Role of Ocean Carriers Will Expand in 2011
February 9, 2011 The challenge in 2011 might be “Touching and feeling the fabric of our lives.” With inclement weather affecting cotton production in China and India, flooding destroying a significant portion of the 2010 Pakistan crop, and export restrictions by some governments, there is a spotlight on the U.S. cotton market’s supply. The U.S. has experienced favorable crop conditions and the key for the supply chain is for ocean carriers to be able to respond to shifts in the worldwide sourcing and manufacturing patterns.
As the reality of the demand became apparent in the last few months, panic purchasing by apparel manufacturers ensued as they scrambled to secure their material needs in spite of the record-high prices. The manufacturers also started to switch their production to countries with lower labor costs (such as Vietnam, Cambodia and Bangladesh) or where customs charges are less of a factor (such as Egypt and Nicaragua).
Export bookings for raw cotton are on the rise, and China continues to be a major importer with strong, continued demand.
In order to accommodate this scenario, ocean carriers need to work with their customers to ascertain the anticipated production locations, volumes and shipping dates in order for carriers to coordinate the necessary equipment, positioning and vessel space for the particular export service.
Coordination between the shipper, intermodal provider, port and ocean carrier will be critical. The changing sourcing patterns will be a key factor in determining the global export and import patterns. While many countries may benefit from this situation, their port and intermodal infrastructure must be able to accommodate this shift as well. Likewise, the finished product for export will also need to be distributed to the final distribution locations. With import duties varying from 8 percent to as much as 32 percent (depending on the country and the special duty or duty-free agreements with a particular country), this may further influence production locations. Countries involved in cotton or yarn forward operations will have an advantage when it comes to meeting their customers’ needs.
It is a relationship business
Demand in emerging and developing markets is expected to increase in the years ahead. For ocean carriers, the key is to work with critical stakeholders to foster clear communications regarding what is required in terms of containers, chassis, vessel space and shipping dates.
The future movement of cotton goes beyond creating close customer connections; the future is positive customer relationships.
With continued growth anticipated in this market, and the fact that ocean shipping will remain the most environmentally friendly mode of transportation, success in the future will rely on working with customers to deliver the necessary material with the least impact to the marine environment and air emissions in port areas, while assisting customers in reducing their own environmental footprint–and, of course, getting cargo to the right place, at the right time.
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