Ocean Containership Vessel Sharing Agreements to be Realigned in Q2 2017 – What to Expect?

The below graphic gives a snapshot of the current VSA (Vessel Sharing Agreement) structure across the ocean carrier community as well as what will become of the carrier alliances in April of this year. There may be some minor adjustments to the below but essentially these will be the major VSA’s going forward as of April 1, 2017:

ocean-alliances-2017

What to Expect?

David Arsenault, the former CEO of Hyundai Merchant Marine, has warned “We’ve seen alliances get reshuffled in the past, but never have we seen all of those alliances kick off with a shotgun start at one time.” Shippers and consumers of ocean containership products should be aware that a restructuring of this magnitude results is a number of new or vastly expanded relationships among carriers and between carriers and terminals that could bring about a variety of challenges in the supply chain during this transition period. Potential challenges include but are not limited to:

  • Delays in both landside and high seas operations
  •  Terminal changes at ports around the world as the ocean carriers determine which ports and terminals the ships in the new rotations will call at.
  • Congestion at key container ports around the world.
  • Negotiations with shore-side labor may evolve as new terminal leases and berthing contracts are negotiated and developed.
  • Chassis availability issues, mainly in North America.
  • Changes with rail cutoffs (upstream), again mainly in North America

How to prepare for the potential challenges?

Overall the keys to overcoming these challenges will be to:

  • Communicate openly with overseas trading partners about the upcoming change in carrier alliances
  • Build some excess lead time into your supply chain
  • Consider advancing production and shipping orders ahead of the new VSA launch date
  • Consider having safety stock in key regions or facilities
  • Maintain a diverse ocean carrier mix to support your business

Odyssey will be monitoring the situation very closely in the weeks ahead and will keep you informed as developments warrant. In the interim if you have any questions please feel free to reach out to your Odyssey representative.