Alliances Continued (Part II)

So we have covered why alliances exist, in order for the smaller carriers to try and compete with the largest carriers. However, it doesn’t stop there.

Each alliance is run using a Vessel Sharing Agreement working document. This document covers the day to day aspects of running the alliance. It outlines the responsibilities of each partner and has rules covering what is acceptable behaviour from each partner.

Now, there are a number of ways this VSA document can be used. Lines that are not so used to working within VSA’s (I can’t name names here), have a tendency to either follow the VSA agreement to the letter, and/or not let the stowage coordinators see it at all.

Smart operators know exactly what the VSA covers but, most importantly, they know what it doesn’t say. If, for example, the VSA does not explicitly say that you, as a partner in this VSA, cannot do something, then effectively you can do it. The only thing you have to ensure is that you do not exceed your stated allocation (unless you want to pay for more space on a partner vessel – which is normally covered by a VSA).

To put this into context, if you, as a shipping line, have a hub port call where only your cargo will be loaded and the partners do not have any cargo, you can choose to do things that are not covered by the VSA.

A classic example of this would be that, when your vessels are in the hub port, you pick and choose the best cargo mix for utilizing your own vessel. If you have cargo that is going to affect your ability to maximize the utilization on your own vessel, then you will hold that cargo back until one of your partners’ vessels comes in. For example, very heavy 20ft units cause problems in utilization, so why not shove them onto a partner vessel?

If the VSA does not explicitly state you cannot do this, then the assumption is, you can!. No matter how much your partner protests, all you have to do is bring out the agreement, ask them where it says you can’t do this and then point to the signatures on the document.

This is an example of using the VSA in an extreme case, but that’s not to say it doesn’t happen.

Another example would be from when I was still sailing (about 12 years ago now) as part of the Grand Alliance. One of our partners would deliberately load Reefer Containers onto our (and presumably other partner vessels) that they thought were likely to need repairs. The most common repair would be a failure of the compressor – a vital component in keeping the reefer motor running and the temperature set.

As part of the agreement, if a reefer broke down on any vessel within the alliance, the partner that happened to be carrying the container at the time would bear the labour and expenses of replacing the compressor. As soon as it was repaired and off our vessels, the reefer would be moved back into the pool of our partner and only be loaded on their own vessels until repairs looked imminent again.

In terms of the main goals of an alliance, that is, to share resources and compete at a larger scale, they work. What goes on between the partners is often against the spirit of the agreement, but never breaks the VSA rules.

To end, alliance work, but there is usually at least one partner that is much smarter than the rest…….