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Freight forwarders have been warned that the recent trend by shipping lines to impose container no-show and booking cancellation fees could leave intermediaries exposed to “accounting nightmares”.
In recent months, ocean carriers have begun to tackle the problem of cargo no shows/late cancellations and applied a variety of fees, and the wording of their conditions are crucial to forwarders.
The fee is levied on the party that made the booking, rather than the beneficial cargo owner, notes online freight forwarder iContainers, which suggests forwarders draw up new policies with shippers that cancel shipments at the last minute.
Vice president of sales and operations of iContainers Klaus Lysdal said: “For freight forwarders and NVOCCs [non-vessel operating common carriers], these fees could become a much bigger challenge, as we do not necessarily control the cargo we are booking and often have no control over a client cancelling at the last minute.
“The OTI [ocean transport intermediary] community will have to prepare itself. OTIs should consider implementing policies to prevent potential accounting nightmares that could leave them stuck with cancellation charges.”
Like the European Shippers Council, Mr Lysdale partly welcomed the carriers’ initiative and suggested that, with the concentration of carriers into three main alliances as well as the recent round of consolidation in the industry, lines were now in stronger position to penalise no-shows.
“The no-shows fine is a step in the right direction from the carriers. Certainly, from their perspective, it’s strange that they have never been able to implement charges like these in the past. But now there are fewer carriers to choose from, the chances of these fees sticking around have greatly increased.”
However, he suggests that if carriers are unable to collect penalties, and the initiative does not lead to any significant decline in no-shows, carriers might have to change their strategy.
“If this fails to work again, the next step in the process may be to follow the airlines and demand payment at the time of booking. This would certainly ease the burden on the carriers’ planning.
“But it would also increase the demand for them to deliver in terms of space and equipment, and quite possibly increase sailing schedule integrity and dependability,” he said.
Comment on this article
Andres Pelaez
June 22, 2017 at 1:50 pmInteresting article.. And you can understand that shipping lines wants to charge from users this kind of incidents. You might think then that the other way would also work to show fair treatment. Let`s say for example, shipping lines paying shippers or freight forwarders when they roll over containers due to “lack of space” on vessels; or when they decide not to call some port and your cargo faces ETD delays.
Andy Lane
June 30, 2017 at 4:39 pmFully agreed, it should be bi-lateral, to be objective and fair.
For the “intermediaries”, a simple charge on +++, would be the only hedge required.
The entire supply chain will benefit from greater reliability and transparency, all need to contribute to make it truly work and enforceable. The time is ripe for change.