5 Tips for BCOs with upcoming tenders

What is the “new normal” in supply chain and when can we expect reliable flows again? How is supply chain affected by inflation and how should BCO:s prepares to avoid risks?

APM Terminals talked to Peter Sand, senior analyst at Xeneta, about all this and much more. Now he is sharing his best tips with you.

What do you do at Xeneta?
Xeneta is a benchmarking platform for freight rates. We collect data and perform market analyses to enable our customers to monitor the market, identify disruptions and make the right decisions when analysing their own position in the market and the volumes and shipments they need. Our services prepare customers for the tender season.

Who are your customers?
The more complex your flows, the more you get out of our services. Recently, we helped some of the largest global BCO:s as a result of the major cost increases that have arisen due to the strain on logistics.

What is the future of intra-European container freight?
Short-sea transport is one of the best things to have happened to logistics, but it requires investments in ports and terminals. We are currently seeing major capacity problems in ports in Europe, where volumes are decreasing but yard density is increasing. This needs to be resolved before short-sea can fully fulfil the needs. I believe that a combination of transport modes is currently the best solution for intra-European logistics, but it needs to be done smarter.

Several external factors have affected supply chain in recent years. What is the “new normal” and when can we expect smooth flows again?
Within a year, we can expect greater predictability and reliability in supply chain. At present, about 40 per cent of vessels are on time, a figure that should be 80 per cent on average. This illustrates that we still have a long way to go. Many players in supply chain have struggled to manage day-to-day operations, and several ports have been forced to close down due to factors such as industrial actions or external factors outside their control.

I think we can say with certainty that the “new normal” will look different. The Scandinavian and European markets may be at an advantage because they embraced technology at an early stage. For transport buyers, the potential of gaining insight into their own logistics chain is a major advantage and something that was often handed over to freight forwarders before the pandemic.

How do inflation and fluctuations in the economy affect the supply chain?
For the first time ever, we at Xeneta expect volumes to be higher in the first half of the year than in the second half. It may be challenging for players in the supply chain who are used to working according to a predictable calendar year with recurring peaks. The European market has fallen by almost five per cent during the first half of the year, compared with the same period last year.

Global freight costs will of course fall based on the fill rate of the vessels. From the Far East to Europe, freight prices have fallen by around 40 per cent since the beginning of May. However, this development has not been driven by European demand but rather by North American consumers who have pushed up freight rates on the European routes.

In other markets, prices have not fallen as quickly, but they are definitely on the way down. Nevertheless, the rates are far from pre-pandemic levels.

How does this affect European ports?
Transport buyers demand predictability and supply chain stability. This puts pressure on ports to deliver stable and flexible service, and if a port or terminal cannot live up to this, volumes will be redirected to another port. Today, European ports face major challenges in reducing density, i.e. the number of containers that remain at the terminal. This affects flows and handling efficiency.

Peter Sand shares his 5 top tips for BCOs

1. Be aware that this peak season will be different and be prepared to act accordingly.
2. Know your business and your own transport needs well.
3. Use this information to position yourself in the tendering process. The better you monitor your volumes and the more stable your flows, the better chance you have of doing business with the right carriers.
4. Look over your potential for renegotiating long-term contracts with transport companies to find the balance between spot rates and the contracts you are bound by.
5. Have a clear contingency plan for unexpected events, such as industrial actions, other disruptions and external factors in the major continental ports.