Consolidation ushers in new era for carriers and shippers

The economies of scale currently driving carriers to replace f leets with megaships will demand better collaboration between shipping stakeholders in the future if a balance between all role-players' interests is to be achieved. “It really comes down to fewer operators with bigger ships serving the market and that means a reduction in competition,” says Terry Gale, chairman of the Exporters' Club Western Cape. “For shippers this is not necessarily good news as we need competition in the market. In the South African environment it will definitely result in exporters having less choice – and at a time when we are trying to break into new markets, choice is crucial.” According to Dr Beverly Waugh, executive director of the South African Shippers’ Council (SASC), markets worldwide are increasingly demanding frequency in order to reduce their inventory burden – ie costs and risk. “It is for the same reason that road is increasing in popularity over rail worldwide. Customers’ customers require frequency and f lexibility and cargo owners shipping overseas need modes and carriers that provide the logistics services that assist them to do this.” But, says Waugh, as transport costs continue to escalate economies of scale are an obvious way of dealing with it. “The challenge for the cargo owner is to find the balance and to manage the supply chain in conjunction with service providers in order to achieve adequate frequency and f lexibility while costs are being managed and even driven down at the same time.” In this regard SASC and The South African Association of Ship Operators and Agents (Saasoa) have informally agreed to consult each other on various matters of mutual interest. “Collaboration will be key in the future to meet the needs and interests of all the various stakeholders,” she says. For Gale relationshipbuilding will also become more important in this environment. “I do think there is an opportunity to work together to find solutions that will serve the needs of the carriers on one side and the shipper on the other,” he says. INSERT & CAPTION 1 Mega-ship era will definately result in exporters having less choice − and at a time when we are trying to break into new markets. – Terry Gale INSERT & CAPTION 2 The challenge for the cargo owner is to find the balance and to manage the supply chain in conjunction with service providers. – Beverley Waugh