Are penalties for cargo no shows and late cancellations fair?
No one can deny that shipping lines need to tackle the rising behaviour of shippers and freight forwarders cancelling bookings at the last minute, or that they should not address the rising instances of cargo no shows. These behaviours, when done with intent, can cause real costs to the lines, as well as consequential issues up and down the supply chain, particularly in respect to the availability of equipment, which is a sore topic for shippers after the 20' food quality container deficit earlier in the year.
There have been calls in some parts of the world to follow the airline model, demanding full payment at the time of booking. In Australia, this would be wholly unpracticable and does not reflect the nature of our trade.
So, instead, we have seen the lines in Australia increase the fees for no-shows, as well as introduce other protections in their commercial terms. So, are the lines, well, out of line? Perhaps some balance is needed. What would happen if shippers start charging the carriers for non-compliance to the terms of agreement- should they be chargeable? In the case of a short-shipment or a cancellation by the line, should the forwarders charge the shipping line for the re-working of documentation?
Incorrect Pre-Receival Advice (PRA) charges are also an area that we have received regular feedback about from our shippers. 1 Stop have the capacity to ensure that costs for incorrect presentation are a thing of the past but some shipping lines have not taken up the service.
Some shipping lines have suggested that late cancellation is a strategy employed by forwarders and shippers. Accusations have been made that some shippers simply book space and hold it as "bank" and if it doesn't come off they cancel. It's easy to see how that practice would hurt the shipping lines, particularly with the volatile nature of some of our commodities.
However, fairness is about balance. If the shippers/forwarders are held accountable for not delivering, then the shipping lines should be in the same boat, to use the pun. This year we have seen an increasing number of rolled bookings, struggle in finding equipment and other issues. As they say, those in glass houses….
With increasing consolidation, and more to come, the lines will become more powerful than ever and they will feel increasingly comfortable in their market position to start exercising this power, including in policing and penalising cancellations and no shows. It may well be time for the shippers/forwarders to pull up their socks, that's clear and that's something we're happy to support. But it's a two-way street and the non-delivery of commitments is something that needs to be addressed on both sides of the fence.
Travis Brooks-Garrett
Secretariat
Australian Peak Shippers Association (APSA)