When I was managing logistics for a large importer, the President of Maersk came to visit us at our US HQ. He was in somewhat of a “foul mood,” lamenting the large losses they were experiencing at the time. I asked him what he thought was driving these losses and he quickly cited three key reasons:

1. Empty repositioning of equipment.
2. Insufficient forecasting from their customers.
3. Dwell time.

They had studied it so carefully that he was able to cite the macro numbers for each category from memory. Understanding the challenges they were facing allowed us to work together and create a mutually beneficial scenario. We agreed to measure and minimize all three of their cost drivers in exchange for discounts, provided we mutually met the objectives.

Each of these changes were a win/win for both sides, and not just financially. Both sides gained much greater efficiency throughout by implementing these changes. For example, turning boxes on the west coast gave Maersk back three full weeks of asset utilization, and we improved efficiency with 53' trailers.

What I see happening today with carriers is rather than working in partnership with customers, they are using blunt force instruments. This works in the short term, especially when there is a supply shortage as we saw with the pandemic, but it isn't sustainable or good business. Benefits that only benefit one party are doomed to fail on either side. The other party will simple look to gain back the advantage when supply dynamics flip (and they always do).

Right now, carriers actions seem out of touch with this basic tenet of business. They have systematically cut customer service and disempowered the people closest to the clients. Too often they make top down decisions by fiat in HQs thousands of miles away. For example, the carrier rep we worked with in Philadelphia had to check with their Asia HQ in Hong Kong for space commitments, who had to check with their Global HQ in Denmark, and back again. It never ended well, and eventually we went back to using a 3PL.

My advice to carriers. Have your most senior executives (CEO, COO, CFO+) spend two weeks each quarter meeting with clients at their offices in your top markets. They will be amazed at what can be learned and accomplish by simply talking to their customers directly. In the end I believe both parties want exactly the same things: a reasonable cost/margin, a professional relationship, and predictable outcomes.

It's possible in the short term to keep rates high through artificial means like cartels, blank sailings, and fiats, but it won't turn out well in the long term.

Carriers now have a “boatload” of money, ambitions to be full service logistics companies, and a path towards technological breakthroughs. There will never a better time than now to 'chart a client focused course,' but the window is closing.