Eric Johnson, Senior Technology Editor
Shippers need to focus on better capacity forecasting, sharing of benefits with carriers, and concentrating volume with fewer partners to navigate what will be a tricky container allocation environment in 2021.
Container allocations refer to the process of divvying up a shipper’s volume among various vessel operators and non-vessel operating common carriers (NVOs) on an annual and more short-term basis. Allocations are built on a mixture of annual contracts — based on projected volume associated with a negotiated rate, also known as minimum quantity commitments (MQCs), and shorter term, ad hoc needs — so they essentially act as ongoing projections for what volume a shipper will send to a specific carrier on a given week.
In a sense, allocation strategy allows a shipper to avoid having the space allocated to them weekly reduced to a non-scientific MQC-divided-by-52-weeks equation.
The challenge, according to Chris Kirchner, CEO of logistics software provider Slync, is that data resides in systems within multiple parties — the shipper, the logistics services provider, and the carrier — and in both structured and unstructured formats.
“This makes it very difficult to get a[n] accurate picture of what is going on, and what needs to be done at various points in the allocation process,” Kirchner said. “The operational challenge is that allocation is a fluid situation taking place around the world on a continuous basis. It relies on carrier confirmations that can fluctuate, especially in today's environment, and requires a lot of human attention in most operations.”
This article was originally posted by the Journal of Commerce. To continue reading, visit JOC.com.