Shipping
11 March 2010
Should Shippers Share the Blame for Low Rates?
Shippers are unmoved and even incredulous over suggestions that they might be to blame for the financial problems which many air freight companies have faced over the past year. Dr Andrew Traill, Managing Partner of Shippers Voice, an independent information portal www.shippersvoice.com, canvassed opinions late last year and in January 2010.
"While many observers might say that shippers had it good for the first half of 2009 with the slump in rates, they therefore had little to complain about when the rates soared in the second half of 2009," he says. "But most shippers I have spoken to say that they simply took advantage of the rates which carriers were offering and that it is up to the service providers to make sure they earn enough money to stay solvent."
He quotes one shipper Berndt Herrmann, Corporate Technology at the German company Siemens, who, when asked if he and his colleagues in the Supply Chain Management team felt in any way culpable for putting pressure on airlines for extremely low rates earlier in the year 2009, remarked "Not at all, this is a question of the market and how people seek to offset their positions in order to manage the situation."
A shipper from a major pharmaceutical company, based in the UK, was critical of the service providers, saying: "They [carriers] should not have allowed rates to dip so far in the first place. However, this peak and trough, boom and bust, practice with rates is in nobodys interest. Shippers need consistency and predictability in their costs, and they also need carriers to invest for the future, so very low (unsustainable) rates help nobody in the long term."
How then can the air freight sector recover some of its stability? The consensus opinion was to work together, the shipper, jointly with the forwarders and the carriers:"We all need to look at the whole of the customers businesses and understand how we can supply them better", said one shipper; "Failing to do this will result in the carriers failing to know exactly what we need and so providing what they believe we need, which can sometimes be miles from the truth."
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