Container line no show fees a 'potential nightmare' for freight forwarders

Shippers cancelled container bookings at the last minute are a longstanding problem for shipping lines and recently the likes of CMA CGM, Maersk Line and Hapag-Lloyd have started to introduce “no show” penalty fees for the late cancellation of bookings on some trades. iContainers noted that while this was the right move for container lines for it could be an “accounting nightmare” for ocean transport intermediaries (OTIs) and NVOCCs acting as the middle man between shippers and lines and as a result stuck with cancellation fees.

“For freight forwarders and NVOCCs, these fees could become a much bigger challenge as we do not necessarily control the cargo we are booking and often have no control over a client canceling at the last minute,” said Klaus Lysdal, vice president of sales and operations of iContainers.

In particular CMA CGM’s cancellation fee was highlighted as it was the booking party that is liable for the fee, which would be the freight forwarder even if it was their customer that cancelled the booking late. The French line introduced a $150 per teu cancellation fee covering North Europe to the Red Sea, Middle East, India, Pakistan and Sri Lanka from 1 June.

“The OTI community will have to prepare itself. OTIs should consider implementing policies to prevent potential accounting nightmares that could leave them stuck with cancellation charges,” Lysdal warned.

A failure for no show fees to work could lead to lines asking for payment at the time of booking as the airline industry does. “If this fails to work again, the next step in the process may be to follow what airlines do and demand payment at the time of booking,” he said.