The shippers’ complaint
20 / 05 / 2015
A new global alliance aims to give shippers a stronger voice. JOOST SITSKOORN and JOOST VAN DOESBURG outline its agenda to Peter Conway.
Shippers are changing the way they are organising themselves. The result could be a new stronger voice for airfreight’s ultimate customers and a higher profile for their views.
The change came on March 18 when a memorandum of understanding was signed in Surabaya, Indonesia, to create the Global Shippers’ Alliance (GSA). That brings together the European Shippers’ Council (ESC), the Asian Shippers’ Association (ASA) and the American Association of Exporters and Importers.
The ASA is in turn a reform of the Asian Shippers’ Council (ASC), initiated by countries such as Thailand, Indonesia, Korea and Hong Kong who felt the latter was too slow to make decisions.
Both the ASC and the ESC were members of the Global Shippers’ Forum until 2013, but left due to disputes over policy and voting rights. Joost Sitskoorn, special envoy for the ESC, says the Global Shippers’ Forum had become too dominated by transport companies and logistics service providers. “So it is not a proper shippers’ body, but we see no reason why we should not work together with them.
”The new body, the GSA, is an alliance, rather than a merger, of the three associations that formed it. It does not even have a chairman.
“We have opted for a light structure. We will meet once a year and have Skype conferences every two to three months,” Sitskoorn says.
But he also says that the alliance wants to be more than just a discussion group: “We want to contribute in an active way to solve the problems that we face.
”This includes producing white papers (policy documents) on airfreight, seafreight, the environment and trade facilitation. The first of these – Airfreight 2020 and beyond – has already been drawn up by the ESC and adopted by the other two associations. Armed with this, the GSA now hopes to engage forwarders and carriers in dialogue.
Top of the list is to talk about service levels and the starting premise here is that shippers are prepared to pay for the right service if carriers and forwarders can deliver it. This may come as a surprise to those in the air cargo industry who moan that shippers only care about the freight rate.
Sitskoorn disputes this view: “We hosted a shippers’ panel at Intermodal Asia in Shanghai in March and it was interesting to hear that shippers were prepared to pay for better services – for example, transparent billing, correct billing, on-time delivery, information on different lanes available or for specific help with Customs clearance,” he says. “All of these matter to different shippers in different ways, so there is room for negotiation.
”To underline the point, Joost van Doesburg, airfreight policy manager at the ESC, points to modal shift, but not the familiar one from air to sea. “There has also been a shift to the integrators, who are four times more expensive.
“Why? Because shippers want reliability, delivery as promised, better track and trace, and clear prices without surcharges which fluctuate in ways shippers do not understand.
”Or to look at it in another way, van Doesburg points out that if shippers really only cared about price, with airfreight rates currently at an all-time low they would be happy. “But they are not happy because they are complaining about service levels,” he says.
Carriers might pro-test that those who offer higher quality service don’t always earn higher rates. Cargo 2000 was founded in 1996 to address this issue, and make service levels more transparent.
Van Doesburg says the ESC was a founder member, “but twenty years on, shippers still do not have an insight into which forwarder or airline is doing better. It does produce some data elements that can be useful for shippers, but which airline or forwarder sends them to us? No shipper has access to the Cargo 2000 figures and that is a problem”.
The ESC white paper also calls for more dialogue between shippers and carriers in general. This has long been a taboo subject for the air-freight industry, with forwarders worried that airlines might try to poach their customers.
Van Doesburg describes this as “the philosophy of twenty years ago”, saying only a tripartite relationship can truly deliver the supply chain that shippers want.
“We very often hear stories about miscommunication – that what the shipper ordered from the forwarder is different from what the forwarder ordered from the carrier,” he says.
“The only way to avoid this is for the shipper to be in contact with the airline.
“General cargo is moving rapidly away from air cargo and in the future it will be all special cargo. An airline needs to know how to ship this and under what conditions. Without this, shippers will remain angry about the service they receive.
”None of this means cutting out the forwarder, but van Doesburg says they need to change their role.
He explains: “We have a different understanding of partnerships than most forwarders. Some shippers are so fed up with forwarders that they are becoming IATA/CASS associates and taking certain functions into their own hands.
“Inditex is a well-known example.
”Another aspect of transparency is the vexed question of surcharges. Van Doesburg states frankly that these “no longer reflect the reason they were implemented” and have effectively become part of the freight rate.
“In the last few months, as we all know, fuel costs have fallen over 50 per cent but surcharges have decreased only 10 per cent.
“Some of our members have not seen decreases at all. We are very positive about the all-in rates of Emirates, Qatar Airways, British Airways, Iberia and SAS, but so far no other carriers have copied them,” he says.
“The main issue here is stability. The shipper wants to tell his boss what he will spend on transport in the next year. With other modes this is possible, but not with air. You can negotiate a price but you always know the airline might add or lower surcharges. We don’t want discounts – we just want prices that are stable.
“Ask any shipper and this is their concern.
”Despite many airlines claiming that their customers like to book by telephone, shippers also find booking procedures perplexing.
“Why is it so difficult to make an e-booking in our industry? We are still based on telephone calls and human contact, rather than a system which offers prices online like we are used to when we fly as passengers,” van Doesburg says.
“Also the later you book, the cheaper the rate you get, so everyone waits to book.
“This means it is difficult for carriers to know if a flight is overloaded or not, and so shippers who want their shipment on a specific flight can’t be sure of this. In the passenger business, the later I book, the more I pay.
”All of these are perhaps familiar complaints, but the hope is that with the new global alliance shippers will now speak with one voice and hopefully start to make an impact. “In the past when we spoke to IATA they were only getting a view from Europe: now they will be getting a view from three continents,” Sitskoorn says.
It could even be more continents than that, with the Cameroon Shippers’ Council already applying to join and talks going on with the South Africans. “Through our Portuguese members we are also looking for organisations we can work with in Brazil and Argentina,” Sitskoorn says.