August 13 - According to maritime research agency Drewry, cargo no-shows and phantom booking are a major headache for ocean carriers.
With the peak season now well underway cargo rollovers are more likely.
Whilst freight booked from Asia to Europe was being rolled onto later vessels at the beginning of July, some ships still sailed under capacity as a result of last minute booking cancellations.
Drewry reports that according to one cynical carrier, rollovers are only caused by the usual level of cargo no-shows being less than normal - as late cargo delivery cut-offs have become a competitive feature of a carriers' sales strategy. Phantom bookings add to the problem; a result of forwarders that foresee a strong market and try to reserve enough freight space in the hope of securing new customers, and fall short of expectations.
This point demonstrates an inefficiency of deep-sea supply chains, which if resolved would counteract the negative side of slow steaming. Whilst this is not a new problem, ocean carriers' attempts to minimise this damage by imposing heavy penalties on forwarders appears to have had limited effect.
Calculating this effect is not easy as bookings can fail to arrive on time for various understandable and unavoidable reasons. If a connecting barge, train or feeder service is delayed, allocated deep-sea vessel capacity can end up unfilled at the last moment. This makes strict enforcement of late cancellation fees difficult, as identifying legitimate late arrivals from fiction can be an arduous task. It is also still a buyers market, and a lot depends on carriers applying similar rules and fines.
Figure 1. shows that 29 percent of cargo booked in Q1 2013 was not shipped on time, although this includes delays caused by vessels failing to arrive at port for loading on time. This was worse than the 27 percent of ships that failed to arrive at a destination on time.
Drewry states that for the purpose of this exercise, a shipment is deemed to have been a success when the difference between the estimated date of shipment stated in the original booking confirmation at the first load port and the corresponding actual departure date is within a day. This means that the cargo can still be shipped on the requested vessel, only more than a day late for loading.
Statistics show the proportion of bookings that failed to be shipped on time was 4 percent higher in Q1 2013 than in Q4 2012. However, there has been a steady improvement in booking arrivals since Q4 2011, which coincides with shipping line Maersk calling for greater penalties over the late delivery of bookings, and strict application of rules (FIG2).
Drewry says that since then, ocean carriers have been rolling out penalties for late cargo delivery on a regional basis. For example, at the beginning of this 2013 Maersk's network of late delivery charges reached Australia, where a penalty of AUD100 (USD91.35) per dry container for cancellations made within seven days of expected time of arrival was introduced. OOCL's fine of GBP250 (USD386.30) per container for cancellations received less than five working days before arrival of vessel was introduced in the UK during March 2013.
Maersk says it still received roughly 2,700 ghost bookings across all trade lanes in the first 22 weeks of 2013, totaling approximately 14,000 teu. This figure is at least 50 percent lower than five years ago. However, instead of being mainly an Asian problem, the trend has spread globally.
At the Retail Supply Chain conference in London, it was made clear that the focus for retailers is to improve the availability of products on the shelf and in store, thus minimising lost sales. The trend of slow steaming is set to stay, meaning efficiencies must be identified and eradicated from the supply chain. Limiting phantom bookings and no-shows is an ideal place to start.