Peak season chaos was 'inevitable'

Better forecasting would not have averted the peak season chaos last year, but will help prevent it repeating, according to senior forwarding and logistics executives.

Shippers, forwarders and carriers all shared some of the blame for the backlogs and scramble for capacity in the second half of 2009, although ultimately, carriers “in survival mode” were responsible, said Diederick de Vroet, north-west Europe senior VP for sea freight at Kuehne + Nagel.

“It was caused by the reduction of capacity by the carriers,” he said.

“It is a triangular relationship in terms of communication between shippers, forwarders and carriers, but the way sea freight and air freight carriers adjusted capacity [in the second half of last year] had nothing to do with getting the forecasts right – it was to do with getting their profitability up to a level where they stopped losing money.

“The priority for carriers shifted from being commercially driven to, really, survival. We came across strong survival instincts to drive the market [rate] levels up to a level they felt comfortable with again.”

John Pattullo, CEO of Ceva Logistics, said that there was always room for improvement in forecasting and communication between shippers, forwarders and carriers, but agreed the main factor, ultimately, in the capacity crunch last year was the sudden fleet cuts by carriers.

“Understandably, air and ocean carriers reduced capacity because they had had such a difficult first half,” he said.

“The levels of demand in the second half were also higher than people were forecasting during the doom and gloom of the second quarter.

“You could call that poor forecasting, although those were also exceptional conditions.”

Although better forecasting would not have prevented the chaos last year, de Vroet believed it would help in the future.

“With the recovery of rates and volumes we have seen in recent months, our expectation is that carriers will not be in survival mode this year in the same way as they were last year,” he said.

“We always talk about forecasting, but this year has taught us to focus with individual customers to get the forecasting right.

“Within that, of course, there are always factories where there is delayed production, but still, if we can make the forecast more accurate, will help air and sea freight.

“If you can forecast eight weeks in advance – from actual [customer manufacturing] orders – then there is a certain window where the data is more or less accurate.” (source IFW)

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