Last week in Los Angeles, I attended the TPM conference, where several compelling discussions took place, notably around U.S. policy impacts on trade, the Maersk/Hapag Gemini concept, and more. However, the discussion led by Otto Schacht, a shipping veteran with extensive experience at Kuehne + Nagel and Hapag Lloyd, particularly inspired this piece. Schacht delved into the different approaches carriers are adopting to blend their liner operations with logistics and freight forwarding capabilities.
As a forwarder handling a volume of 100,000 TEUs annually, our interactions with ocean carriers and our clients offer us unique insights.
It’s my view that carriers should only venture into offering freight forwarding and logistics services if they excel in their primary business—liner operations, and as of today, they are far from it.
The current landscape for ocean carriers is marked by global challenges in delivering fundamental services.
Before the financial turmoil of 2008-2009, carriers were on an expansion spree, enhancing customer satisfaction significantly, which even started to concern freight forwarders like MTS Logistics. However, the post-crisis period pushed them to undergo downsizing, closing offices, laying off staff, and diminishing service quality to cut costs, despite technological advancements aimed at higher efficiency.
This shift from a reliance on highly skilled personnel to average online tools represented a critical loss of expertise and knowledge, a gap exposed during the Covid pandemic when these digital tools proved inadequate for managing exceptions.
When carriers propose services traditionally managed by freight forwarders, customers’ assessments are influenced by their prior experiences with the carriers’ liner services.
The fundamental task of shipping containers is straightforward compared to the comprehensive 4PL services offered by forwarders. If customers face challenges with carriers even in simple tasks like shipping from Port A to Port B, or simple needs like communication and accessibility, their confidence in the carriers’ ability to handle more complex requirements is understandably shaken.
In today’s fiercely competitive business environment, including for importers and exporters, over-reliance on a single provider for all supply chain needs can be detrimental, not only in terms of cost and performance but also due to the risks associated with such dependence.
Despite the recurring attempts at this integration model throughout my 23-year career in the shipping industry, no clear success stories have emerged.
As it has been said over and over, the potential for change, particularly with AI/machine learning, is undeniable. I believe that the agility, customer-centric approach, and personalized service that freight forwarders offer will continue to be their strength, ensuring their relevance and effectiveness, albeit on a smaller scale but with greater consistency.
