TPM22: Relationships Matter

To say the environment will be “complex” when TPM reconvenes in February for the first time since 2019 is an, um, understatement. So much service interruption and fundamental change has occurred, and still will exist next February as a result of the pandemic and its ripple effects, that when the industry gathers in person for the first time in three years, it will be a cauldron of intense and memorable interactions — planned and spontaneous. The bottom line: Relationships matter. 

Each of us, whether we’re a shipper, carrier, 3PL, port or other player, will bring to TPM22 a unique perspective defined by how our own jobs and organizations have been impacted and reshaped by the pandemic. But broad strokes will define our perspectives: 

  • If you are a shipper, depending on your size and how you played the market over the past year, this period has been barely tolerable, problematic, or unbearable. The combination of unimaginable freight rate increases combined with extensive delays and unsatisfactory service reliability —not just in ocean but across the supply chain — makes this market not only unprecedented, but one that was literally beyond comprehension a year ago. There is no frame of reference. You are literally chartering your own ships if you have the ability to do. This isn’t a movie. 
  • If you are a carrier, your profits this year are beyond your wildest dreams. Your industry might see profits of $100 billion this year, according to Drewry, “making up for 20 years of value destruction in just a single year,” analyst Lars Jensen said. And beyond that, you are looking at the prospect of permanently higher rates and the ability to keep rate volatility in check by adjusting capacity in the short term, potentially making the years of sub-$1,500 rates to the West Coast and minimal profits a distant memory. But your customers are unhappy and complaining to regulators, and those regulators are listening. In the US, Congress, for the first time in nearly a quarter century, will soon introduce legislation addressing shippers’ concerns on detention and demurrage and other issues. 
  • If you are a forwarder, you’re caught in the middle. Yes, you’re making money but it’s not coming easily. The pressure on you to find space for your customers and deliver the quality customer experience that has enabled your sector to capture an ever-larger slice of the market versus carriers has never been more challenged. You are turning away business that previously you would have accepted gleefully. You've never worked harder and your people are exhausted. Like everyone else, you need a break, but somehow you keep going. 

Where is the middle ground? Where is there a basis for dialogue, let alone collaboration or even partnership? Many shippers blame carriers for a litany of grievances: canceled bookings or blanket refusals to carry cargo, unfair detention and demurrage bills, failure to honor minimum quantity commitments, inaccurate and alarming notices. Carriers say the volumes exceed the capacity to handle it and that port congestion is beyond their control. They say all vessel capacity is deployed and that dwell times on containers and chassis have lengthened greatly, further constricting capacity, all this against a continuing surge in demand that has sent the container ship charter market — an independent indicator of demand — to historic highs. They have placed orders for hundreds of new ships to meet demand. 

Most likely this will still be the situation by the time TPM22 begins on Feb. 27. But here’s the point: A new and promising factor will be at play that has been absent over these many months of crisis — the ability to interact in person. Yes, relationships matter. How much has physical isolation affected the dynamic? How ineffective are endless Zoom calls in building and leveraging relationships for mutual advantage as this industry has done for centuries? Now, at long last, the ability to build real relationships will be restored. 

At the end of the day, that matters. As distrust and misunderstanding have spiked alongside freight rates, no one is going anywhere. Everyone needs everyone. Our challenge is to rebuild relationships and find a common basis for doing business going forward, however difficult that might seem from today’s crisis-ridden vantage point. We look forward to seeing you in Long Beach.

While virtual TPM 2021 was quite successful, it is great to see that TPM 2022 will return to its customary live format in Long Beach. This is the most valuable event in the industry due to its program content and networking opportunities. The many challenges that currently exist in the global supply chain will only enhance the importance of this event.”

-James I. Newsome III, President and CEO, South Carolina Ports Authority