As shippers adjust and finalize their business strategies for 2021, they are finding the international transportation industry facing grave uncertainties as many new and challenging market conditions shape a very different landscape from any that supply chain professionals have experienced in the past. Setting long-term plans is typical at this time, however, significant changes brought about by the COVID-19 pandemic still linger, making it difficult for shippers to plan for the remainder of 2021.
Minimum Quantity CommitmentsÂ
One of the main concerns shippers worry about stems from issues that began in 2020, when existing minimum quantity commitments (MQC’s) were no longer being fulfilled due to equipment shortages, congested ports, high spikes in demand, and extreme delays. This has caused a drop in the reliability of long-term contracts and some shippers feel that if similar issues continue into 2021, their frustrations may also continue, as they lose space they thought was secure.
Schedule Reliability
Schedule reliability has also dropped since last year. Thus far in 2021, global container line schedules were just 35% reliable for the month of January, nearly 34% lower than the same month in 2020. For the vessels on trans-Pacific trades lanes, the schedule reliability was even worse. Eastbound vessels heading to the U.S. West Coast were only 14% reliable and those heading to the U.S. East Coast were 21.5% reliable in January.
Stern Business Practices
Shippers should understand that many ocean carriers are being especially firm this year when issuing space and making any long-term commitments. Because of the extreme equipment shortages throughout 2020, there have even been indications that free time may also be reduced in hopes to keep containers flowing.
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