Carriers set service reliability record in 2015, Drewry says

Greg Knowler, Senior Asia Editor | Jan 18, 2016 3:46AM EST

On-time container service reliability for 2015 on all trades was the highest ever recorded at 73 percent, according to Drewry’s Container Insight Weekly.

The analyst found that despite deterioration in the final three months of the year, the year-long reliability average for all trades covered was a marked improvement on 2014 when it plummeted to just 59 percent.

Drewry has been monitoring container service reliability for 10 years and the 2015 performance just beat the 72 percent reliability recorded in 2012. But the analyst acknowledged the reasons for the improved performance were hard to spot.

“Finding an explanation for the dramatic improvement seen last year is difficult, but our unscientific take is that it is a reflection of the operational improvements brought about by the new, enlarged carrier alliances and that carriers in general are, belatedly, recognising the importance of reliability in terms of marketing and customer retention,” Drewry said.

The gap between the best and worst performing lines narrowed with the variation now being around 20 percentage points, when it has been much wider in previous years.

The carrier with the highest overall on-time performance in 2015 was Maersk Line with a 12-month average of 81 percent. Second was Evergreen with 78 percent, while “K” Line took the bronze medal with 77.6 percent. The wooden spoon went to MSC with 58.4 percent.

Drewry said the early months of 2015 were negatively affected by the introduction of the new alliance structures that required some time to fully bed-in, and congestion issues at U.S. West Coast ports of Los Angeles and Long Beach. Service reliability for ships discharging at Los Angeles-Long Beach plummeted to below 10 percent in February 2015 as labor issues brought the main U.S. gateway to a standstill.

Reliability across the covered trades steadily improved as the months ticked by as the alliance and West Coast issues dissipated, reaching a data-series high in September.

The higher standard for container service reliability is very welcome news to shippers as predictability and reliability are key to managing supply chains costs for importers and exporters, the analyst noted. A more reliable shipping service can reduce costs in areas such as inventory holding or expedited freight-spend. Often these savings can be greater than those achieved through securing even the most competitive ocean freight rates.

Drewry said it believed this was a new normal that would last but also that it was probably close to the ceiling of what shippers could expect from carriers in the short-to-medium term as most of their attention would be directed towards restoring profitability.