Contracts between shippers and carriers should be tightened up, but it will be difficult for shippers to provide accurate data on when and in what quantity containers will be shipped.
European Shippers’ Council (ESC) Secretary General Nicolette van der Jagt said she supported carrier calls for tighter contracts between shippers and carriers, after Maersk Line CEO Eivind Kolding last week said contracts contained too much leeway that left both parties unclear about what had been agreed. Kolding pointed out that a contract may commit a shipping line to carry 5,000 boxes a year from China to Europe, but often it was not clear if that meant 100 boxes a week, or 50 one week and 150 the next, or where the containers would be shipped from.
And van der Jagt said some ESC members had taken the initiative to work on standard contract clauses that were more formal than used today. But she said it may be difficult for shippers to provide accurate long-term predictions on when containers will be shipped and in what quantity, as called for by Kolding.“It’s true that some contracts are a bit loose, but the argument used by Kolding is that shippers should commit themselves more strictly in terms of volumes and when exactly they will ship certain volumes. But this is very difficult, and the carriers know that,” she said.
Kolding also suggested that contracts on US trades were stronger, because legally they must contain minimum quantity commitments and both shippers and carriers can seek compensation if these are not met. However, van der Jagt said: “Even if you go to more formal contracts, like in the US, there have also been broken contracts in recent months. “It’s important that the carriers understand the nature of the shippers’ business to understand how much spare capacity they should keep. “The shippers and carriers have to talk more, having a tighter contract will not solve this problem.” She pointed out that over the last 12 months there had also been complaints from US shippers about carriers failing to supply enough capacity and breaking contracts. This caused the US Federal Maritime Commission to set up Rapid Response Teams to deal with carrier and shipper disagreements following an investigation into capacity and container shortages experienced this year.
There are also moves to ban shipping line conferences in the US. Andrew Trail, MD of online shipper forum Shippers’ Voice, said: “In an ideal world, it makes great sense to have contracts that are a lot clearer and remove any legal confusion. “But in the real world, it’s going to be difficult to find contractual clauses that are acceptable to either side. He added: “It is nigh-on impossible for shippers to give clarity on when boxes will be shipped, particularly in the large volumes – a lot of shippers simply can’t give that level of detail six to 12 months in advance.” Kolding made his comments after it emerged that UK retailer Argos was claiming US$13.9m (£8.9m) compensation from Maersk Line for an alleged contract breach between 2010 and 2011.
Source: Damian Brett, IFW News, 05 October 2010