MOL Contributes to Debate on Pricing Fluctuations (UK)

There are usually very good reasons for shippers receiving significant variations in price quotes from different shipping lines, says Adrian Jones, MOL’s UK Managing Director.

Speaking at the ‘Saving logistics costs’ seminar at the Multimodal Exhibition in Birmingham, Mr Jones was called on to give the shipping line’s view of the continuing rate volatility and capacity fluctuations.

“Calculating a realistic price for a container movement can be very complex – it depends on how full the ship is, the price of fuel, how fast it sails, how long a container might stay in the port and so on. With the variety of charges applied to cope with this uncertainty, Shipping Lines are often painted as the bad guys, but we really do want to save shippers money.”

He explained that each shipping line has its own cargo flows depending on which customers it is serving. “So, if we end up with a lot of empty containers in one area and need to reposition them to another part of the world, we would be able to offer you a cheaper rate to ship between those two points than another shipping line which did not have a surplus of containers at the same place of origin.”

Mr Jones said he understands why some customers will change shipping lines every time they can get a cheaper price elsewhere, but warns that this is not always the best option.

“By constantly switching lines, there are added administration costs involved in sorting out terms and conditions, and there is also an increased risk of operational failure, as new partners are brought in who are not familiar with the way the shipper or forwarder works.”

He suggested that shippers work more closely with the shipping lines and discuss where there is flexibility in their requirements – for instance, with delivery times. “Everyone specifies a delivery at 8am – whether they need the goods then or not. If they agreed to receive the container in the afternoon, the delivery cost could well be cheaper.”

Shipping lines understand that shippers want secure, reliable services at the most cost-effective price. “The best way to achieve this is to agree longer-term price deals and both parties honour that, whichever way the market moves. In times when ship capacity is tight, the customers with whom we have this sort of two-way relationship are the ones who get looked after as a priority,” Mr Jones concluded.

[mappress]

Source: MOL, May 10, 2012