Supply Chain Dive — For carrier alliances, expanding ports of call are a sign of progress in capturing greater market share. Expansion can also benefit the shippers, giving them more options and flexibility to manage their supply chains.
When it comes to negotiating rates, shippers have the upper hand, Jon Slangerup, Chairman and CEO of American Global Logistics told Supply Chain Dive. This will be the case “until the carriers effectively address the ongoing imbalance between container capacity and demand,” he said.
Despite the benefits of expanded services, shippers don’t always greet service additions with open arms. Contracts and rates must be readjusted as ports of call, vessels and slot arrangements shift. This is especially the case for smaller shippers, which tend to rely on freight forwarders.
“Larger BCOs negotiate directly with ocean carriers to secure the most favorable rates and services, and generally pay very close attention to the alliances and their competitive offerings,” Slangerup said. “Smaller BCOs generally rely on NVOCCs to provide competitive rates and value-added services based on freight forwarders’ agility and responsiveness to smaller shippers’ needs.”