Container shippers out of touch with freight needs

Copenhagen, Denmark: Maersk Line, the world’s largest container shipping company, has called on the container shipping industry to fundamentally change its business approach to better meet the needs of its customers.

Eivind Kolding, Maersk Line’s chief executive pointed to three areas where the container shipping industry has fallen behind the curve: timely delivery, reliable and easy booking and tracking, and ensuring transparent and comparable environmental footprint data.

“If the container shipping industry is to secure its license to operate in the future, the industry needs to change now,” Kolding said at the presentation of the company’s new manifesto for industry change.

He said new technology, market and customer behaviour force companies to “never lose sight of what customers really want.”

“Today, we deliver one out of two pieces of cargo on time. We need to revolutionise the industry and get up to 95% instead, or even higher,” Kolding said.

He said reliable delivery minimises risks and cuts the costs of their customers, something customers have indicated would prompt them to increase volumes and even be willing to pay a premium to ensure.

“On-time delivery is not a nice-to-have for them; it’s a cold, hard business necessity,” he said. Kolding also urged that the industry revolutionize and simplify some of its rather old-fashioned business processes to accommodate booking and tracking of container space much in the manner of the airline industry’s ticket systems.

The container shipping industry, with its heavy global carbon emissions footprint, needs to be more pro-active in the communication of its environmental performance. Customers are increasingly expecting transparency on environmental standards and independently verified environmental data, he said.

“If we take pro-active action, then customers will be able to make decisions with open eyes between the carbon footprints caused by carriers in their supply chains.”

Kolding’s speech was delivered at an industry conference in Belgium on Tuesday.

• Maersk Line’s The New Normal manifesto envisages a time when reliability becomes more important than low rates and it is as easy to book space on a ship online as it is to book a seat on an aircraft.

The report reveals how Maersk sees the industry developing. It says improving reliability would reduce supply chain costs and could therefore become more important that offering lower rates than rivals.  “Customers of course care about cost, but what they really care about is the total cost and not the price on a single box,” Maersk Line writes in the manifesto. “They can accept rate rises; what they cannot accept is a delivery promise that isn’t trustworthy.

“Often customers value their ability to trust delivery promises more than they need a rock-bottom price – because the cost implications of late deliveries are far greater. If they cannot rely on a container being at destination on time, their whole business operations are compromised.

“Supply chains must be reworked, stores may not have products to sell to eager customers, and potentially one late cargo arrival might have implications not just for the customer’s own business, but those of a range of interconnected suppliers.

“If customers increase their trust in the shipping industry as a supplier then we would get more repeat business – the most reliable operators in any logistics sector will always attract customers.

“If customers save significant inventory costs by minimising risk in their supply chain then we will build better relationships because customers will be more satisfied with our service deliveries.”

Maersk Line said making it easier to book online was also a key development for the industry.  The manifesto said: “If customers are offered a more automated booking process saving them money through supply chain and inventory optimisation then we will get better control of bookings and less no-shows. “Because instant booking confirmation is a two-way process and a two-way guarantee, it means the customer is also confirming.

“If customers are presented with an immediate price, with a full breakdown of charges – so they can deselect options they don’t need – and a possibility to follow their order then we create security for them and they enjoy an improved overall customer experience.

“If we automate customer interactions and thereby free up time spent on filling out forms, re-work and chasing loose ends then customers could enjoy an improved personal service as we could spend the time we free up to serve them when and where they need it.”

It also added the industry needed to beat environmental expectations not struggle to meet them.