Peter de Langen: +31 (0) 6 11 76 88 77   Jordi Caballé: +34 629 546 150

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Value of schedule reliability

COMMENT: The value of schedule reliability for shippers is clear and widely understood; recent congestion concerns in North European ports, especially Hamburg and Rotterdam, have now highlighted the value of schedule reliability for terminal operators as well, writes Peter de Langen.

In this latest bout of congestion, terminal operators have argued that one of the principal causes is the late arrival of ships. Terminal operators cannot adhere to their planning if substantial percentages of ships (say 30%-40%) arrive late and the knock-on effects of deviations from schedules are huge.

Yes, there will be inevitable delays in handling deepsea vessels, but this will also lead to significant delays for barge, rail and feeder operators. The majority of these additional costs will not be borne by the shipping line, but by barge and rail operators instead, as they see their handling times inadvertently increased.

Deviations from schedules also have negative environmental effects as containers are switched from rail and barge to the least environmentally friendly mode: road transport.

Given these negative knock-on effects one wonders if a pricing structure that would promote on-time arrival would be beneficial. The objection that carriers cannot avoid deviations from their schedules caused by external events (strikes in ports, bad weather etc.) does not seem very strong; the huge variations in on-time arrivals from different shipping lines suggest that they do have a significant influence their on-time record.

Various players could theoretically implement a pricing system that ‘sends the right signals’ to shipping lines. The most obvious player to put forward incentives is the terminal operating company, however ongoing poor on-time performance records suggest that terminal operators are not interested in finidng a solution, or develop ineffectual pricing structures that do nothing to promote schedule integrity.

This does open the door for port authorities to implement policies and pricing structures that promote schedule integrity. There already appears to be a rationale in differentiating port dues as well as towage and pilotage fees based on adherence to schedules. But as far as I am aware, such differentiation is hardly, if at all, applied.

The current congestion in Northern European ports has led to barge and feeder operators charging congestion fees, to be paid by the shippers. While it is an understandable move by the barge and feeder operators, this does not send any pricing signals to the shipping lines. It may be time for a serious re-think on pricing principles if we, as an industry, genuinely want to create efficient transport chains.