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We seem to live in a world of ‘just in time’ everything. Schedules are tighter, demands are greater, and general expectations are continuously elevated. I can’t say I am not guilty of it because I am. As automation and process techniques advance resulting in exceeding my expectations, so do my expectations evolve. It is inevitable. After our expectations are exceeded a few times, it becomes the ‘new normal’. As related to transportation, gone are the quaint days of booking an ocean shipment when our commodity is ready, or near ready, to ship. Heaven forbid our ‘ready’ inventory sits on our warehouse floor just one unexplained extra day. Instead when capacity is even a little tight we book our ocean transportation well in advance in anticipation of our freight being ready.
Booking vessel container space in advance works wonderfully in keeping our inventory moving and reducing ‘order placed’ to ‘order received’ time. Although there is a byproduct produced by the time saving technique, it’s canceled bookings. Other than within the confines of the NFL not everything works like a finely tuned Rolex watch. Everything from manufacturing delays to inbound freight delays can skew our schedule. Most ocean shippers, being optimists at heart, delay canceling their outbound bookings until the bitter end in hopes of benefiting from a small miracle occurring allowing them to ship on schedule. When the miracle is a no show, the booking is canceled at the last moment to be re-booked for the next vessel. No problem, right? Not so much.
The general rule of canceling bookings at the last minute as a normal result of ‘just in time’ everything does have consequences. The habit of booking canceling sets of a chain of events when it happens. First it really does cheese-off the ocean carriers. It makes their world harder to manage. It also forces their hand to ‘over booking’ vessels. The lines can’t afford not to over book vessels if normal history indicates they will be losing bookings at the last minute.
How does this impact a shipper? Occasionally most, or even all, of a vessel’s bookings will come through the gate on time. Since the line has over booked they must start rolling containers to the next vessel which sets off a new chain of similar events. The stevedores will likely be forced to handle containers addition times, as the bad guy the line must contact unhappy shippers whose containers got bumped, additional work will be experienced trying to fit the rolled containers on to the next vessel which increases the chance of the same thing happening all over again for the later sailing.
It’s not reasonable to believe the world at large will slow down to eliminate the problem. That would be like Amazon bumping my two day delivery to five days because it makes the parcel carriers miserable. Amazon knows Walmart would love to become the new Amazon. There’s no going back now. Since the ocean carriers can’t turn back the hands of time, there are two trying something as a test, booking cancellation fees.
According to an article I read in the JOC today, Hapag-Lloyd announced it will charge booking cancellation fees for export shipments from Singapore to India starting June 9th 2017 charging $60 for any cancellation within 3 days of vessel arrival. They join CMA CMG which started charging $150 per TEU no show on their North Europe – Middle East-Indian subcontinent lane on June 1st. Whether, and how, the carriers will enforce the cancellation fees is debatable. Although the move does definitely signal the ocean carriers are fairly fed up with shippers having a happy-go-lucky attitude when it comes to last minute canceling of bookings at a time when carriers are looking to save pennies and increase efficiency.
Only time will tell if the fee will be enforceable and have the intended affect. If the fee does show the intended results with minimal TEU volume loss, I would look for other lines to look at the idea as well. As with most everything in transportation, fees like the cancellation fee only grow teeth if everyone is charging them. If it catches on and the ocean carriers collectively don’t blink, a cancellation fee may be coming to your favorite trade lane.
I wonder if it is plausible the ocean carriers may take a cue from our friendly passenger air carriers in the U.S.A.. Passenger air carriers have long offered ‘flexible’ tickets which are readily refundable, albeit at a higher initial purchase price, or the ‘nonrefundable’ cheaper version whereas not making it is not an option and changing schedules comes at a price. If the ocean carriers did travel that path, they have a built in advantage over the passenger air carriers. Containers won’t scream half as much when you drag them off the vessel… Oh yes I did.