We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • INDUSTRY PRESS ROOM
  • ABOUT
  • CONTACT
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • Parcel Forum 2022
    • MODEX 2022
    • Upload Your Video
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • Parcel Forum 2022
    • MODEX 2022
    • Upload Your Video
Home » Maersk Line to charge fee for "phantom bookings"
newsworthy

Maersk Line to charge fee for "phantom bookings"

September 9, 2011
Toby Gooley
No Comments

In an effort to discourage the practice of "phantom bookings"—container bookings that never materialize and leave the carrier with empty and non-revenue producing boxes and vessel slots—Danish shipping giant Maersk Line will charge a fee to shippers that do not cancel or reschedule their bookings within a specified time period.

Maersk said it will assess a fee of $100 per dry container and $500 per refrigerated container for no-show bookings that are not canceled or revised within a specified period, usually seven days before a vessel's arrival. However, if in that same time period, Maersk is unable to supply containers or has to roll cargo to an alternate sailing because it overbooked or changed a sailing, then it will compensate affected customers by the same amounts, according to John Neilsen, Maersk's senior director of charge management. Neilsen said Maersk recognizes that a no-show occurs sometimes through no fault of the shipper.

The program will be rolled out over the next one to two years, Maersk said.

Phantom bookings have several causes. When capacity is tight, shippers, freight forwarders, and ocean consolidators often book with multiple carriers to make sure they'll have space when they need it. In other cases, those that don't have a good handle on forecasting may book large numbers of containers far in advance and fail to revise their bookings once they know their actual shipping requirements. Others will pick up containers but arrive too late for the scheduled sailing.

Globally, about 20 percent of container reservations turn out to be phantom bookings. But a 35-percent no-show rate is not unusual in some ports. At some Eastern European ports, it can hit 100 percent, said Neilsen.

Neilsen calls phantom bookings "a major disruption to our processes and our capacity planning." A no-show leaves the carrier with an empty container and an empty slot on the ship, while customers who were turned away from ostensibly fully booked sailings may ship with another carrier instead, he said.

The carrier also pays the administrative costs of making the booking—$50 to $100 per booking, by some estimates—as well as the operational cost of suboptimal asset utilization. In addition, carriers find it difficult to fill unexpectedly empty space on such short notice, analysts said.

"If you have a bunch of shippers canceling at the last minute, then it's challenging for carriers to fill space because they have cutoffs, and with today's security rules you can't take bookings at the last minute to backfill what was canceled," said Esben Christensen, a vice president with the transportation consulting firm AlixPartners.

Maersk is not the only affected carrier. Almost all ocean carriers experience the problem to various degrees, but those that have larger exposures to ocean consolidators (NVOCCs) typically have bigger problems than carriers whose customer base mostly comprises beneficial cargo owners, according to Christensen. That's because NVOCCs don't know their customers' production schedules, so they book what they think they will need as a precaution, he said.

Fee cuts both ways
Maersk, taking its cue from a long-accepted airline industry practice, generally overbooks each load port by the average amount of projected shortfall, Neilsen said. If more bookings materialize than expected, the carrier is then forced to roll cargo to the next sailing. That means less capacity on the next vessel, as well as unhappy customers.

Neilsen emphasizes that the no-show fee is not "a secret plan to assess more surcharges" and that the purpose of the fee is to take waste and cost out of the industry. "In our view, success is to make absolutely no revenue with this program," he said. "We may pay a little extra in compensation, but in return we could reduce overbooking by 80 percent."

There's been little or no pushback from shippers. Peter Gatti, executive vice president of the National Industrial Transportation League (NITL), said that his group has not formally discussed the fee yet but the initial assessment is favorable. "Generally speaking, what Maersk is proposing and the changes they have made are very positive aspects of trying to avoid the additional costs they incur, which they in turn would have to pass on to customers," Gatti said.

However, Gatti cautioned that Maersk should take into account the "practical as well as unforeseeable problems" that can force shippers to miss sailings despite their best efforts. "This is not an issue with a simple, black-and-white answer," he added.

The Federal Maritime Commission (FMC), which has over the years investigated how carriers apply surcharges, is not opposed to the concept of a no-show fee. "Without taking a position on the particulars of the Maersk plan, I can say that the chairman of the FMC definitely favors shippers and carriers working together on new incentives to smooth the cargo flow to reduce cancellations and to reduce rolling and phantom bookings," Lowry Crook, the FMC's chief of staff, said in an interview.

Crook added that service contracts provide flexibility to experiment with incentive structures, which could include such a fee. Unless the commission receives complaints that the fee is being applied in an "unreasonable" manner, Crook said, it would have no reason to question or investigate Maersk's fee.

Transportation Maritime & Ocean Global Logistics
KEYWORDS Maersk Line
  • Related Articles

    Maersk folds Damco business line into main logistics and services unit

    Tesla to charge $150,000 for base model of electric truck

    Phantom wins the 2022 MHI Innovation Award for Best New Product by enabling drivers to work remotely

Contributing Editor Toby Gooley is a writer and editor specializing in supply chain, logistics, and material handling, and a lecturer at MIT's Center for Transportation & Logistics. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.

Recent Articles by Toby Gooley

The forklift of your dreams?

Smart choices for small spaces

National Forklift Safety Day 2022 connects safety with labor challenges

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • Survey: top supply chain risk of 2023 is semiconductor shortage

  • Big and bulky last-mile delivery segment set for hot growth

  • Outlook 2023: What’s in store for logistics/supply chain?

  • Ports, maritime operators see tide turning as ocean freight tsunami subsides

  • In Person: Steve Beverly of Penske

Now Playing on DCV-TV

89cfed30 8aac 4284 960d c8c8c1886e16

Have you checked your read rate lately?

DCV-TV 4: Viewer Contributed
No reads. Unaccounted for boxes. Boxes sent to the wrong place. A logistics nightmare! But this nightmare doesn’t have to come true. SICK’s linear line scan camera is what dreams are made of for your logistics operations. And if you’re worried about motion and vibration from conveyor belts...well, there’s no reason...

FEATURED WHITE PAPERS

  • The five best applications for robotic lift trucks in warehouse environments

  • Fulfillment Facility Improved Efficiencies by 4x

  • 3PLs: Complete Orders Faster with Flexible Automation

  • Reusable Packaging for the New Wave of Supply Chain Automation

View More

Subscribe to DC Velocity Magazine

GET YOUR FREE SUBSCRIPTION
  • SUBSCRIBE
  • NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing