SBS Wordwide Urges Strong Carrier Relationships

press release
Monday, January 09, 2012
SBS Worldwide Group Chairman Steve Walker.

Global supply chain provider SBS Worldwide has urged shippers to use logistics providers with strong relationships with shipping lines or they could find their shipments left on the quay side.

 

The warning comes as shipping lines have been withdrawing capacity because the industry has been suffering from over-supply of vessels on key trade lanes. SBS Worldwide Group Chairman Steve Walker said: “When shipping lines remove services in order to balance supply and demand, it results in a short term reduction in capacity. “When this occurs, shipping lines will leave containers behind - it tends to be those being transported on behalf of shippers with short-term supply and demand driven carrier relationships that suffer this fate. The best way to avoid being affected by a situation like this is to make sure that your logistics provider has strong, long-term relationships with more than one reliable shipping line on any trade lanes where you require transport services.”


Walker added that there are already reports of some cargo being left behind as the result of a mini surge in cargo from China as companies attempt to export ahead of the closure of factories for the Chinese New Year celebrations.
The service withdrawals come as carriers have had a tough year. Record profits in 2010 turned to losses in 2011 because of overcapacity in the market. To reverse the oversupply situation, carriers have been busy removing services and laying-up vessels.

 

According to shipping line analyst Alphaliner, the number of vessels taken out of service - an indication of how many ships have been temporarily withdrawn from service – at the start of December was 19.8% higher than the start of November. The shipping industry was struck by a major capacity shortage in late 2009/early 2010, when shipping lines removed a glut of capacity – to correct an oversupply situation - at the same time as an unexpected boom in business. The volatile mix resulted in months of delays to containers as shipping lines were unable to provide enough space on ships.
 

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