News

ESC welcomes Time-definite services launched by Maersk Line

Thursday, 15 September 2011

ESC has welcomed the announcement by Maersk Line earlier this week of a daily time-definite service between Asia and North Europe, along with a scale of penalties applying to shippers in case of "no-show" and to the carrier in case of "roll-over" or other incidents leading to the inability to load a container on the booked vessel.

Reflecting on this announcement, Jean-Louis Cambon, Chairman of the Maritime Transport Council at the European Shippers' Council said: "This new service is in sync with the themes developed in the manifesto on the future business of shipping produced by Maersk Line in June this year.“

“First, de facto, it introduces differentiation in the basket of services on offer, a longstanding demand from shippers, based on the concrete evidence that not all shipments have the same service and costs requirements. Second, it recognizes that uncertainty in schedules is the "mother of all evils" as it generates "belt and braces" safety stocks at destination as no sales organisation can afford stock-outs, particularly in depressed market conditions. Third, even though the compensation may seem quite petty, the "conveyor belt-like" concept allows production to flow smoothly from the factory floor to the port: a daily departure will ensure no idle time is incurred between shipments. In this way a small portion of the time overspent at sea due to slow-steaming can be regained ashore, at both ends. Cutting the number of days where money sits tied-up in inventory is an objective universally shared by shippers. Reactivity should improve as a consequence.”

He continued: “It is worthy to note that aside from innovation on service, Maersk questions the relevance of "transit-time" to shippers, preferring to talk about total transportation time. Indeed, we are concerned by total lead-time from issuance of the order to delivery at destination warehouse. This change of terminology is more momentous than may appear at first sight. What if, at long last, carriers started to "think" and "talk" in the language of their "customers" (i.e. "shippers") ? What if instead of talking about rates, they started to think about "total cost"? In the same spirit, introducing a balanced penalty scheme as a performance incentive for both parties is a frank departure from the traditional conference tariffs which only contained "liquidated damages" and "deadfreight" clauses levelled against shippers and absolutely nothing to sanction carriers' poor performance.

"So, indeed, this time-definite service can be qualified as innovative and in the pursuit of a higher service quality, which will warrant a differentiated pricing, as opposed to a standard no-commitment service.

In conclusion Cambon offered a word of caution over the sustainability of the 'Daily Maersk' product offer, saying "but, and Maersk Line may disagree with this, it cannot prosper in isolation. Its true success will unravel when competing operators launch similar products, confirming the emergence of a new market with different service clusters, much in the same way as the express parcel industry developed.”