UPS says that some shipping lines have been attempting to conclude contract negotiations earlier this year with a view to offering intermodal rates, according to vice president of global freight forwarding, Keith Andrey, with many Transpacific contracts due to expire on April 30.
"Before, we always had to delay because the BCO deals were done first, but many of those deals have already been done and as a result of that that’s going to allow us to kind of negotiate earlier I think and complete a lot of our discussions in advance of some of the time frames we worked under last year," Mr Andrey told American Shipper.
He also pointed out that carriers are becoming more keen to explore business areas that they were not interested in before, including service to inland intermodal points, offering UPS an opportunity to provide its customer with options that weren’t available previously.
The increased flexibility of carriers, he believes, is being driven by concerns over the deployment of mega ships that are entering the Transpacific market and the need to fill those monsters.
Some shippers use the preferred less-than-container-load (LCL) service as a part of their regular supply chain.
But Mr Andrey says most of the time it’s used to “meet an obligation to a customer, like quickly getting parts to a manufacturer to avoid a shutdown of the assembly line.
Rock bottom ocean freight rates “ultimately won’t be healthy because it will eliminate choices in the future for the customers,?according to Mr Andrey.
On the acquisition of APL by CMA CGM and the merger of China Shipping and Cosco, as well as expected changes in mega shipping alliances, forwarders such as UPS are required “to have a pretty fluid strategy for dealing with the steamship lines,?he said.
For UPS, there is a need to have a balance of capacity in different alliances to be able to offer shippers a choice.
For UPS, the company is moving closer to consuming countries, and is investing “significantly in our services and capabilities in the Mexico-US trade. We’re placing our investment in the areas where our customers are going.
Source : HKSG.