Two Tracks

Two Tracks

After meeting with shippers and freight carriers across continents and across modes over the first part of 2011, it seems clearer than ever these two sides of the shipping equation share one very clear strategic conclusion as a result of the downturn. Both sides have two very distinctive types of business relationships in the business.

That was spelled out clearly by Schneider National Chairman Chris Lofgren, who told an industry meeting early this year that the truckload carrier has two distinct sets of customers: strategic customers who establish long-term contracts that include tailored services and shared performance goals, and “transactional customers” who may have contract terms but generally take space as it’s available in the day-to-day market.

That was remarkably close to the view of the market described by ocean container line CMA CGM last week at an industry conference in London, where Senior Vice President Nicolas Sartini described a strategy aimed at the highest end of the maritime market.

“The primary concern for shippers is that the supply chain works,” Sartini told Containerisation International’s Global Liner Shipping Conference, outlining an attempt to build long-term relationships with commitments between shippers and carriers running in both directions. “What we are trying to address is the needs of the larger customers, which are more and more important in the major trades,” he said. “This is because they are more and more concerned with managing their own sourcing.”

Sartini was almost pleading for attention to the approach, and it’s easy to understand why. CMA CGM, the world’s third-largest container ship operator, came as close to demise as any major carrier during the downturn, at least as far as outsiders can tell because the company is closely held. The carrier’s finances turned around starting in late 2009, and Sartini hints at its underlying strategy.

“Our policy was to discriminate among shippers,” Sartini said. “Those who honored their commitments were protected at all times. Some shippers who were more opportunistic regarding the market, those are transactional customers.”

There certainly were no complaints from shippers at the London event about treating different customers in different ways. In fact, two tracks for customer-carrier relationships seem just fine with them.

After measuring customer service carriers provide to his exporting members, Peter Friedmann, executive director of the Agriculture Transportation Coalition, said at the London event that his shipper members understood “there will be some carriers that rank low — you book with them and you pray. But there is a place for them. Those are the carriers that may or may not make a call when they say, but when you need 30 containers carried and the other carrier you prefer has no space because they manage their capacity so closely they have no excess, the other carrier is the one who will be able to take your shipment.

“We’re saying shippers are willing to pay more for better service. And I’m willing to applaud a carrier who says they are not going to invest in customer service. There’s a place for that, too.”

It sounds like many shippers and carriers have come out on the other side of the downturn with very similar conclusions.

Paul Page is executive director of The Journal of Commerce. He can be contacted at 202-355-1170, or at ppage@joc.com. Follow Paul Page on Twitter, www.twitter.com/paulpage.