APL sees strong demand for guaranteed services

APL CEO Nicolas Sartini wants his company to successfully differentiate itself from competitors amidst a high-demand industry, and hopes the ocean carrier’s recently-announced guaranteed services solution will do just that.    Shippers and ocean carriers have dealt unsuccessfully with booking cancellations for years, but APL is confident that its recently-announced guaranteed service solution will change that.
   The age-old debate about how to deal with overbooking and cancellations has resurfaced after multiple large carriers have imposed cancellation fees in recent months, and now with APL launching a guaranteed service product for a limited number of ports.
   Various methods exist to forestall the round-robin frustration and expense, from a blockchain reservation system to a contract-based percentage fee system for both shippers and carriers who default. The obvious question is: which came first, the chicken or the egg? Do container no-shows induce carrier overbooking, or does carrier overbooking induce shippers to engage in multiple bookings that they fail to cancel? Perhaps a better question is this: can the industry overcome this chronic behavior to operate more efficiently?
   Despite the cycle of fees, penalties and contracts, the no-show versus rollover problem continues, to the point that APL will launch a special guaranteed service in early November for peak season. Though the development of a fee-for-guarantee solution for a problem that suggests carriers and shippers are still struggling to establish trust, this offering may help them save money and develop better business relationships.
   However, as many industry exports have noted, although the new service complements other premium offerings by APL, previous similar efforts by industry leader Maersk Line to guarantee space for a price on specific routes proved unsuccessful and were eventually dropped. Despite this, APL CEO Nicolas Sartini is confident of his company’s decision to implement guaranteed services.
   Sartini says the offering allows APL to differentiate itself from competitors, which is paramount in an industry that is quickly consolidating itself into mega-alliances.
   “We need to be more imaginative. This is what we are trying to do with our Eagle Guaranteed program,” Sartini told the Journal of Commerce at JOC’s TPM Asia conference in Shenzhen. “The program is highly successful and we have launched a suite of guaranteed services to deliver to shippers and create value at premium rates.”
   However, Sartini conceded that pricing would be an issue.
   “Many just want their cargo delivered at the best possible price,” he said. “Then you have the more sophisticated shippers and if they can gain a few days on the delivery time they are prepared to pay a premium. That is why we have expanded the Eagle program, because we have seen from the market that there is a demand for this service.
   “Of course, the guy who ships two containers won’t be interested, because he doesn’t need it,” Sartini added. “But for those customers with a sophisticated supply chain we want to make sure there is a just in time delivery that they are prepared to pay for.”
   Other carriers have attempted to impose cancellation fees this year, with Maersk Line imposing its fee in May, citing “strong demand for exports in corridors from North Europe to Middle East, Red Sea and IPBS region, and a significant amount of bookings cancelled shortly before cargo cut off, which leads to inability to accept bookings from other interested customers.” Large carriers including CMA CGM and Hapag-Lloyd have also imposed fees this year for similar reasons and in similar corridors.
   Likewise, APL’s solution only applies to North America services that call directly at Shanghai, Ningbo, Yantian and Cai Mep. The limited options suggest that carriers only seem eager to address the negative symbiosis of overbooking on lanes where demand is high.