Ocean carrier reliability rebounds after record lows in early 2018

July 12, 2018 - The three major ocean carrier alliances began to drastically restore schedule reliability in the second quarter of this year, after letting service levels drop to new lows at the start of 2018, according to SeaIntel Maritime Analysis' June 2018 Global Liner Performance Report.

After 2M, the Ocean Alliance and THE Alliance launched with new configurations around April 2017, the three groups of carriers set high expectations for service by maintaining a schedule reliability on Asia-North America trade lanes above or around 70% through August 2017 (see chart below).

The trend did not last long, however. By February 2018, service reliability had dropped as low as 26.5% for 2M, and 28.4% on the Asia - North America East Coast trades. The figures were not much better on the Asia - North America West Coast trade, as 2M saw a low of 41.9% reliability by March 2018.

Despite relatively few industry wide disruptions over the past year — Hanjin did not go bankrupt this year, at least  — carrier service levels have taken a big hit since the industry consolidated into three major alliances.

It's hard to pinpoint the drop in service to any one factor.

It would be easy to blame consolidation. Merging new systems may affect booking procedures, and therefore reliability, but service levels have only improved since the industry's biggest merger — between K Line, MOL and NYK — created a new shipping line (ONE) in April 2018.

Maersk Line and CMA CGM, meanwhile, have not let their schedule reliability fall below 68% in the past year despite being very active on the acquisition trail, too.

The good news is, carrier service levels are back on the upswing at this time, according to the report.

And, in general, few carriers have strayed too far from their average reliability scores over the past year. HMM saw the biggest single quarterly drop (17.7%) between 82.9% in the fourth quarter of 2017 and 65.2% in the first quarter of 2018, but it's back to a 70.6% reliability as of May 2018.

In other words, save for a few cases, shippers should know the reliability they can expect with individual carriers when they book. As of May 2018, Hapag-Lloyd, ONE and Yang Ming had the lowest individual scores, whereas Maersk Line and APL were the most reliable, according to the report.

Schedule reliability is not the only way carrier service levels are measured, however. Shippers are generally dissatisfied with transit times and overall quality of customer service as well, according to a survey by Drewry and the European Shippers Council.

But even on those measures, carriers are not meeting customer expectations, the survey found.

"Shippers and forwarders want a balance between service quality and price, but the survey shows that carriers are cutting back on service and offering less choice to shippers," Philip Damas, head of the logistics practice at Drewry, said in a press release.

Source: Supply Chain Dive