Maersk exploits lack of reliability

PUBLISHED : Thursday, 06 October, 2011, 12:00am
UPDATED : Thursday, 06 October, 2011, 12:00am


Time was when an exporter or importer shipping a container from a factory on the mainland to a port in Europe or North America knew that it would take around 24 to 25 days to arrive in Europe and 21 days to be unloaded in North America.

But in the past two years, a raft of issues has hurt that schedule reliability. These issues range from port congestion and bad weather to moves by shipping lines to cut costs by sailing slower, and sailing longer distances around the Cape of Good Hope to avoid the pirates in the Indian Ocean and the Gulf of Aden. Some carriers are simply more efficient than others.

Uncertain schedule reliability, which affects individual services and trade lanes, was among the bugbears for manufacturers identified in separate surveys carried out this year by the United States Federal Maritime Commission and logistics firm BDP International. The issue has also affected the general public, so while it may have taken six weeks for a parcel sent by sea via Hongkong Post to reach Britain this time last year, now officials quote a time of two months.

Figures from Drewry Shipping Consultants show that Maersk, the world's largest container line, has traditionally been the most reliable, with around 70 to 75 per cent of all services arriving on time. Mediterranean Shipping Company, the world's second biggest container carrier, is the most unreliable, with about 40 to 45 per cent of global services berthing on the scheduled day.

It is against this backdrop that Maersk Line will formally launch a guaranteed cargo delivery service on Asia-to-Europe services from four Asian ports (including Yantian, Shanghai and Ningbo), to three in Europe, starting on October 24. Eivind Kolding, chief executive of Maersk Line, said a three-month trial of the service, called Daily Maersk, during the summer showed delivery reliability rose to the 'high 90s' in percentage terms.

Under the scheme, the carrier is offering a guaranteed transportation time of 30 days between Yantian and Felixstowe, Bremerhaven and Rotterdam, and 34 days from Shanghai to the three European ports. This compares with a usual transit time of between 26 and 32 days.

The carrier, which uses about 70 container ships on Asia-Europe routes, rescheduled some services to ensure sailings took place on a daily rather than a weekly basis, and to give exporters a daily cut-off to get cargo to port. Maersk Line is also offering cash compensation of US$100 per container if cargo is one to three days late, and US$300 per box if delivery is delayed by four days or more.

Kolding said it was unlikely any other shipping line could offer such a delivery promise because no other carriers had an equivalent number of sailings or ships.

Soren Karas, head of South China at Maersk, said the guarantee only initially applied to these ports on westbound services, partly because of the internal challenge of ensuring the carrier's systems could cope with the cargo flows. Depending on how well Daily Maersk was received, more ports, including Hong Kong, could be added to the programme.

However, introducing the scheme on eastbound services to Asia might take longer because a large proportion of the cargo, including waste paper and scrap metal, was not seen as time sensitive.

Kolding said feedback after the trials confirmed that customers 'reduced inventory and costs by US$500 per container move' because firms no longer needed to keep buffer stocks in case they missed the usual weekly sailings.

But Jacques Chan, general manager for Hong Kong and South China at global logistics firm BDP International, was sceptical whether exporters and importers would need the service, given the gloomy economic outlook, and he questioned the grounds for the delivery promise.

While Maersk said exporters and importers would not pay extra for the guaranteed Daily Maersk service, shippers suspect this will change if market conditions improve, Chan said.