The shipping industry plays a vital role in the global supply chain, facilitating the movement of cargo across vast distances. Within the ocean freight industry, shipping lines are categorized as conference liners and non-conference liners, depending on their operational structures and network relationships.
While conference liners operate in a more collaborative and established framework (commonly referred to as a shipping conference), non-conference liners tend to have more agency with regard to pricing, routes, schedules, and coverage.
In this article, we’ll be taking a closer look at the similarities and differences between conference and non-conference liners. We’ll also touch on the advantages and disadvantages of each to help you better understand their role in the shipping and freight industry.
What Is a Conference Liner?
Conference liners are shipping lines that operate within a cooperative agreement (referred to as a conference). This conference of shipping lines takes a collaborative approach and work within a framework.
By pooling their resources and strategically aligning on operational and commercial topics, they strive to optimize vessel utilization, routes, scheduling, and pricing, in order to enhance operational efficiency and maximize profits.
Advantages of Conference Liners
- Schedule Stability: Conference liners offer the advantage of regular and scheduled services, providing shippers with reliable and predictable sailing. In turn, this reduces the risk of shipment delays and allows them to better plan their shipments.
- Fixed Rates: Conference liners work within a commercial framework where prices are transparent and set in alignment with each other. This allows shippers to plan their freight budgets more effectively and also reduces the risk of sudden fluctuations in shipping costs, which allows them more financial stability in their supply chain operations.
- Increased Utilization: By coordinating operations, conference liners can better match cargo demand with available vessel space, thereby maximizing utilization. This transparent method of capacity allocation not only helps shipping lines minimize costs but also contributes to environmental sustainability by reducing fuel consumption and greenhouse gas emissions.
- Service Network: Conference liners typically cover extensive networks that encompass a wide range of ports, offering comprehensive coverage for shippers. This expansive service network of conference liners enhances connectivity and trade opportunities, which gives shippers better access to global markets.
Disadvantages of Conference Liners
- Limited Flexibility: The fixed schedules and routes established by conference liners may not always align with the specific and unique shipping requirements of shippers. This lack of flexibility can pose challenges for businesses that require customized shipping solutions or those operating in niche markets.
- Lack of Competition: Reduced competition may lead to higher prices, as new joiners to liner conferences typically adhere to existing commercial frameworks. Moreover, this may also cause shippers to have fewer opportunities to negotiate rates or explore alternative shipping providers outside the conference liner agreement.
- Market Control: Liner conferences may acquire a significant market share and exert control over routes and vessel capacity. This control can potentially create barriers to entry for new competitors, making it challenging for them to establish themselves in the market. While this may initially not impact shippers, it can limit competition, which in the long run reduces choices for shippers, and potentially lead to less competitive pricing and service offerings in the industry.
- Antitrust Concerns: The collaborative nature of conference liners can raise concerns about anti-competitive behavior (particularly from non-conference liners). As a result, some regions have imposed restrictions or even abolished the practice of liner conferences in efforts to promote fair competition and prevent monopolistic practices in the shipping and logistics industry.
What Is a Non-Conference Liner?
A non-conference liner refers to a shipping line that operates independently without being a part of a conference or alliance with other shipping lines. Unlike conference liners that collaborate and coordinate within an operational and commercial framework, non-conference liners operate autonomously.
This means that non-conference liners make their own decisions with regards to shipping routes, schedules, pricing, and vessel utilization. In essence, they do not adhere to the framework of conference liners and operate independently.
Advantages of Non-Conference Liners
- Increased Flexibility: Non-conference liners can adapt their operations to accommodate unique shippers’ needs and operate in niche markets. This flexibility enables businesses to have more customized shipping options, such as dedicated vessels, specialized handling, or the ability to operate in niche markets that may not be covered by conference liner networks.
- Increased Competition: Non-conference liners promote competitiveness by operating autonomously. This competition can drive down prices as companies strive to attract customers, providing shippers with more options. Non-conference liners also tend to be more innovative as they employ new technology and introduce of new services and solutions to meet the evolving needs of shippers.
- Market Entry: Non-conference liners create an avenue for new shipping companies to enter the market and establish their presence. This increased accessibility and competition promotes a more dynamic and diverse shipping industry, allowing newer shipping lines to enter and operate within their own operational and commercial framework.
Disadvantages of Non-Conference Liners
- Schedule Variance: Non-conference liners may have schedules that are less predictable compared to conference liners. This variability can introduce challenges for shippers who rely on consistent and reliable transportation services that are offered by shipping lines.
- Pricing Volatility: Non-conference liners are more susceptible to market fluctuations, including changes in fuel prices, demand-supply dynamics, and competitive pressures. This volatility can make it challenging for shippers to forecast and manage their shipping costs.
- Limited Coverage: As they operate independently, non-conference liners may prioritize specific routes and potentially exclude less frequently served trade lanes. Limited coverage can pose challenges for shippers who require access to a broader range of ports or specific locations.
- Capacity Management: Without the collaborative efforts and shared resources of conference liners, non-conference liners may face challenges in optimizing their vessel utilization. This can result in situations of underutilization, where vessels operate below their desired capacity, which in turn may lead to lower profits and in some situations even losses.
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Co-Founder & Writer
About the Author
Gerrit is a certified international supply chain management professional with 16 years of industry experience, having worked for one of the largest global freight forwarders.
As the co-founder of freightcourse, he’s committed to his passion for serving as a source of education and information on various supply chain topics.