TPM21: COVID-19 driving uptick in online booking of ocean freight

TPM21: COVID-19 driving uptick in online booking of ocean freight

More ocean carriers are offering online ocean freight quotes, and can tap them for additional customer insights, panelists at JOC’s virtual TPM21 said. Photo credit: Journal of Commerce.

Online quoting and booking for ocean freight has helped in a pinch as customers deal with unexpected demand to ship personal protective equipment and other goods during the COVID-19 pandemic. But the tradeoff for that convenience is more exposure to swings in ocean freight rates, speakers told JOC’s virtual TPM21 conference Thursday.

Currently, eight of the top 10 container carriers now offer customers a way to get quotes and secure a space for their freight, up from the two or three that offered the service in 2018.

In the two years since Maersk started offering digital booking, about half of its customers are now using the service rather than picking up the phone for rates and availability for one-off freight shipments, Liezel du Toit, Maersk’s senior director and head of spot products, said during the panel on the state of online ocean freight quoting.

She said the uptake in the Maersk Spot product comes from the fact that shippers will not face the cargo rolls and delays that have become increasingly common owing to the strong demand for ocean freight in 2020.

“The main driver was to make it simple, to make it transparent, and introduce this idea of the two-way commitment,” said du Toit. “It’s really the promise to the customer that if you book this, this will happen or we will compensate you.”

She added that the coronavirus disease 2019 (COVID-19) has hastened interest in online quotes because “our customers need to do business from the comfort of their home.”

Online ocean freight booking has also been a lifeline for freight forwarders during 2020 because of difficulties in securing long-term capacity commitments from carriers, said managing director of freight-rate software provider Catapult Laura Finbow.

The volatility of container shipping rates and the many canceled sailings during COVID-19 made online quoting and booking the only way forwarders could keep up with the market, she added.

“We have to acknowledge that these products meant that business could continue,” said Finbow. “A few years ago, carriers couldn’t have distributed rates fast enough in the kind of environment we experienced over the last 12 months.”

Forwarders need to offer fixed price

However, Finbow said forwarders need to provide their own customers a fixed price and a service commitment to win their business. As such, they cannot rely on volatile online quotes and indeterminate capacity to meet their clients’ needs.

“In the absence of a bookable, longer-term rate option, all the risk transfers to the forwarder when they try to quote to their shipper,” said Finbow.

In addition to the commercial risk of using online quotes, carriers do not always make it easy to automate the process for searching online quotes through a standard application programming interface with a forwarder’s own software. The means forwarders may have to manually re-enter information multiple times in different sites to get a quote.

“That doesn't work when you want to create loyalty for when the market stabilizes,” said Finbow. “There is not a homogenous level of [application programming interfaces] connectivity.”

Finbow added that more options in booking ocean freight online would be welcome among freight forwarders. For example, an ocean carrier could provide a quote with different free-time options for equipment or even with the option to roll cargo to a later voyage, she said.

Despite the risks in using online quotes, the panelists agreed that online quoting and booking will only increase. Chief operating officer of quote software maker BlueX Trade Vivian Chiang said online quoting can lead to more dynamic pricing for freight, better capacity planning by the carriers, and offering customers additional services such as electronic bills of lading.

“Quoting and booking is the bare minimum but there is a lot more to do,” said Chiang.