Professionals involved in ocean transport procurement are forced to take a critical view on their current procurement strategy.
Drewry is advising shippers to rethink their procurement strategy now the Asia-Europe contract renewal negotiating season is fast approaching, or shippers risk hefty price hikes and service failures. According to the advisory firm, there are 4 influential factors turning the ocean freight business upside down.
“Rapid consolidation in the supplier base, changes in supplier behavior, huge reductions in vessel orders and new developments in tender technology will bring real change and uncertainty to the ocean transport procurement environment,” warned Philip Damas, head of Drewry. Securing new savings by tendering based on previous blueprints will not be effective according to the consultancy firm.
As a result of bankruptcy, mergers, and acquisitions, the Asia-North Europe trade environment is now facing a reduced number of active carriers (11 now versus 15 a year ago). This number will most probably be reduced to 8 in less than a year, given that Maersk’s takeover of Hamburg Sud, the merger of the Japanese carriers and Cosco’s purchase of OOCL will be completed, subject to regulatory approval.
Capacity and E-sourcing
Drewry is warning shippers that the circumstances will be different for the upcoming year and organizations must prepare themselves. Due to the continuing reduction of ocean carrier capacity, annual ocean freight rates are set to increase by as much as 50%. earlier this month, the Ocean Alliance announced it would be blanking four Asia-Europe voyages early next month, with the 2M and THE alliances likely to reveal details of shrinking sailings over the next few days.
Damas suggests that BCOs need to incorporate benchmarking and e-sourcing best practices into their procurement processes to find the “best combination of bids to meet the intended balance between cost and service”.
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TenderTool Ocean Freight E-procurement
TenderTool is the easiest to use cloud-based Freight Sourcing platform. Built by Logistics and IT experts from the Netherlands, our platform saves Procurement people an enormous amount of time as it automates all Excel number crunching, reporting and analysis. Next to that, it gives full visibility in the RFP process so that you can easily manage the tender from 1 platform instead of your e-mail.
Ken Klaver (29) is active as a global sales manager for TenderTool. He has over 4 years experience in the Logistics industry as he previously worked in marketing and sales for ControlPay global Freight Audit