Container shipping has faced exceptional challenges in the last year with the Covid-19 pandemic initially causing a huge drop in demand, following by an unprecedented surge in demand, exacerbated by the shortage of equipment, Saade said adaptability had been key to surviving this.
“We have shown in the last few months we are able to adapt to a very difficult situation,” he said in a conversation with Peter Tirshwell, vice president maritime and trade for IHS Markit.
While blank sailings were successfully used to managed capacity during the sharp drop in demand in Q2 and Q3 2020 these were not a long term solution to manage the business as Saade said lines needed to offer customers a regular service, rather than a service this week, but not the next.
“What is important is we need to adapt, not only shipping lines need to adapt but also customers, some may say we need to look at our production lines differently. We have shown adaptability by taking actions and been able to weather the storms,” Saade stated.
But the caveat to this providing this ability to adapt and services to customers is that of price. This message comes at a time when container lines' customers are renegotiating long term contracts against a background of record high spot rates, giving carriers a strong upper hand.
“Today the period is exceptional, due Covid there are extremely high rates, but there needs to be an understanding that we as shipping line cannot always lose money, and this is what has been the case for many years. Shipping and logistics are very important for industry and that is why we feel a decent price has to be agreed or otherwise we will be in trouble,” he explained.
Saade sees tough discussions with customers about these issues as natural and believes it is the end result that counts.
“We will adapt to the needs of customers, but we will not work for free. At the same time we need to deliver, it has to be both ways – there is a price and there is a service,” he stated.
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