Bill Mongelluzzo | Apr 15, 2011 9:34AM EDT
The Westbound Transpacific Stabilization Agreement, a discussion group of 10 ocean carriers in the trade, published the checklist in order to improve clarity in the contracting process and minimize the potential for dispute.
The checklist is a "set of suggestions carriers and shippers might consider in their individual contracting," said Brian Conrad, WTSA executive administrator. It was developed with input from the WTSA Shipper Advisory Board. The board was established in September 2010 after two years of informal discussions between shippers and carriers in the trade.
The checklist contains suggestions involving key service contract issues such as volume commitments, rate stability and predictability, surcharges, including fuel surcharges, service issues, recourse and miscellaneous issues such as contract duration, detention and demurrage concerns.
For example, the checklist includes a suggestion encouraging parties to consider a specified contract cargo volume with more accurate forecasting by season, product or lane segment. This would help improve equipment availability.
Discussion of pricing might include possible reviews during the contract term or a band in which rates could fluctuate over the term of the contract, subject to triggers.
Another suggestion involves more specific service commitments with performance measures and non-performance penalties or incentives built into the contract.
The WTSA effort highlights some of the common friction points in service contracting where the carrier group believes added communication with supporting data could make the process simpler, quicker and less adversarial, Conrad said.
-- Contact Bill Mongelluzzo at bmongelluzzo@joc.com. Follow him on Twitter @BillMongelluzzo.