Shipment insurance

Shipper’s arms twisted as carriers use shipping ‘carrot’ to sell add-ons

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Shipping carriers are accused of “twisting arms” to coerce shippers into buying additional products, such as customs clearance and insurance, to boost their shipping prospects.

In a message, seen by The Loadstar, sent to a UK-based shipper, Hamburg Süd says: “Rates will remain high as equipment and space remain a challenge in all markets. In order to better serve our customers and offer a true end-to-end solution, we therefore focus our efforts on delivering businesses with the greatest revenue/value potential.

“This means that we will focus our main priority on shipments offering us pre-routing, customs brokerage, transportation and our new Cargo Protection Coverage.” adds the Maersk subsidiary.

The message went on to imply that without purchasing these add-on products, shippers would struggle to get their cargo booked – and would still refrain from offering a shipment guarantee even if the customer was willing to purchase their additional services.

“Customers with this potential should find that the likelihood of bookings being accepted should increase – there can be no promises, but we will prioritize the freight that has the most reward,” he said.

And, according to another NVOCC contact, Hamburg Süd is far from alone in using the booking acceptance carrot to push additional product, though few are willing to put that strategy into practice.

The contact said: “I’m sure that’s the talk in carrier boardrooms right now, how to get even more money out of their customers, but we’re mostly hearing this off the record from reps, with a ‘nod and a wink’.”

The managing director of a major UK freight forwarder said The Loadstar today, carriers were “on a roll,” maximizing revenue from their additional services.

“Now we see the lines increasing their interest in these customers [to which] they can push the complete aspect of the supply chain, encompassing customs clearance, warehousing and local/national transportation.

“In some ways they would claim they always have (albeit quietly). Now they see it as a lucrative add-on, and being able to offer it coupled with the allure of getting space will attract a lot of them,” he said.

He warned that this made the fate of small shippers critical.

“The situation is desperate for many small shippers and now, indeed, for small agents. The ball is rolling and it will be difficult to stop,” he warned.

The latest allegations against the container lines come just weeks after charges were leveled against carriers over newly signed contracts to target more lucrative premium businesses, and ahead of the second quarter reporting season, as carriers are expected to make massive profits.

Indeed, shipping consultant Drewry said last week that he “wouldn’t be surprised” if the shipping industry made a cumulative net profit of $100 billion for this year.

“The only loss-making account for carriers is public relations,” he added.