Combative MSC says shippers must look forward

Combative MSC says shippers must look forward.jpg

Shippers do not know the real cost of moving a container, cargo owners must pay the right price for moving containers, most shippers want to “screw” the lines said MSC.

In a battling performance on the JOC’s Transatlantic trade webinar, the Swiss-based carrier’s senior VP and head of Europe to North America trade Pasquale Formisano said that “99% of shippers want to screw us and get the most out of us.”

Shippers should not look at the profits carriers made in the pandemic but should look forward to better relationships and better services, believes Formisano.

“There is a lot of ignorance in this industry over the cost of moving a container from A to B, but shippers must pay the right price for moving containers,” argued Formisano.

He went on to say there was not a single industry that did not make money during the pandemic but argued this was in the past.

“They [shippers] should all say thanks to the Chinese for the bloody Covid,” said Formisano, adding, that when it comes to the carriers “Clients shouldn’t look at the pandemic they should build relationships with carriers going forward and that would lead to better services.”

By focusing on price and driving rates down shipping lines cannot provide economical services and that means lines blank sailings and reduce capacity.

He said all carriers are capable honouring contracts but that shippers do not give accurate forecasts and do not meet quantity requirements, “We should not be killed for what we’re asking,” concluded Formisano.

“Clients do not keep to their word, we do not have proper contracts,” complained Formisano.

Lidl’s Jochen Gutschmidt, senior advisor-inland supply chain and logistics, hit back at Formisano, “You expect to get the product you buy,” he said, “If you make a contract for six or 12 months, but if there’s a significant change then that’s a moment when you can discuss the product.”

According to Gutschmidt shippers try to balance their negotiations, of course, when you put volumes out to tender you look at the price, but most shippers are not simply focused on price.

“Do we love disruption?” asked Gutschmidt rhetorically. “No,” he answered. “Blank sailings phasing out [larger] ships these things mean we cannot conduct our business the way we’d like to.”

Formisano accepted that the shipping lines were to blame for the over-capacity that is pervasive in global markets, “Why are we so stupid? It’s because this industry works with a lot of ego and it will continue like that. But we should not focus on supply and demand we should focus on the right price to move containers and to have a good service.”

Earlier, Stefan Verberckmoes, senior analyst at Alphaliner, had said that the Atlantic trades had seen a super cycle through the pandemic which had seen the carriers’ operating margins reach 56.8%.

As demand has tailed off, however, the lines have decreased capacity by 43% by replacing larger ships with smaller sizes. Deliveries of new vessels will, however, inevitably lead to more deployments of vessels as carriers cascade new bigger ships through the major trades and redeploy older tonnage to less profitable routes.

Mary Ann Evans
Correspondent at Large

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