Shippers ‘constructively dissatisfied’ with service

   With 250 members, Gemini Shippers Group is one of the largest shippers associations in the country, using its collective power to negotiate competitive ocean freight rates and streamline the shipping process.
   Ken O’Brien, Gemini’s chief operating officer, says, “We, like many shippers, have been constructively dissatisfied with service levels” offered by container shipping companies.
   The twist is, he believes, many carriers would agree.
   “I don’t think many of the carriers feel that they are delivering at the level that they should. Some of them are more public about admitting it, and some have said it off the record to us,” O’Brien says.
   “I guess you could argue that they’re not making the money to provide the service or they lost focus on the service or all the other distractions of a very volatile shipping industry — be it rate, price, fuel, operational cost, etc. — distracted some of the players.
   “I think the answer is all of the above,” says O’Brien, a former liner executive himself, having worked 21 years at Hapag-Lloyd and APL. Problems at carriers can be attributed to both “technology and not keeping up and reinvesting in people and processes.”
   But he says he believes the carriers Gemini works with — and he says in the transpacific, for example, it works with a couple of lines from each of the three major alliances and independents — are working to improve service.
   When Gemini calls those carriers or has quarterly discussions with them, “they’re listening” — hence his use of the term “constructive dissatisfaction.”
   But he adds the pace at which carriers are able to fix problems “is a struggle.”
   Gemini members move a wide variety of items, including fashion accessories, luggage, footwear, promotional items, giftware, office supplies, apparel, electronics, plumbing supplies, hard goods and outdoor/sporting goods.
   The biggest pain point for its members right now? Last-mile delivery.
   O’Brien is not certain what the root cause of that is. It could be the federal requirement for truckers to use electronic logging devices has reduced the number of hours some drivers had previously worked. It could be driver turnover or drivers going to work for ridesharing companies like Uber. Or it could be highway congestion resulting from a lack of infrastructure spending in the United States.
   But he says the cost of inland transportation has risen and service levels have gone down.
   He said Gemini has been working to mitigate those effects.
   It has built its own proprietary tool for tracking and tracing cargo to give members better visibility on where their cargo is, both on railroads and at sea by encompassing data from automatic identification systems for tracking ships.
   “I can’t make the train go faster, but I can at least give you a better idea of where your cargo is and what you can expect to happen,” says O’Brien.
   Gemini also has contracted with trucking companies to help its members with drayage in certain markets, including the Los Angeles/Long Beach region and Chicago.
   While many Gemini members have cargo delivered to inland destinations directly by ocean carriers under so-called “door” bills of lading, he says in some intermodal hubs, it may be better to align a member with a trucker who can move a container to its final destination.
   Gemini also has signed agreements with chassis providers. It can obtain better pricing and service for equipment, but O’Brien says the biggest advantage for members is improving the availability of chassis where equipment is in short supply.
   Beyond buying transportation in bulk to get a better price, O’Brien says that part of the value of a shippers association is playing “matchmaker” and understanding what carriers do well and what cargo they want and don’t want.
   Gemini actually encompasses two shippers association — Gemini Shippers Association and the group from which it emerged, the Fashion Accessories Shippers Association.
   While Gemini doesn’t reveal the quantity of cargo that it arranges shipment for each year, O’Brien says if it did, it would be among the top 10 importers on a list published each year by the Journal of Commerce, all of which are listed as shipping more than 120,000 TEUs.
   O’Brien says Gemini has had to “get much more granular this year,” looking at the needs of its members and also what carriers want.
   “This year it feels to me like the carriers aren’t this ubiquitous Jell-O where everyone is exactly the same,” he says, adding that he never bought the notion of  “what is good for carrier A being good for carrier B and carrier C” as a steamship executive and he doesn’t buy it today..
   “Each carrier is very distinct based on their mix of customers and trade lanes, and I think when we broad brush it, it’s not a good thing. There are good carriers that are bad in certain places and there’s carriers that aren’t,” O’Brien says.
   Because of their financial results, he thinks carriers are being “forced to get much more aware of their network opportunities. I believe business intelligence tools are getting better and people are more aware of what’s a good move or a bad move” for their company.
   If this means carriers are “more in tune with their book of business and that’s starting to drive decision-making, it is not a bad thing,” he says.
   Gemini is supportive of the effort by some carriers to offer premium services that offer faster transit time or guaranteed loading, though he says Gemini has been fortunate in not seeing its members’ cargo rolled. 
   While the plan by the West Coast Marine Terminal Operators Association to modify the PierPass system in the Ports of Los Angeles and Long Beach has sparked a lot of comment from importers, O’Brien says Gemini has decided to “tread lightly” when speaking about the issue because with so many members, some are likely to disagree with whatever the association says.
   Some shippers have optimized their operations to move containers to and from terminals at night because the existing PierPass system charges a fee during weekdays and waives it at night and on Saturdays to encourage truckers to transact business when highways around the port are less busy.
   But he notes not every shipper can pull containers from the terminals at night.
   While PierPass has been successful in easing congestion, he says it has always felt like “a very blunt object” being used as a tool to fix a complex problem, and that technology has created an opportunity to offer more dynamic pricing.
   “My Uber has dynamic pricing and I pay more when it’s raining out,” he says. “Why can’t transportation be thinking a little bit more creatively?”
   But he says there are things he likes about the proposed changes that some call “PierPass 2.0,” including offering incentives for dual transactions in which truckers are dropping off and picking up a container at the same time at a terminal.
   He hopes the proposed changes are “not the last step, but one of a series that optimizes the infrastructure. … I hope it doesn’t take as long for PierPass 3.0 as it did to get to PierPass 2.0.”
   Earlier this year Gemini surveyed shippers to find out how they feel about service.
   He says some shippers are frustrated with the process of getting bookings confirmed and getting carriers to release space in a timely manner, though he admits this is partly because shippers have trouble giving carriers accurate forecasts of how many containers they are going to ship weeks in advance.
   He also says “many shippers that I’ve talked to both in and outside this association continue to say that what I would call data integrity, both invoice and transactional EDI, is not where it needs to be for many carriers.”
   He is enthusiastic about carriers wanting to do more “digitization” and notes Gemini has built a proprietary platform it uses to audit every bill of lading, matching electronic invoices and matching them against rates in  databases without human intervention and determining what’s right and wrong.
   “My cautionary tale would be that tech without business insight is dangerous,” says O’Brien. “We like to think we have a lot of business insight, and if we combine it with good tech we can not only reduce keystrokes, which ultimately reduces error rate, but we can start to use data to help drive decision-making.”