Maersk Line is mulling accepting financial penalties in its Asia-Europe contracts if it is unable to deliver the service it has promised.
Annemette Jepsen, Senior Director and Cluster Manager UK and Ireland, told IFW the Danish carrier was hoping to avoid a repeat of the situation the industry faced at the start of this year, when an unexpected surge of volumes resulted in demand exceeding supply and shipments being delayed.
To solve the problem it asked shippers to provide more accurate information on when they would need goods shipped, so it could make sure there was enough capacity to handle all the volumes.
Now Maersk Line is considering accepting financial penalties if it failed to deliver the service it had sold.
Jepsen said: “I think customers need to work on how they get better at forecasting and that will be a process.
“We also know that a customer can’t say ‘in week 42 I will need this much space’; we have to have some kind of tolerances [allowing for leeway in volumes to be shipped].
“We are working with scenarios where we would be willing to accept a financial penalty if we fail to deliver a slot we have promised.
“But we need to have something that will help ensure that a customer uses slots when they have booked them, so we get to more of a fixed and mutually binding commitment.”
Jepsen said Maersk Line was also making sure it does not sell more space than it actually has to offer – a problem it had suffered from in the past.
She said: “One of the things we ran into in the beginning of last year was that we didn’t have enough check on what we had promised our customers.
“Some of our customers had been told they could get any space they liked, and when a lot of people have a lot cargo and you haven’t added it up, you run into trouble.
“Now we have very rigorous processes so we know when we look at a particular service how much [space] we have committed each week.”
Earlier this week, consultant Drewry Supply Chain Advisors said that contracts between shipping lines and shippers must be tightened-up if companies want to avoid them being torn up.
Drewry said to ensure access to capacity, some shippers were signing-up to use more carriers and also adding a freight forwarder.
Drewry also recommended that importers try to provide accurate volume forecasts and use contractual penalties and incentives to encourage contract terms are met.
Annemette Jepsen, Senior Director and Cluster Manager UK and Ireland, told IFW the Danish carrier was hoping to avoid a repeat of the situation the industry faced at the start of this year, when an unexpected surge of volumes resulted in demand exceeding supply and shipments being delayed.
To solve the problem it asked shippers to provide more accurate information on when they would need goods shipped, so it could make sure there was enough capacity to handle all the volumes.
Now Maersk Line is considering accepting financial penalties if it failed to deliver the service it had sold.
Jepsen said: “I think customers need to work on how they get better at forecasting and that will be a process.
“We also know that a customer can’t say ‘in week 42 I will need this much space’; we have to have some kind of tolerances [allowing for leeway in volumes to be shipped].
“We are working with scenarios where we would be willing to accept a financial penalty if we fail to deliver a slot we have promised.
“But we need to have something that will help ensure that a customer uses slots when they have booked them, so we get to more of a fixed and mutually binding commitment.”
Jepsen said Maersk Line was also making sure it does not sell more space than it actually has to offer – a problem it had suffered from in the past.
She said: “One of the things we ran into in the beginning of last year was that we didn’t have enough check on what we had promised our customers.
“Some of our customers had been told they could get any space they liked, and when a lot of people have a lot cargo and you haven’t added it up, you run into trouble.
“Now we have very rigorous processes so we know when we look at a particular service how much [space] we have committed each week.”
Earlier this week, consultant Drewry Supply Chain Advisors said that contracts between shipping lines and shippers must be tightened-up if companies want to avoid them being torn up.
Drewry said to ensure access to capacity, some shippers were signing-up to use more carriers and also adding a freight forwarder.
Drewry also recommended that importers try to provide accurate volume forecasts and use contractual penalties and incentives to encourage contract terms are met.