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INCORPORATING

ONLINE MARKETPLACES COULD INCREASE EFFICIENCY IN SHIPPING INDUSTRY

Wednesday, October 2, 2019 

Online technology platforms where shipping lines and their customers can negotiate forward contracts could help improve vessel utilisation levels and reduce freight rate volatility, according to a joint study conducted by global shipping consultancy Drewry and maritime supply chain technology provider CyberLogitec.

While the shipping industry has changed dramatically in recent years, the market for ocean freight services remains exposed to the inherently dynamic nature of demand and fixed nature of supply which results in oscillating vessel load factors and freight rate volatility. This fundamental supply and demand mismatch causes significant structural inefficiency which adversely impacts all market participants.

“Our study concluded that many of the market’s pain points could be addressed through a capability to flexibly buy or sell ocean freight services in advance, using a neutral, global platform,” said Philippe Salles, Head of e-Business, Transport and Supply Chain at Drewry Supply Chain Advisors. “Volume commitments and capacity guarantees would provide an early visualisation of demand to the market, thereby reducing the supply-demand mismatch and rate volatility, to the benefit of all market participants.”

“As an independent market analyst with rich heritage in the global container shipping market, we approached Drewry to help define the major structural issues facing today’s container liner industry,” said Chris Na, VP and Head of Platform Division at CyberLogitec. “With a clear understanding of the origin and mechanics of the problem we believe we are well placed to develop innovative and robust solutions that can benefit all market participants.”

The study found that shipping lines could better forecast revenues and reduce capital costs through forward selling of vessel slots, underpinned by volume commitments. The same forward selling would benefit shippers and forwarders, protecting product margins and providing a hedge against freight rate increases.

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