Container Lines Achieve Record Score

Thursday, August 06, 2009

Container lines achieved a record high on-time service reliability performance, according to Drewry Container Shipper Insight’s latest quarterly schedule monitoring survey, just published.

Out of nearly 1,700 ships tracked in the three months between 1 April to 30 June, 69% arrived either on the scheduled day of arrival or a day prior, the best result since Drewry began its schedule reliability survey at the end of 2005.

The average on-time results as measured by Drewry have been steadily increasing since the October-December 2008 monitoring period and the latest score compares to the previous best of 60% achieved in the January-March 2009 window.

The average time deviation, or delay, from the scheduled day of arrival is also heading in the right direction. The average deviation for all services and carriers in the April-June 2009 period was 0.8 days, marking the first time it has dipped under 1 day. (Figures 1,2,3 attached/follow.)

Horizon Lines and Regional Container Lines topped the latest ranking of carriers’ on-time schedule reliability performance with perfect scores of 100%. The best performing among the major “Top 20” carriers were Maersk Line and Hamburg Süd in joint 12th place with 79%.

“The latest results show that most of the big carriers are taking service reliability seriously, which is just as it should be as ship delays equal lost sales to shippers and a potential lost customer to carriers,” said Simon Heaney, editor of Container Shipper Insight.

“However, lines should not rest on their laurels. Being on time 69% of the time is okay but there is plenty of room for improvement and carriers are not in the habit of giving away more for less. The better reliability average is probably a combination of carrier actions and the near disappearance of port congestion delays as a side-effect of the global downturn in trade.”

“Less demand for goods has induced quite severe container service cut backs which in turn has eased pressure on over-stressed container terminals. With fewer active containerships operating right now the chances of one arriving at port on time but having to wait in a queue and then miss its berthing window are much slimmer.“ said Heaney

The Container Shipper Insight report also provides the historical performances of carriers over the past 10 surveys to give readers an idea of each carrier’s consistency level. Matson heads both long-term charts for on-time performance and average deviation. Maersk has the best record of all the major players in both charts.

When calculating a carrier’s individual reliability score Drewry looks at each service that it has space on, and not just the loops that it operates with its own vessels.

“There have been a lot of new ‘alliances’ formed in recent months in the big east-west trades and carriers might be wise to look carefully at their new partners’ track record before they jump into bed with them as they might find their score get dragged down if they choose badly,” said Heaney.

The elevated reliability performances of late have come at a time when freight rates have been falling dramatically and the survival of many carriers has been put in serious doubt.

Heaney added that reliability has become a bigger marketing virtue than speed in the age of slow-steaming and it seems that most carriers are being more realistic with their scheduling.

“In the past a few carriers were possibly guilty of trying to lure customers with the promise of fast transit times that they were unlikely to be able to deliver. We take our raw data from carriers’ advertised schedules so another contributing factor to the better results might be that carriers are paying better attention to the detail in their schedules.”

Drewry believes service quality should have a bigger influence on freight rate negotiations between carriers and shippers and has advised shippers to include on-time key performance indicators in their contracts with carriers.

“Making reliability a key component of shipper/carrier contracts, maybe even with cash-back clauses, could be a basis for getting rates off the floor and help build stronger and more efficient partnerships,” said Heaney.

“A new and mature dialogue that goes beyond freight rates needs to emerge soon. The danger is that reliability scores will fall back to their previous low levels when the recovery comes and the supply chain crumbles under the same pressures evident prior to the downturn.”

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