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Alliances need to broaden cooperation to shore-side: NYK line ceo

Alliances need to broaden cooperation to shore-side: NYK line ceo
Container line alliances are here to stay and the next step is to move the cooperation to landside infrastructure to increase productivity and efficiency, said NYK Line ceo Jeremy Nixon at a recent industry conference.

“The alliance model is probably here to stay from the economic standpoint while the regulators and economists are unified in their approach that alliances are pro-competition and a more efficient way of operating,” said Nixon.

Drawing parallels with the airline industry, he noted that the four alliances that have evolved are quite stable and does not see it consolidating much further since the regulators are quite particular about breaching the 30% market share figure.

However there needs to be much more integration beyond what has already been done, Nixon said. “One of the issues with productivity today is that the interface point between the vessel coming in and the yard operations and while part of that problem is the landside activity, the other side is the hub and spoking activity,” he pointed out.

For example if there are six different alliance partners all using different feeder and barge operators, this adds a tremendous amount of complexity to terminal operations. “For this reason I think there is value to look at the interface between the vessel and into the terminal, and even inland to look at building dedicated feeder, barge and even rail services around specific vessels calling within certain windows to decongest and prioritise the flow,” Nixon said.

There is room on a global level to reduce the number of individual terminals within a port area and increase quay lengths which will allow more on-dock rail and help build up more velocity and scale for the alliances.

“I think that’s a collaborative thing which will take time but you’re going to see that evolve over the next couple of years,” he said.

Providing support from the shippers’ point of view, Electrolux vice-president of global logistics Bjorn Vang Jensen welcomed this greater integration. He pointed out for example that a large part of the problems at the US west coast ports earlier this year were caused by carriers calling at multiple terminals and this problem remains.

“I would welcome, from a procurement and an operational perspective, further commoditization which the alliances have already driven,” Vang Jensen said.

The flipside of this however, is that the risk to shippers increases with this greater commoditization that the alliances bring. He pointed out for example how a large part of Electrolux’s Christmas season allocation for Brazil last year was very late because of an incident at an Asian port. Although, Electrolux tries to diversify its shipments the increasing cooperation of alliances sometimes makes this very difficult to keep a handle on, Vang Jensen concluded.