By: Gary Ferrulli

Gary Ferrulli — Thu, 15 Sep 2016 23:45:26 +0000

Generally speaking I agree with your conclusion that carriers including Hanjin, do great harm to themselves. The details on big ships I disagree with,
but let that slide. The “customers” part in this is passive the past few years as carriers just kept offering lower and lower rates, once in a while shippers asked, most of the time the carriers volunteered. However, let’s be realistic about businesses, they constantly try to find a cheaper way of doing things.
If you take a typical large corporation, at the beginning of each year the CEO will send out his Specific Objectives for the year; he sends it to his direct reports who adapt the CEO’s objectives to fit their specific job. I guarantee you that every year the CEO has something in his or her Specific Objectives called cost containment or cost reduction, for sake of argument say it is going to be a 5% reduction of all costs . So the VP’s all put in to
their Specific Objectives, a 5% reduction to their cost stream. Somewhere the Logistics and/or Supply Chain people see this and simply mimic it, they have no choice, their compensation and bonus’s are tied to that. They can pursue those or forego their bonus’s and get a poor review. Which course would you take?

Comments on: Why Blaming Shippers for Hanjin’s Demise is Ridiculous

By: Gary Ferrulli