SO WHOSE FAULT IS IT ANYWAY?
From the "you've got to be kidding me file" comes the story of Mr. Gianluigi Aponte, CEO of Mediterranean Shipping Company. At a recent speech he gave to the Financial Times, Mr. Aponte claimed that the recent financial woes of the ocean carriers, "the deepest crisis in history" as he put it, was caused solely by the shippers who exploited overcapacity in the industry to drive down ocean freight rates.
I hate to break the news to Mr. Aponte but the steamship lines could have said no to the shippers' rate reduction requests if the rates were below the ocean carriers' out of pocket costs. The issue of overcapacity and under capacity and resulting lower and higher freight costs has been a fact of life for the past 30 years since economic deregulation of the transportation industry. The pendulum swings from the shipper's advantage to the carrier's advantage and back again.
It makes no sense to blame the shippers for the company's poor financial condition because without the shippers Mr. Aponte and other ocean carriers would not have a business. You can always point the finger at someone else for a company's financial failure; however there are many successful and profitable transportation businesses that know where to draw the line when it comes to reducing prices. Many savvy transportation companies welcome the loss of unprofitable business which they are more than happy to have their competition handle. After all, if a carrier is going to have financial trouble, it's better to be your competitor's problem and not yours.
On the other side of the coin, Steve Fishman, CEO of Big Lots claims that "the shipping companies have decided they haven't made the kind of money they want to make over the past year whether they have contracts with you or they don't have contracts with you". Meaning, you guessed it the ocean freight rates are going up and going up quite significantly. So apparently Mr. Aponte and many of the other ocean carriers are now seeing the pendulum swinging in their direction with higher freight rates to offset their prior losses. It was just a matter of time!
~Tony Nuzio
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