Cargo rollover happens for a variety of reasons, at various stages and various places. Cargo rollover can cause significant delays and result in potentially crippling operations.
Most shippers assume carriers would send rollover notifications, but only a few carriers seem to notify customers in advance that their cargo is about to be rolled or has been rolled. This especially happens when transhipment is involved and catches many customers by surprise and upsets their production or sales plans.
What most customers don’t know is that there is a reliable way to get advance warning of cargo rollover so that they can take suitable action.
Before we answer that question, let’s take a closer look at the causes of cargo rollover, how it impacts ocean freight, and why forwarders and logistics managers need to realize what’s happening in regards to cargo rollover.
The real cost and causes of cargo rollover
Despite best plans and intentions, ships are regularly overbooked bringing with it the risk of exceeding allowed tonnage.
Journal of Commerce attributes the primary cause of cargo rollover to poor forecasting between Carriers and BCOs.
In fact, “less than 50 percent of container carriers actually forecast their capacity needs, and less than half of those are forecasting properly,” says Greg Knowler of JOC.com.
Soren Skou, CEO of Maersk tells JOC.com “For Maersk, on average, 30 percent of bookings made don’t show, and we try to estimate for that and overbook,” said Skou. “The risk of doing that is we get it wrong and containers have to be rolled or the ship is not full when it leaves. Both of these situations cost money for us and our customers.”
Carriers may be forced to cut and run in an attempt to restore the liner schedule and avoid delays along the route.
Rollovers can happen at the Port of Load or at Transhipment port(s) and in some cases when cargo gets rolled, the customers may only find out about the rollover much later and in some extreme cases when it fails to show up at the destination.
Consequences of cargo rollover can be severe — “a single delay for a major BCO could lead to a daily loss of more than $400,000 a day” according to Bjorn Vang Jensen, vice president of global logistics at home appliance maker Electrolux as explained to Greg Knowler in the Journal of Commerce:
“It costs about Euros 400,000 [$440,000] a day to shut down an Electrolux plant anywhere in the world, and all it takes is one container that was late at destination.”
A study of more than two million data points was done using the Ocean Insights platform. In the study, only carriers that moved more than 10,000 containers in H2 2019 were included.
The result of this study was clear: container rollover is a serious issue affecting on average between 5 and 17% of all containers shipped.
Consider the below charts derived from these data points :
In the below image you can see the highest cargo rollover ratio among carriers is almost a whopping 18%.
If we isolate containers that undergo transshipment at various hubs (transshipment ports), you can see that the ratio goes up quite drastically and Carrier 2 that had only 16% of rollovers in total has almost 32% rollovers when transhipment cargo is considered.
The below image using data points from Ocean Insights platform shows which of the major transhipment ports have the most rollovers. This helps customers to understand how the ports are performing around their containers. The data is pulled from H2 of 2019.
As discussed earlier, cargo rollovers can be due to cut and runs, overbooking, or blank sailings by the carriers in order to avoid berthing delays and maintain schedule integrity.
Some of the causes of cargo rollover could be :
- Carriers exceeding the allotted tonnage for the ship and the ship cannot physically accommodate all booked cargo;
- Improper forecasting by BCOs;
- Documentation problems, such as poor paperwork and compliance with international trade regulations;
- Resulting from inaccuracy in booking or even the need to overbook to avoid unfilled space
Yes, even if cargo makes it to the port, it could still get rolled due to port closure, if the shipment lacks the right documentation, or the port has a high volume of activity.
Ocean Insights uses data to give customers advance warning so they can take action and reduce the impact and cost of rollovers.
Data keeps customers appraised of cargo status & proactive.
The use of data forms a basis of business cases for investing in new systems and technologies across all industries and around the globe.
Data proves its value with fact, not an assumption. It gives BCOs and Forwarders an opportunity to see not only what has happened but see and more importantly understand what will happen.
Shippers that recognize the warning signs that the cargo looks like it may be rolled have the upper hand, capable of intervening to prevent further disruptions to the supply chain, such as :
- Moving inventory from one warehouse to some other location, if necessary
- Proactively communicate status with customers, improving services.
- Switch to emergency mode, such as airfreight
How does Ocean Insights do it?
Ocean Insights’ Container Track & Trace Service captures the original and then compares it against the real-time progress of your containers. In case of any discrepancy between the original plans and actual status, or if the further routing of a shipment is changed, corresponding alerts will be pushed to the customer immediately.
This also includes situations where vessels are replaced throughout the journey. Any vessel change is highlighted and complete information and position data for the replacement vessel is provided. With this powerful insight into the variance from the original carrier commitment, shippers can quickly and easily see when their cargo has been rolled.
Ocean Insights leverages carrier data for shipment details and then constantly compares those against the real-time global locations of container vessels. By incorporating real-time monitoring, Ocean Insights is able to create a more complete picture of the shipment’s status.
The technology detects deviations much earlier and more comprehensively compared to what is usually communicated by the carriers because it also triggers automatic event and exception alerts on the software dashboard to notify logistics managers and operators of potential issues.
Furthermore, by using historical shipment and vessel travel time data, Ocean Insights leverages machine learning technology in order to predict near-future travel times to generate warnings for containers that are at risk of being rolled over.
This predictive analytics tool works independently from carriers’ scheduled ETA and regardless of whether carriers initiate the notification or not, the Ocean Insights platform continuously calculates and updates the estimated time of arrival of the cargo.
Freight forwarders on behalf of their customers and logistics managers could stay more informed of what is happening, will happen, and what they need to do to accommodate any changes in their supply chains.
Ocean Insights provides means of connecting logistics managers and freight forwarders with the current and predicted position of their cargoes.
Think of it as a primary management platform for the logistics manager to proactively manage ocean shipments.
The Ocean Insights platform enables visibility and data points tracking the following metrics:
- Port of Landing;
- Transhipment Port;
- Port of Delivery;
- Land Facility;
- Containers Behind Schedule;
- Estimated Time of Departure Changed;
- Estimated Time of Arrival Changed;
- Port of Delivery Arrival Warning; and
- Cargo Not Yet Released.
Each dashboard value provides insight into what’s happening, exceptions, enabling better responsiveness so both shippers and freight forwarders can leverage the event history to understand what’s happened within the past 24, 48 or 72 hours.
Even though carriers have grown better in terms of notification of cargo rollover to customers, shippers still need a hand and help in recognizing when cargo gets rolled. The industry needs an overhaul of how to receive early notification of cargo rollover and other reasons for delays.
What are your views on cargo rollover and how do you handle cargo rollover, whether you are BCO or Freight Forwarder or Carrier?
About the Author:
Josha Brazil works as the Chief Operations Officer of Ocean Insights. Ocean Insights has a best-in-class ocean visibility software and a team of experts to make supply chain data visible and actionable.
They bring down your demurrage and detention fees, support day-to-day operations, and strategic decisions within the freight industry.