Shipping lines are evolving digitally day by day.. I wrote previously how digital shipping lines are countering the advances of digital freight forwarders..
In its latest digital offering, Maersk Line, the world’s largest container line has introduced an online product aimed at making the booking process for containers simpler and more efficient..
Apart from being fully digitally enabled, what makes this product “Maersk Spot” stand out is that it comes with a cargo loading guarantee at a fixed price upfront..
With the launch of this new product, Maersk Line is simplifying the supply chains of its clients and cementing its place as a digital shipping line..
Maersk Spot addresses some of the fundamental inefficiencies that exist across the industry while also addressing the issue of overbookings and rollovers..
As per Silvia Ding, Global Head of Ocean Products at Maersk, “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. 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.”
Maersk Spot allows customers to search and get competitive rates online at any time and the rate offered is an all in rate which is calculated and fixed when the booking is confirmed..
As this rate calculation and booking is instantaneous, it allows the customer to simplify the process from rate quotation to booking confirmation in one transaction creating process efficiency..
“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 paper work from rate sheets to terms and conditions and surcharges, etc. With Maersk Spot, this cumbersome process is reduced to five simple and integrated steps – all online,” added Ding..
Bookings made via Maersk Spot comes with a guarantee from Maersk to load the container which means that overbookings from the side of the client and roll overs from the side of Maersk both are addressed simultaneously ..
If there are any cancellations, then customers pay for it where as if there are any roll overs then Maersk compensates the customer.. This is however subject to terms and conditions of Maersk Spot..
This mutual commitment paired with increased visibility of sailings and fixed rates has reportedly been accepted by more than 3,000 unique customers each week, with already over 50,000 Forty-Foot-Equivalent (FFE) units booked in Q2 as per a Maersk press release..
One such client, The Ramco Cements Limited reportedly sends around 120-200 containers from Kattupalli port to Colombo every week, making their bookings one to two weeks in advance to ensure they can deliver to their customers on time with the best deal possible..
“We are quite proactive about our bookings but there were still cases where our shipments were not loaded due to capacity issues which resulted in the loss of trust with some of our customers,” says Ramakrishnan D, General Marketing Manager of The Ramco Cements Limited. “With Maersk Spot, we no longer have the uncertainty of not knowing if we can actually provide our customers with their shipments.”
Maersk Spot which is currently available in its Beta version on all trades other than the US Trades is expected to be implemented on Maersk’s website at the beginning of August..
All shipping lines today face challenges with capacity forecasting due to last minute downfalls from customers. e.g. A vessel has space for 1000 FFE (40 foot containers). A shipping lines normally open bookings with some buffer depending on the historical downfall. Lets assume historically there is a 20% downfall, so a shipping line will allow 1200 bookings expecting 200 FFE will not turn up.
In some weeks, the downfall is more and only 900 containers turn up and the vessel sail lights while other weeks 1100 containers turn up and shipping lines need to roll 100 containers impacting customers supply chain.
The main difference between airline and shipping is that there is no cancellation fee with shipping while a flight ticket charges a heavy cancellation penalty. So Maersk has started this new product with loading guarantee and a minimal cancellation fee. The freight rates are also lucrative. This should be a benefit to customers as well as shipping lines to manage their supply chain. Expecting other shipping lines to also follow.
I don’t see any advantage with Maersk Spot because in practice shipper can face production fall or production fail and in this case booking of 8 FFE can cost client much more in comparison to ‘ordinary booking’. We already faced such case.