Ocean Shipping Rates - Volatility Can Mean Opportunity to the Vigilant

Is anyone else nervous about the volatility in the stock market of late? We in the cargo, freight and logistics business have been on an especially wild ride since 2008. Bill Corley of Export America lays it out for us in his informative Technical Advice article.

Basically there are six key contributing factors to the price and availabiity swings we're managing behind the scenes when as help our customers move their personal effects, business exports and dry goods abroad:

Continually increasing freight charges within the logistics chain; those are the fees and tarifs we pay along the way when moving containers from origination point through to destination point).

Vessel capacity; the room available on ocean-going cargo shops which seem to us to be unnecessarily scarce..so much so, that the Federal Maritime Commission is investigating the causes of this shortage. Anyone flying over Singapore seeing the miles-upon-miles of "mothballed" cargo ships has to wonder why these assets are not being put to use...hmmm.

Shipping lines selectively excluding customers of certain volume and revenue characteristics. We've all heard of "reserving the right to refuse service to anyone"...but come-on people! We're talking cargo containers, not country club memberships here. Like the highway system in our great nation, the shipping lanes are maintained, reguleted and protected by the tax-paying, sweat-equity business owners - we've earned access so let's get real about whose paying their bills right now. Even cargo customers with "preferred" status are waiting upwards of 4 weeks to get their stuff aboard so something just doesn't add up behind these conditions.

Logistics is a complex business with lots of room for mistakes. Clearly understood forms and documents in one country can be grossly misunderstood in another. And when imperfect paper-based processing is abundant, imagine what automating those same processes over the internet can do! There is both humor and caution in what we learned during Shanghai's Expo 2010 . Funny, yes; but only until you ponder the potential disasters these sorts of misunderstandings can trigger in tense logistics and emergency communications situations. It's slow going for these folks, but we must honor their persistence and stand poised for the advice they'll have for the rest of the world when they're done.

Long road ahead for recovery: Shipping, as a lagging indicator of economic growth, is still in it's downturn. NASSCO has announced a significant layoff for this summer; which means that a domestic response to constrained vessel capacity isn't likely in the near term - workers in this sector are shifting their focus from building to repair.

Bottom Line: Tough times continue; so trust your friends or look for new ones (with good references), book in advance, be flexible with rate swings and ship dates, make backup plans. Chaos breads opportunity for new relationships and gives the better agents an opportunity to demonstrate their capabilities.

With 25 years experience in Asia freight logistics, a deep network of experienced partners, and good relationships with agents all over the world; Universal Cargo Management, Inc. in Los Angeles should be on your short list when seeking bids and new business relationships. www.universalcargo.com