Steamship lines have complained for years that shippers book more containers than what are required to meet their shipping needs. It is common practice for some shippers to place excess container bookings to protect space only to cancel these bookings prior to the sailing date. Steamship lines claim that for every four containers booked, only three show up for the sailing. They say that unless some type of deterrent is introduced in the industry, booking cancellations will continue to be the norm.
CMA is the latest carrier to try to impose a deterrent in the form of a booking cancellation fee. CMA is testing the booking cancellation fee on cargo moving in the North Europe – Middle East trade. Effective June 1, 2017, CMA will impose a booking cancellation fee of $150 per TEU for container bookings cancelled seven days or less prior to the cut-off date. CMA believes this action is necessary to protect their customers that have legitimate bookings. CMA is not the first steamship line to try imposing penalties for booking cancellations. Past attempts by steamship lines to charge monetary penalties to deter false bookings have failed.
Shippers acknowledge that booking cancellations are a major problem plaguing the industry. They understand that a fix is necessary but any solutions cannot be one-sided. Shippers often question why there are no penalties imposed on the steamship lines when cargo is arbitrarily moved or bumped to a later sailing date. If a booking is accepted by a steamship line, shippers have every right to expect the container to ship on the original shipping date.
The biggest complaint from shippers is when steamship lines accept a booking for a ship that is already overbooked. This practice is prevalent in the Asia to US trade. Steamship lines will say this practice has become necessary because 25% of the bookings they receive ultimately end up being cancelled by shippers. They are not willing to run the risk of having a ship sail that is 25% under capacity. This cycle will continue until shippers and steamship lines can agree upon enforceable solutions that benefit both sides.
IHSA recently concluded ocean contract negotiations with 11 steamship lines providing service to and from the United States. The confidential contract rates are valid through April 30, 2018 and are not subject to base rate increases during the life of the contracts.
The International Housewares Shippers Association (IHSA) is a not-for-profit association formed to benefit companies belonging to the International Housewares Association (IHA). Through the combined leverage of members, IHSA negotiates freight contracts and partners with other logistics providers to lower supply chain costs.
IHSA’s main function is to negotiate the lowest possible transportation rates and provide the highest quality service for all participating members. Additionally, IHSA members receive valuable market intelligence and advice through regular newsletters and briefings.
IHA member companies looking to reduce their ocean freight costs or have questions about an ocean freight issue are encouraged to contact IHSA to learn about the program. Contact IHSA at +1-513-489-4743 and learn more on our website.
