Zero-sum mindset in container shipping destroys value for all

August 10, 2015

Zero-sum mindset in container shipping destroys value for all

A new whitepaper on how to improve the relationship between Carriers and Freight Forwarders highlights the counterproductive behavioural patterns in container shipping and suggests a different way forward. Having encountered these dynamics on several engagements, QVARTZ decided to look deeper into understanding this relationship. We have interviewed 50+ managers and executives from 30+ companies, including Shippers, global and regional Carriers as well as global, regional and local Freight Forwarders in Europe, the Middle East and Asia.

Intermediaries are known in many industries. In most cases, the intermediary is either exploiting market imperfections and/or bridging complexity. Oftentimes, the supply side considers the intermediary an unavoidable evil.

At first glance, container shipping is no different: Freight Forwarders act as intermediaries and market makers, consolidating volume, pressuring Carriers for better rates and taking a cut in the process.

When you look beneath the surface, however, it becomes evident that the current industry dynamics destroy value for all. The relationship between Carriers and Freight Forwarders is blurry, which leads to inconsistent behaviour and fosters a short-term and transactional approach to working together.  Sometimes they are suppliers and customers; other times partners and sometimes even competitors. This ambiguity is counterproductive for everyone.

The insights from this study suggest that Carriers and Freight Forwarders can do a great deal – both unilaterally and together – to improve their working relationships and create new value in the industry to the benefit of all. Those who have the courage to invite for co-creation will most likely be the winners of the next decade. The cocktail of mutual dependency, competition and the market moving towards more transparency makes it crucial for all parties to define the right strategies.

Read the whitepaper