What’s the State of the Sea Freight Industry?
iscal year 2017 was a busy but eventful year
in the sea freight industry. There were work
stoppages at Spanish ports, Hanjin Shipping
Company declared bankruptcy, pending contract
negotiations between the Pacific Maritime Association
(PMA) and the International Longshore and Warehouse
Union (ILWU) along with mergers and acquisition that
impacted all major steamship lines. As we enter another
year there is still ambiguity regarding the current state
of the sea freight industry.
The volatility experienced can be divided into two
areas of focus: port operations and carrier stability. In
July of 2017 the Pacific Maritime Association and the
International Longshore and Warehouse Union came to
an agreement that has extended the recent stability we
have seen in each of the 29 western coast ports until
2022. This comes as a sigh of relief for not only
Blue
Diamond
, but for importers and exporters throughout the
world as many recall the congestion associated with the
work slow-downs of years past. During those periods,
all cargo owners experienced delayed shipments and
unfortunately saw a negative financial impact.
As we anxiously awaited the PMA & ILWU contract
negotiations to conclude, there were mergers,
acquisitions, consolidations and alliance changes
occurring with nearly every major ocean carrier in the
world. The catalyst for this activity was the bankruptcy
of Hanjin, a Korean-based ocean carrier. This put a
spotlight on a struggling industry and provided insight
as to why the mergers, acquisitions, and consolidations
were necessary. Also, the recent alliance changes
further highlighted the need for the sea freight industry
to find a solution to an imbalance in capacity and
plunging market rates because of an oversupply of
capacity on vessels going primarily into Asia. In 2016,
it has been estimated that the steamship companies
lost over 5 billion dollars. The industry is now in an
era where those that were once competitors are now
relying on each other to become more efficient.
Blue Diamond
is optimistic, but unsure of the effects
of these changes to the industry. We anticipate over
the next few years we will see a market equilibrium in
the sea freight industry that will ultimately impact all
importers and exporters. A critical part of our success
is the success of the steamship carriers and sea freight
industry. The criticality of our partners success has led
Blue Diamond
to take an active role in partnering with
our selected carriers and creating new relationships
throughout the industry. These partnerships, and our
export strategy of diversification to mitigate risk, will
give
Blue Diamond
the ability to adapt to the changing
landscape of the sea freight industry and allow the
cooperative to continue to add value to the grower-
owners that entrust us with their crops.
NEWS IN A NUTSHELL
1 6
A L M O N D F A C T S
