25Mar

The truth behind re-routing of ocean freight

After my shipment gets loaded, I have no more control…
After speaking with several freight forwarders and BCO’s over the past few months, I came across another myth that needs to be debunked. You cannot make changes to your ocean freight booking..? Your shipping line will never allow it? To my surprise, this misconception proved to be quite popular among logistics professionals. The truth is that shipping lines re-book and re-route your cargo on regular basis. This is a daily operational occurrence at shipping lines.

The reasons why shipping lines re-route and re-book your shipments

  • Overbooking
    In order to sail with fully booked ships, shipping lines do overbook. What happens if your cargo is the unlucky one that gets left behind? It gets re-booked to another sailing, usually with a 1 week delay. You can find more information on this in our previous blog post on rollings.
  • Changes in the connection vessel at transhipment port
    Some shipments are not direct and may require a connection between two vessels via a transhipment port. With average schedule reliability of vessels fluctuating between 50-80%, you can imagine that missed connections happen. Even when vessels arrive on time, the next sailing could be overbooked (back to point 1..!). In either case, your shipment will usually be re-booked by the shipping line’s cargo operations team to the next vessel on the same service, which means a one week delay.
  • Contingencies
    Your cargo is currently on a vessel, which is making its way to the destination port. Suddenly, because of a port strike, congestion or bad weather, a shipping line decides to omit your destination port with that vessel. What happens to your cargo now? The operations department (this means cargo, capacity, berth planning and stowage planning teams) will figure out an alternative port to discharge your cargo and re-route it back to the original port of discharge via another vessel. The merchant haulage cargo will most likely be re-booked to the next vessel on the same service, to reach the original POD (port of discharge), as stated in the booking. Such operational changes happen regularly. Although container re-routing is referred to as ‘exception management’, in the operational department of a container shipping line, it is pretty much a daily routine.

Okay, that’s great that the shipping lines do this all behind the scenes. That means they are taking the optimal decisions to get my cargo to its final destination on time? Right…?

Not quite… Here are some reasons why:

Legacy systems and processes – Shipping lines do not have a full overview of their own networks.

What…? Are you serious? Yes… The main reasons for that are the legacy systems. Normally a lot more than just 1 system, covering ERP/CRM systems, pricing, routing and equipment management to note. One of the key points that I remember whilst I was a trade manager, was that routings were set on a manual basis. Someone physically allowed the routing system to show a specific service for each port-pair.

Sure, shipping lines need to plan ahead, to ensure capacity is available and create a system to ensure order. But there are now 10 major shipping lines in the world that account for 82% of total capacity (according to Alphaliner top 100)…! Their shipping networks are huge and normally have multiple sailings and services that cover a set of port pairs. However, when you log onto their website, you will usually see 1 weekly service. Unfortunately, this is also what the rest of their organisation sees. It is really only the operations department who have the best level of visibility, as they need to keep track of the vessels and ensure the berthing plans are adhered to. This is also the reason why we built the OceanOps platform. We enable you to have this full visibility of the networks of all shipping lines, so you can take control of your cargo! We show all the combinations of routings; much more completely than the shipping lines own websites.

The shipping line does not know the final destination of your containers.

About 60% of shipments are booked on a merchant haulage basis. That means the shipping line only knows the destination port and not the inland point of delivery. This is a big deal. Imagine that the final destination of the container is Hannover. The discharge port has been set as Hamburg in the booking. The vessel ends up omitting Hamburg and your cargo now gets discharged at Felixstowe as part of the contingency plan. The shipping line does not have information about your final destination. All they know is that the container needs to arrive at Hamburg. Hence, the operations team will re-book your cargo on a vessel going from Felixstowe to Hamburg. You on the other hand, are waiting for delivery of your shipment which is now undoubtedly late. You as the cargo owner or freight forwarder would know that the cargo can be picked up from Hamburg, but also Rotterdam or Antwerp…. By considering alternative ports, you might be able to reduce the delay to your shipment completely.  This is another case where the OceanOps platform comes in. You can search to an inland destination and see all the relevant schedules for ports that can serve any inland destination.

So will the shipping line actually confirm my request to re-route a shipment?

Absolutely! Shipping lines need to fill their vessels. In fact, at least 70-80% round-trip utilisation of a vessel is required for the shipping line to break-even on a voyage. This means that if there is space available on a sailing that you want to re-book/re-route to, the shipping line will actually want to accept it. If it’s a major exception, you should insist on escalating the issue to the operations team or the trade team. There were several cases when I was a trade manager, where I was more than happy to accept a customized customer request.

What if my containers are already loaded onto the vessel?

Yes! There is a standard process called a COD request (Change of Discharge). The request gets sent to the stowage planner and they will check how many restows (if any) are required to change the destination of the container. If the berth plan has enough time to conduct the moves, then it is down to you to choose if you want to accept the cost of the restows. If your shipment was due to connect at a transhipment port, then you do not even need to check the stowage plan. The operations team will just check the capacity of the next vessel and if the berthing plan can account for the additional handling moves.

I hope this sheds some light on the question of re-routing. I’ll end this blog with an amazing visualization, courtesy of shipmap.org, to highlight the amount of re-routing opportunities there are to ensure cargo arrives on time at the destination.

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