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Reliability becoming a new competitive battleground for global liners

Reliability becoming a new competitive battleground for global liners

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Financial evidence has been revealed that suggests the most reliable container carriers are also the most profitable.

SeaIntel Maritime Analysis has analysed carriers’ quarterly financial results from Q1 2014 to Q2 2017, comparing them with the schedule reliability each carrier delivered in each quarter. The results suggest shippers are willing to pay for reliability.

SeaIntel posits that if a carrier is more reliable than its competition in a given quarter, then the same carrier will also be slightly more profitable than the same competitors. The analysts did add however that whether this is driven by commercial considerations such as higher freight rates or more loyal customers, or whether it is driven by operational efficiency stemming from having less exception management when vessels are on time, cannot be determined from the dataset.

SeaIntelligence Consulting partner Lars Jensen, a regular Splash contributor, commented on LinkedIn: “Of course reliability is only one small portion of the drivers of profitability for the carriers, however from a statistical viewpoint, the numbers are clear. There is a link between carrier reliability and carrier profitability.”

Jensen suggested that among the global carriers: “[R]eliability might become a new competitive battleground.” However, he conceded that presently this battle starts from a “very low base” with global reliability only being 75% in August 2017.

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Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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2 Comments

  1. Gunther Ginckels
    October 5, 2017 at 9:28 am

    As usual Lars is right though it is – as he also knows – one of many criteria for shippers to select a carrier. While reliability, financial strength and freight rates are important we also see with the continued rise of ULCV’s that landside logistics are becoming an ever more important element. Some believe that it will all be resolved with “Big-Data” and other ICT concepts however when the hardware – read infra – and super structure on the landside i.e. Container Terminal and Synchromodal products follow the pace, it will all be in vain and a waste of time and resources. Time Ports, Carriers, Terminal Operators and Intermodal Service Providers start to gather on the same meeting table and share the benefits by investing in solutions.

  2. H
    October 5, 2017 at 1:12 pm

    Yes but are they profitable because they are reliable or are they reliable because they are very serious about their business in many facets (including operations) and thus have a closer relationship with their customers?