Monday, July 11, 2011

Charging for no-show bookings

Maersk announced last month their intention to start charging for containers which are booked but are not delivered in time for the sailing.

From The Journal of Commerce

Carrier also plans to pay for rolled boxes

Maersk Line is planning to charge its customers a fee for booked containers that fail to appear at the port of departure, and plans to compensate customers for booked containers that it fails to load on departing ships, the carrier said.

Maersk Line CEO Eivind Kolding addressed the issue of fees for no-show and rolled containers in a speech he gave at the time he presented his manifesto on June 7 calling for radical changes in the way the container industry conducts business.

“Right now we know that 30 percent of the containers that are booked with us do not turn up. That’s 30 percent no-shows,” he said in an interview with the Journal of Commerce on June 13. “That’s the average. So there is something for us to do in the industry to take the waste out.”

Kolding said Maersk will start to try to alter no-show behavior by charging what it calls a “load protection fee.”
“If we do not get the container on board, we will pay the customer. If the customer does not show up with the container, they will pay us, so we can get a behavioral discipline in the industry,” Kolding said.

We all know forwarders (mostly) make bookings based on what space they "think" they might need. Often this is because they are moving consolidated loads, and they don't know how much cargo they will received to consolidate.

Or, they might have customers who don't know if they will have a container to ship in the next week. Most companies are still unorganized enough to not plan ahead to make space for their cargo. There were never penalties, they probably always managed to get space (thanks to their forwarder making phantom bookings).

It appears this will be changing. It will take some time, because of the culture of doing business, because of they way companies are organized,, or more correctly, not organized.

I recall hearing back in the 60's when exports were booming, that export clerks in some steamship lines were taking bribes to ensure cargo got loaded. Of course, this was back in the era of legal price fixing.

Now carriers will start putting requirements in their contracts and tariffs. And, there is nothing wrong with this. It took the airlines at least 10 years after they were deregulated to start imposing penalties for changes.

The good news is Maersk says they will also pay if they do not load containers which are booked.

I have a feeling the era of "wait listing" will also return.

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