News / Indian shippers with spot bookings face a return of no-show fees

Hapag-Lloyd's Express Rome. Credit Hapag-Lloyd.

Current trends suggest a return to some sort of rate stability in the Indian market.

This has, seemingly, given rise to the return of booking cancellation charges – back to haunt shippers seeking spot bookings.

Indian exporters and freight forwarders have taken hefty GRI hits over the past year, but now find themselves on the edge of a turn in freight rate levels.

According to regional industry sources, major carriers serving the Indian trade are heavily penalising walk-in customers for failing to gate-in cargo for the booked sailing as they increasingly build substantial volumes via long-term service contracts.

“Hapag-Lloyd is charging $1,000 per container for no-shows,” a Mumbai-based freight forwarder told The Loadstar. “Other carriers are not far behind in penalising spot booking cancellations.”

Cancellations have become a major concern for shipping lines because of the acute capacity pressure created by stronger-than-expected demand in the aftermath of Covid-19 supply chain dysfunction.

MSC issued an advisory announcing a no-show penalty of $100 per container for all trade routes from India, beginning early next month.

“Booking cancellation fees (BCFs) will be applicable for all export ‘unmaterialised’ bookings against which containers are not picked up, till the port cut-off of the vessel on which booking is issued,” MSC Agency (India) told customers.

Maersk Line and CMA CGM are levying similar charges on spot customers who miss their booked slots.

Maersk said: “We do not levy charges to our long-term contract customers for no-shows, however we urge them to plan and forecast their cargo as accurately as possible. This allows us to eliminate inefficiencies induced due to overbookings or downfall.”

Amid frequent schedule readjustments and sailing disruptions, shippers inevitably face considerable challenges planning their export shipments with any sense of certainty, a leading Indian exporter told The Loadstar.

“We have no choice but to live with this new reality.”

Sanjay Bhatia, co-founder of digital forwarder Freightwalla, told The Loadstar: “Amid high freight rates, the addition of no-show penalties is an additional burden. It will add to freight forwarders’ and NVOCC costs, which will eventually be passed on to shippers.

“MSME [micro-small-to-medium enterprise] shippers that operate on low margins, and typically face challenges in terms of cash flow, will be particularly impacted by this.”

Meanwhile, Indian exports continue to show strong growth, having hit a new monthly high of $40bn, by value, in April, the first month of fiscal year 2022-23.

“Starting the fiscal with such an impressive beginning will add to the motivation of the exporting community for much higher growth during the financial year,” said A Sakthivel, president of the Federation of Indian Export Organisations (FIEO). “The outstanding accomplishments of the exporters have consistently not only helped the economy to reap rich dividends but will also support our endeavour to become a $5 trillion economy by 2025.”

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