“Respect, fairness and integrity” must be the cornerstone of a post-pandemic shipping market which has produced a breeding ground for opportunistic behaviours.
That is the view of Mihai Stroe, Director of Global Transportation at Amer Sports, who believes the turbulent market has brought out the worst in some businesses.
Mihai made his feelings known while speaking to Xeneta CEO Patrik Berglund during the latest customer-exclusive Ocean Freight Market Pulse webinar.
He said: “I have a few things that I don’t like about the industry and one of them is the shrinking level of integrity and opportunistic and short-term thinking that I’ve seen.
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“Throughout Covid when supply and demand was not in balance we can see behaviour changed. This is the time you see who could be a good partner for your business – and who would not be.”
Mihai revealed to the Xeneta Ocean Freight Market Pulse webinar that Amer have ended relationships as a result of opportunistic behaviour.
He said: “We have seen companies try to maximise their profits and in some cases the respect for the customer wasn’t there and the support for the customer wasn’t there.
“In other cases it was there – through tough times some companies will come ahead of others. As a business you choose the right partnership with the right company.
“So we stopped engaging with companies who didn’t have the level of integrity we need.”
Amer has some of the world’s most recognizable sports brands including Wilson, Salomon, and Arc’teryx with operations in 38 countries.
Mihai believes values are central to their continued success. He said: “We treat everybody with respect, fairness and a high level of integrity. It’s something we’re very strong about – we expect our partners to respect their commitments and we respect our commitments.
“We have the best products in the world and are leading the market in many areas – but it’s not enough, we have to make sure those products are available for consumers.”
Amer tender in 12-month cycles and aim to lock all volumes into these contracts – but the spot market still plays an important role in remaining agile to any unexpected requirements during the year.
Mihai said: “A new factory may be opening up, there may be a new sourcing opportunity, or a new customer pops up somewhere in the world.
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“We have about 20% of volume managed by NVOCCs and for the spot we go to them.”
It is in these situations Mihai relies heavily upon the Xeneta platform to benchmark the spot rate offered and guard against any questionable behaviours at play.
He said: “We engage with [the NVOCC] to provide the rate. But where is the rate they have provided located [in the market]– high? Mid? Low? This is where in all honesty Xeneta is adding a lot of value to our decision processes.
“We can go back and say, ‘you are way off’.”
Amer is a truly global company with the transpacific and Asia to Europe trades being of high importance. Amer also ship products from Europe to China, Japan, Korea, the US and Canada as well as from North America to APEC.
But it was the transpacific which was a key focus of conversation with Patrik during the Ocean Freight Market Pulse webinar and the fact ‘disruption is the new normal’.
Xeneta data shows rates on the China to US West Coast long-term market dropped continuously until the summer where they remained relatively stable, while the short-term market experienced a spike of 50% before starting to tail off again in September.
Mihai said: “Those mass variations are creating a lot of issues for a person in my position – we have to explain [to the Amer Executive] why the budget multiplies a few times.
“If we look from a percentage perspective; 10, 15 or 20 percent [price increase] is high but when you talk about 50 or 100 percent it’s very hard to explain and have a proper discussion.
“It should be more stable. Rates should not be allowed to go red, it’s not okay and the variations of price should be justified by service sustainability and reliability.”
The challenges posed by an unscrupulous market are not unique to Amer and many Xeneta customers listening to the Pulse webinar shared Mihai’s concerns.
So how can shippers navigate a market without a moral compass?
Well, similar to Amer, it can be achieved through the visibility and benchmarking of data provided by Xeneta.
Greater transparency in the shipping market will then hopefully mean it is integrity rather than opportunism that is rewarded.