Peter Nordstrom joined DB Schenker as the Regional Head of Ocean Product across the Americas in early-2020. At the time, COVID-19 was largely relegated to China and had yet to begin wreaking havoc on nearly every country around the world.
Responsible for developing and implementing ocean freight strategies—including preferred carrier relationship management, negotiations, and procurement across North and South America—Nordstrom has his finger on the pulse of the ocean shipping environment.
Reflecting on 2020 thus far, Nordstrom says the post-Chinese New Year ramp-up was extremely slow, and mainly because many Chinese factories never went back into full production after the nationwide holiday. “COVID-19 curtailed a lot of that activity and kept people from returning to their jobs,” says Nordstrom.
With the number of Coronavirus cases in China no longer rising, the situation has begun to shift. “We’ve seen a pretty clear ramp-up in volumes, with manufacturers and factories in China basically getting back to normal,” says Nordstrom. “There’s somewhat less capacity than there was before Chinese New Year, but things are more or less getting back to normal.”
China Shakes it Off
The uptick in activity in China is pushing more activity on the water, where container shipping volumes are rising exponentially. “From an ocean perspective, we’re basically back to where we were at this time last year,” says Nordstrom, who notes that the Americas is made up of “consumption countries.” As consumption slows recently—based on possible job layoffs, business shutdowns, and the fact that consumers are sticking to the confines of their own homes—he predicts a slowdown in both ocean and airfreight shipment volumes in 2020.
As a whole, ocean carriers are still in a “concentration mode,” meaning that they are consolidating their efforts by aligning with the supply / demand situation. “I don’t think we’ve reached the end of that trend yet,” says Nordstrom, who predicts that some niche carriers may go out of business or at least withdraw services as a result of the larger macroeconomic trends that are at work right now.
“We’ve already seen Pacific International Lines (PIL) withdraw its service from the Transpacific market (the company announced that its last Transpacific sailing would be in March 2020),” Nordstrom points out. “I think that type of behavior will continue.”
Focus on Relationships
Bullish on the prospects for DB Schenker’s ocean logistics division this year, Nordstrom says the company is well positioned to service all of its ocean customers in the Americas right now. Despite the fact that the carriers are controlling the market, and using void/blank sailings to keep shipping rates at a “healthy” level, he says the opportunities for both importers and exporters that use ocean shipping are plentiful right now.
To shippers that want to leverage these opportunities, Nordstrom advises leveraging existing relationships with logistics partners that know the market well, and that understand the nuances of operating in a fluctuating, volatile market industry.
“We’re in an environment where it’s extremely important to act as partners versus simply having ‘supplier-vendor’ relationships,” Nordstrom says. “In a turbulent market, we all need to work together and act as true partners in all of this, versus just transactional business partners.”