differences between airlines and ocean carriers, but in the area of customer relations and problem resolution, the two businesses have more in common than I thought.

After a very shortened evening with no dinner (actually very early morning/night) in Hong Kong and arriving the next day in Shenzhen less than refreshed, we got right into the TPM Asia agenda, packed with panels set to discuss as many of the issues facing our industry as we could fit into a two-day gig. What follows is a summary of my personal highlights:

The new Maersk Line service paradigm, including its Daily Maersk service and its “Triple E” mega-ships — the genesis of the industry’s newest term: “ULCS,” for ultra-large container ships — was discussed widely. One speaker, in a more or less left-handed compliment, called the Maersk strategy a brilliant new marketing campaign.

Whatever you call it, the chase and competition among ocean carriers for ever bigger ships — my granddaughter would call them “ginormous” — caused some to suggest that perhaps size really does matter, which led to yet another new term: “vessel porn.” How much is too much? How big is too big? Are the carriers about to start a new race that takes them over the cliff like a galloping herd of crazed lemmings, as one speaker suggested, toward overcapacity that they themselves will create?

The data and forecasts and mood weren’t nearly as bad as the doomsday March 2009 TPM Conference in Los Angeles, but the prognostications were less than rosy just the same. Whether the forecasts were “bluesy-sad” or “blood-red devastation” is difficult to decide, but with about a four-week rather than a four-month 2011 peak season, no real hope for improvement the rest of this year and mostly gloom for 2012, there was no dancing in the streets in South China this month.

The parallel session on container freight derivatives was interesting on several levels. To start, almost all the attendees were young — under 40, I’d guess — and clearly much smarter than me. The presenters were like characters out of a Michael “The Big Short” Lewis book and extremely well-versed in the material and probably way above my pay grade.

As I listened to a presentation that sounded like a 20-minute Vegas casino class on how to play craps, complete with assurances and explanations about why trading freight derivatives is not betting, I not only believed it, but also knew I was in well over my head. These young folks are wicked smart, and these instruments are coming — are, in fact, already here and available, and being used successfully to a large extent. It’s another sign of the rapidly and dramatically changing landscape of our industry.

The relationship between the ocean carriers and their customers was a frequent topic and remains highly fraught and troubled, and you can expect to hear more on this at next March’s TPM Conference in Long Beach.

There was more, much more, including more people, just over 600, which was about a 20 percent increase over TPM Asia 2010, so it was a successful event by any reckoning and a fitting end to the 2011 ocean shipping conference season.

Now if only my flights home are on time …

Barry Horowitz is the principal of CMS Consulting Services. Contact him at 503-208-2232, or at barryh@cms-cs.com.

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