Maersk Spot will offer shippers guaranteed equipment and space in exchange for a penalty if they don’t show up with promised cargo.
Maersk said it is now offering a product called Maersk Spot that will provide customers with guaranteed equipment and loading so that they can avoid having their cargo rolled if a ship is overbooked.
“It is not uncommon to see overbookings to the tune of 30%, and often this leads to rolling of the customers’ cargoes since there is overbooking to compensate for the high downfall. This creates a lot of uncertainty for our customers,” said Silvia Ding, global head of ocean products at Maersk. “With Maersk Spot, we provide full visibility of the price and terms that will ensure cargoes get on board — ultimately allowing customers to move their cargo in a much simpler and more reliable way.”
A Maersk representative said about 50% of the company’s business “is generated via short-term contracts and we believe that Maersk Spot short-term contract business is a way to overcome the industry challenges customers and carriers share today.”
Maersk Spot is now available on all trades, except in and out of U.S. Currently available as on a beta website, the product will be implemented on Maersk.com at the beginning of August.
“We are planning to roll out Maersk Spot for our U.S. customers later this year. We have filed for permission with the Federal Maritime Commission (FMC) and are currently pending their approval,” a spokeswoman said. She added that Maersk also will continue to offer guaranteed space through the New York Shipping Exchange (NYSHEX).
Maersk said that Maersk Spot will simplify the process of booking cargo. Customers will be able to search for space and get spot rates online around the clock. An all-in price is calculated and fixed when the booking is confirmed, which happens instantly.
Maersk’s loading guarantee is for “equipment and space within three days before or after the estimated time of arrival, as confirmed in the customer’s booking confirmation. Each booking is ‘on the spot’ (not multiple weeks) and can contain 40 units,” a Maersk spokeswoman explained.
If the customer wants to move more units, it will need to make an additional booking. If the customer does not show up in the port as scheduled, Maersk has the right to charge a fee. Likewise Maersk also is subject to penalties if it does not perform. The amounts of the penalties vary by trade, but can be viewed here.
“Dynamic online pricing fixed at booking creates one transaction for the customer from quotation to booking confirmation, profoundly simplifying the buying process,” said Maersk.
“Maersk Spot radically simplifies the buying experience for our customers. Today’s offline process can be up to 13 individual steps, often involving a lot of communication and paperwork from rate sheets to terms and conditions and surcharges, et cetera. With Maersk Spot, this cumbersome process is reduced to five simple and integrated steps — all online,” said Ding.
Maersk has been offering the Maersk Spot product on a pilot basis and said, “The mutual commitment paired with increased visibility of sailings and certainty of prices has been to date embraced by more than 3,000 unique customers each week, with already over 50,000 40-foot equivalent (FFE) units booked in Q2.”
A Maersk representative said, “Maersk Spot is our own product, which we developed from trials we have run in the past and successful cooperations, such as the ones with Alibaba and NYSHEX.”
Philippe Salles, head of e-business, transport and supply chains for Drewry Supply Chain Advisors, said this is not the first time Maersk has offered a similar product. More than a decade ago, Maersk rolled out Youship.com, which provided a space guarantee with immediate confirmation and clear all-in price to customers, he said.
Maersk said unlike the NYSHEX and Alibaba products, Maersk Spot “is purely Maersk operated with customer engagement going via Maersk channels, whereas NYSHEX is a multi-carrier platform governed by a council of carriers and shippers in accordance with the FMC regulations. However, launching our own product does not mean we will not commit to any partnerships with third parties anymore. We believe in cooperation and learning experiences across the digital ecosystem of our industry. We are very happy with our partnership with NYSHEX and will continue to be committed to this platform as well.”
Gordon Downes, the chief executive officer of NYSHEX, views the Maersk announcement as “a very good sign because it shows the industry is taking the problem of downfalls and rollings far more seriously now. There will be more carriers doing something similar in the not-too-distant future. Overall this is very good for both shippers and carriers, as well as NYSHEX.
“You may wonder why this is very good for NYSHEX, and the answer is NYSHEX becomes even more relevant in a world where it is ‘normal’ for carriers and shippers to enter binding and enforced contracts,” Downes said.
He said, “NYSHEX offers something different than what is offered through the carrier’s individual digital channels: NYSHEX is multi-carrier, which allows shippers to select the best service and price for their needs without jumping between websites; NYSHEX is governed by our carrier and shipper members and overseen by the FMC, which means the rules are always fair and balanced; NYSHEX allows for exits so if a shipper can’t make a shipment, the shipper can exit the contract through NYSHEX.”