Logistics industry veteran Nick Coverdale is proving that start-ups and innovation need not be initiatives limited to the younger generation. Instead he has grasped technology and come up with a refined product that will bring container carriers and shippers closer together than they have been for many a year.
The concept of a website that links the carrier direct to the customer rather than through a forwarder or NVOCC is not entirely new. There are already a number of players in the field including at least one with a base in Hong Kong. The difference between Agree Freight and its competitors, insists Mr Coverdale, is the amount of transparency and the ability to choose a sailing and agree a rate in seconds, offered by his website.
Currently shippers may register on the site free. A quick summary of how the site operates goes something like this:
Before registering, the shipper must type in the load port and discharge port. All vessels sailing on that route will immediately appear. The shipper also has the option to include nearby loading ports and discharge ports. The shipper then views by filter date by typing in his last two loading dates, at which point vessels will appear for those dates.
Now the carrier will show an asking price for a standard service. If the shipper accepts the price he will type in the weight, the goods and the number of containers. He presses confirm and immediately the parties have agreed freight. The carrier will issue a booking reference through the website. From then on the shipper will deal direct with the carrier.
“There are no middlemen,” says Mr Coverdale. “I believe this system will service buyers of goods and small to mid-size forwarders. I doubt it will benefit the bigger NVOCCs but you can’t please everybody,” he adds.
For the time being the site does not include transhipment ports but will follow in due course.
Mr Coverdale points out that each carrier has different criteria when it comes to booking cargo and processing the business. “On the website we will show each carriers’ criteria. As each carrier registers the customer will be able to choose which carriers he wants to deal with,” he says.
If the shipper is not happy with the price offered by the carrier he has the option to put in an alternative bid that will go direct to the carrier. If there is no acceptance the bid will disappear from the site two days before the last loading date, which is different from cut off and varies from market to market.
Once there is a confirmed shipment if there is a no-show the shipper will be charged 10% of the cost of freight. This will be passed to the carrier.
The definition of a no-show is fairly liberal. If for example a shipper books five 40 feu but just three arrive this does not count as a no show. And once the shipper becomes a regular customer the penalty will no longer apply.
“The real problem is where a booking is agreed and the shipper subsequently gets a cheaper deal and doesn’t bother to tell the original carrier,” says Mr Coverdale.
“No shows equate to an extraordinary 30% of goods booked for shipment,” he adds.
While a final booking of two days before last load date is a default setting there are occasions, such as when shipping goods to the US the shipper needs to present customs declarations prior to the goods being shipped. This is where the site’s “Hotbox” comes into its own. Hotbox accesses the shipper to a number of options including the option to still deliver the cargo to the vessel within two days before the vessel sails, top stowage of the container, and priority load on the vessel (space protection). However, it should be understood that all three options would be subject to additional charges imposed by the carrier.
Some 96% to 98% of cargo shipped from China to the US is on a freight collect basis. The buyer of the goods decides the carrier.
So, it seems, in addition to a faster transaction the shipper may make savings through the use of Agree Freight. Mr Coverdale says that the carrier will also benefit, for example in this scenario:
If a fashion house in London has placed orders with a Chinese factory and registers as an importer on Agree Freight the house can search the site by arrival date and find the quickest vessel that is available. Having agreed a price, the booking can be executed immediately. After filling in the shipper’s details the Chinese factory will get the container release note.
“This is where I see the big market, where the time difference is no longer relevant,” says Mr Coverdale.
But perhaps the benefit for the carrier that registers with Agree Freight could be a reduced dependency on the big NVOCC. As shipping lines continued to haemorrhage cash throughout 2016, so the NVOCC’s carried on reaping record profits. Could this alternative free carriers from the tyranny of NVOCCs?