Mediterranean Shipping Co. on Wednesday unveiled its instant quoting and booking platform to freight buyers, joining the likes of CMA CGM, Evergreen Line, Hapag-Lloyd, and Maersk in allowing cargo owners and forwarders to buy shipping services online.
Online booking is available for the Asia to Europe and North America to Europe trades, and MSC plans to expand to other trades later this year, André Simha, MSC chief digital and information officer, told JOC.com.
The rollout is significant considering MSC has been generally one of the more cautious carriers when it comes to technology investment, choosing to focus on standardization rather than backing tech startups such as fellow Europe-based carriers Maersk and CMA CGM.
“The coronavirus disease 2019 (COVID-19) pandemic has accelerated the trend towards digitalization within the industry and the importance of engaging customers through multiple platforms, including through e-business,” Simha said. “It is helping us on the business transformation side to bring new things to the market.”
About half of all containers move under the spot market and the carriers have been developing online tools to capture a greater share of those boxes. For example, containers booked on Maersk and Hapag-Lloyd’s websites now account for more than 10 percent of each of their total spot rate transactions.
The MSC solution offers real-time shipping rates for container bookings and is open to all shippers registered with the carrier.
“We basically provide a tool where the customer can enter the data and get an instant quote, without having to book the shipment immediately after getting that quote,” Simha told JOC.com. “We still want to give the flexibility to a customer who is looking for a quote and maybe wants the seller to book on the other side of the ocean.”
MSC’s online solution will also enable shippers to receive quotes and book their containers from end to end. “The idea is to be able to offer this door to door. We have our own logistics arm, Medlog, so there is a lot of transportation that is organized by them and their vendors,” he said.
Simha said it was important to find solutions that made sense for both MSC and its customers. “Like in every market, there are different types of customers, and maybe there are customers we don’t know,” he said. “I am very keen to understand this. The ability to use this tool is limited to a certain market and we will find out as we go along.”
Adding online payment and space guarantees to the tool is not yet on the menu of options available to MSC customers, but it was an area the carrier was looking into, Simha said.
“I would like to add the payment as an option,” he said. “That would allow us to say if you book and pay online, you get guaranteed space, a lot like the airlines, but we are not there yet. This is not yet something that shippers accept. The allocation of space will at some point be linked to some form of payment guarantee or deposit, but for the moment we want to see how this picks up.”
As container lines gravitate toward more online interactions with customers, be it direct with shippers or via forwarders and non-vessel operating common carriers (NVOs), offering rates and bookings digitally is the first step on a path toward dynamic pricing. That will give carriers the ability to set prices and change them frequently, based on seasonality, and supply and demand on a specific sailing.
Cost control over price
Carriers have struggled over many years to set prices based on underlying type or value of the cargo, their efforts undermined by price competition that left carriers often selling an undifferentiated market rate monitored by public indices and which move based on overall market supply and demand. The result was that for most of the post-financial crisis decade, carriers turned to cost control as the main area of their business they are able to exercise control over, including embracing slow-steaming and mega-container ships.
Not everyone is convinced that online quoting is the answer. Alan Baer, CEO of the NVO Ocean Wide Logistics, told JOC.com earlier this year that with instant quoting systems, a user never knew what they were buying.
“The questions of equipment, space, which string the price is valid on, has not been resolved,” he said. “When you look at the services provided by an NVO, the nature of a price is perhaps 10 to 20 percent of the overall relationship. We provide multiple sailing options, multiple pricing options, credit, documentation solutions, overseas networks that actually reply. All of these go way beyond simply supplying a rate via a computer screen interaction.”
Software providers are helping forwarders navigate increased customer experience expectations from cargo owners by better connecting existing systems. This allows forwarders to more accurately and profitably quote rates to their shipper customers, particularly forwarders procuring rates from multiple different carriers.
“Almost every conversation we have with forwarders is circling back to them needing to manage one or more rate management tools,” Brian Glick, CEO of logistics software integration specialist Chain.io, told JOC.com this week. “There is an explosion in our customers needing this capability.”