Lawrence Burns, Senior Vice President, Sales and Management Group, Hyundai Merchant Marine North America

Lawrence Burns, Senior Vice President, Sales and Management Group, Hyundai Merchant Marine North America

After a decade of built-up container ship capacity in major east-west trades and globally that favor buyers’ negotiations, cargo owners and intermediaries struggle with space shortages, terminal congestion, equipment imbalances, last-mile obstacles, documentation, and inadequate payment processes.  

Each year an unknown tremor disrupts the simple law of supply and demand that more often than not causes a quake in the plans of carriers, cargo owners and intermediaries alike: 2015, labor; 2016, bankruptcy; 2017, carrier and alliance consolidation; 2018, demand surges and trade wars. When we plan for a surplus of availability and we get unexpected constraints at every hand over point, we ask: Where is the service?

Amid the best efforts by all partners to improve services, the key variable to overcome the uncertainties that lead carriers to commoditization is predictability. At the core is the commitment between the customers and the carriers to bind themselves to mutually beneficial terms.

The model of this transformation took place in the airline industry. Once an industry overcome with capacity and rate wars, a transformation in the ability to predict the value differences among its passengers led to differentiation splintered in multiple market segments on the same aircraft.

Containerized ocean cargo is not generic. Each customer values their cargo differently. Therefore, they value their cargo’s passage differently. A carrier has an opportunity to add variety to its menu of services even when it is sharing the ship with its alliance partner. The difficulty is to understand the appetite for services with added price, value, and expense in a predictable way.

With better systems and information, carriers are maturing with an ability to understand customers better and have the means to bring added value to its services. However, what goes into our respective wallets matters.

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