Fresh off its lengthy and secret study of container availability, the Federal Maritime Commission has a new investigative target in mind: slow-steaming carriers.
The agency says it wants to study how the practice affects shippers and if carriers are passing along enough of the savings to shippers.
Let’s save the FMC time, effort and tax dollars by accurately predicting the results. After all, the FMC concluded its study of equipment shortages by saying that although it couldn’t release the report, in general, shippers complained about equipment shortages, while carriers said they were losing too much money to buy massive amounts of boxes for what is often seasonal demand.
You shouldn’t need a crystal ball to foretell the results of the slow-steaming study: Shippers will complain they are adversely affected by the practice, and carriers will say they have no choice because of low rates and high fuel costs.
I don’t mean to downplay the problems on either side. Carriers lost billions of dollars during 2009 and 2010. That there were no bankruptcies among the carriers is somewhat of a miracle. But shippers are frustrated, bordering on angry, at the poor service they have been receiving.
Bob Weiss, head of the Food Shippers Association, said shippers more frequently have trouble making bookings, and if a booking is made, equipment commonly is delivered late.
“It is happening more frequently that reefer boxes are delivered to a shipper too late for the load to make the intended sailing,” he said. “So the shipper — who has perhaps lost a sale overseas — gets the box delivered to port for the next week’s sailing. A lot of times my members are getting charged demurrage by the carrier who was late delivering equipment in the first place.”
Lee Doud, senior vice president of Paramount Exports, said service has “deteriorated to the point where we are having the types of technical discussions with carriers we did 30 years ago.”
“Shippers have the right to be upset,” said an executive with one container line. “They aren’t getting good service from every carrier.” But he said the poor service isn’t across the board. “Some carriers are doing a great job. Reefer is a difficult, challenging business.”
He said companies exporting high-value perishable products should shop carefully for an ocean carrier. “Some services are expensive, but shippers don’t want to pay extra for extra service. If you go to Nordstrom, you expect to pay more than if you buy an item at Wal-Mart. Why is it different for our industry?”
Perhaps the FMC can tackle that question after it finishes its investigation of slow-steaming.
Stephanie Nall is editor of Cool Cargoes. She can be contacted at firstname.lastname@example.org.