iContainers: Ocean carrier cancellation fees could cause ‘nightmares’ for shippers

Although fines for no-show shipments are the right move for ocean carriers, for freight forwarders and non-vessel-operating common carriers, they could create a much larger challenge, according to Klaus Lysdal, iContainers VP of sales and operations.    The recent implementation of “no-show” fines by ocean carriers could potentially cause “nightmares” for freight forwarders, according to Barcelona, Spain-based online freight forwarding company iContainers.
   In recent months, several major ocean carriers – including Maersk Line, CMA CGM and Hapag-Lloyd – have started implementing such fines on booking cancellations and no-shows within a certain time period leading up to a vessel sailing.
   These fines are aimed at cost compensation, since carriers often have to lower rates as a last-ditch effort to fill their vessels. For instance, Hapag-Lloyd estimates that around a quarter of its bookings fail to load as a result of no-shows, iContainers explained.
   iContainers Vice President of Sales and Operations Klaus Lysdal said that although these fees are the right move for ocean carriers, “for freight forwarders and NVOCCs, 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 canceling at the last minute.
   “The OTI community will have to prepare itself,” he added. “OTIs should consider implementing policies to prevent potential accounting nightmares that could leave them stuck with cancellation charges.”
   The problem of no-shows has been plaguing the ocean freight industry for years, and this is by no means the first time ocean carriers have attempted to introduce such fees.
   However, Lysdal believes these fees have a greater chance of actually sticking around now that there are fewer carriers to choose from.
   iContainers said it will take some time to verify whether the no-show fines will actually achieve their purpose.
   Looking ahead, the company said, “More drastic steps may need to be taken if the new implementation attempt fails, which may relieve the long-standing issue, but at the same time cause more pressure on shipping lines.”
   “If this fails to work again, the next step in the process may be to follow what airlines do and demand payment at the time of booking,” said Lysdal. “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.”