Is tailwind here to stay?

Is this a temporary phenomenon or here to stay? There is a clear short-term logic, with shipping lines having a profit margin of well above 50 per cent and in some cases around 70 per cent. However, it remains to be seen if the initiative is viable in the long run, as one would assume profit levels return to more normal levels.

Tailwind is much smaller than the established carriers and consequently needs to compensate the scale disadvantage to be viable in the long run. at could be ways to achieve this? The most feasible option seems to be a network design based on the volumes of Lidl and potentially a few other major shippers. This would contrast with the main shipping lines that have developed shipping networks without taking into account the volumes of the main customers – simply because even the largest customers only provide a relatively small share of the total volumes moved in the shipping network. A less complex network with fewer ports may suit the needs of Lidl and other large shippers and give Tailwind an edge in terms of reliability and turnaround time.

Tailwind’s ports in Europe, Koper, Rotterdam and Barcelona (with additional ‘ad-hoc’ calls added occasionally) are nicely spread to serve Europe’s main markets. One would assume Tailwind is looking for high-volume shippers willing to commit volumes on this network for a substantial period.

However, long term success still seems an uphill battle, as the scale advantages of large carriers are huge, and include access to dedicated terminals, better rates for terminal handling, towage bunkering and other port services (due to larger volumes) and lower port dues (as port authorities often provide volume rebates).

The development of Tailwind (and other entrants) will be closely watched, not only by shippers but also by regulators, as their fate provides useful clues about the contestability of container shipping.