By Patrick Burnson, Executive Editor ·
January 27, 2021
As noted in SCMR last December, consolidation in the global container shipping industry in recent years has been the key factor behind improved supply discipline. Indeed, ocean cargo carriers’ financial performance has been improving as a result.
Furthermore, supply chain managers may be heartened to learn that some measure of stability has returned to ocean cargo arena in the past year. Spot container freight rates have increased in recent months, driven by shipping companies’ supply discipline, despite a decline in demand at the start of the coronavirus pandemic.
David Arsenault, newly named president of GSC Logistics in Oakland, California, notes that while the global pandemic is disrupting supply chains and placing stress on West Coast harbor truckers, freight haulers are confronting a surge in containerized imports driven by U.S. consumer spending and demands for personal protective equipment.
“The ocean carrier business has gone through quite a transformation during the past 4 years since my role as President & CEO of Hyundai Merchant Marine America,” he says.
He also notes that ocean carrier consolidation has continued where there are now fewer carriers that each command a larger market share among three global alliances.
“This has improved the ability to align vessel supply with market demand,” he says.
But Arsenault also observes that the larger vessel sizes – and the increased cargo volumes that they are capable of carrying – is placing increased pressure on the shoreside infrastructure required to support them.
“This increases the frequency of global supply chain disruptions that expose supply chain risks and vulnerabilities, causing companies to approach their supply chains more strategically,” he says.
As a consequence, supply chain visibility and technology innovation is moving at a more rapid pace, thereby forcing companies to reassess technology investments in order to support emerging business and integration requirements.
“Increased demand to forge deeper supply chain partnerships with customers and vendors/partners will be a must in order to manage through challenges and achieve deeper cost savings through efficiency,” he adds.
Arsenault concludes by noting that shoreside supply chain risk mitigation might also be made by promoting The Port of Oakland as a first import ocean carrier call or for GSC’s Express Service.
“In any case, supply chain managers will be charged with developing new partnerships with industry thought leaders to jointly develop and execute innovative new solutions,” he says.
January 27, 2021
About the Author
Patrick Burnson, Executive Editor
Mr. Burnson is a widely-published writer and editor specializing in international trade, global logistics, and supply chain management. He is based in San Francisco, where he provides a Pacific Rim perspective on industry trends and forecasts. He may be reached at his downtown office: [email protected]
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