THE TECH DIFFERENCE

RATE MONITORING/CARGOSPHERE

58 CONTAINERISATION INTERNATIONAL www.containershipping.com October 2012

According to the world’s largest freight forwarder Kuehne+Nagle, approximately one third of all ocean freight invoices are inaccurate. It is one of the biggest

problems confronting the industry, requiring customers to painstakingly check every bill before payment can be approved.

Apportioning blame is beyond the scope of this article. Suffice to say that ocean carriers claim shippers often state the wrong freight contract number on their shipping instructions, while shippers counter that ocean carriers’ records of what has been agreed are not updated fast enough. The same problem exists between forwarders and their customers.

It is easy enough to understand, as nearly all cargo is now shipped under special contract rates accompanied by a myriad of fluid surcharges which have often been negotiated thousands of miles away by sales executives that are remote from their invoicing departments. When deals are concluded – frequently through no more than a loose exchange of emails – subsequent information flows can often leave much to be desired.

Asked to comment on this arena, Carsten Frank Olsen, head of commercial business processes within Maersk Line, lamented: ‘We are well aware that customers are not exactly lauding us for timely and accurate invoices, and as an industry at large this is a big issue. Better invoicing is something that Maersk Line has identified as a key component of our current strategy, and something we are actively investing resources in.

‘There are several components to fixing invoice quality: we are looking at our internal policies, our processes and our IT systems in order to make it work. Invoice quality is a basic element of any business, and we owe it to our customers to fix it.

‘We will also be looking to our customers for help. In global trade, payment terms are usually known and agreed well ahead of the physical transportation taking place, yet in some instances customers fail to provide these terms to the carrier.

‘Lacking these terms seriously hampers our ability to produce a timely and correct invoice, which may eventually lead to a dispute. Disputes are clearly unwanted by all parties; for customers they add administration, and for carriers they have a negative impact on cashflow.’

Be that as it may, e-commerce solutions are increasingly coming to the rescue, one of which is provided by US-based CargoSphere, and another is Softship’s Line Application offered to ocean carriers and non-vessel operators (NVOs), which includes a much wider package of uses.

CargoSphere’s service was originally set up to help forwarders and NVOs keep track of what they had agreed, but is now being extended to beneficial cargo owners (BCOs) and ocean carriers, for which a link was recently set up with INTTRA.

Shippers searching for the right sailing through INTTRA can now quickly check on the correct freight rate to apply before subsequently completing their booking request/shipping

Invoice inaccuracy still plagues the box industry, but companies such as CargoSphere can help, as Matthew Beddow discovers from discussions with its customers

CargoSphere’s Neil Barni: ‘We are much more than a good idea’

BETTER WAY TO DO BUSINESS

‘The automated CargoSphere system has saved our company

thousands of dollars a year’

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NEXT MONTH:CHASSIS: INTERNATIONAL ASSET SYSTEMS

www.containershipping.com CONTAINERISATION INTERNATIONAL 59October 2012

instruction forms through the same portal, without having to switch sites.

CargoSphere’s core product is its premier rate management system, which enables users to securely manage their own carrier contracts, while aggregating large volumes of external rates from a wide range of sources, including associations, agents, partners, and neutral NVOs.

Pat Fosberry, corporate export and transportation manager of US-based forwarder John S. James Co, elaborated: ‘We have six offices in the US, so keeping everyone up to date on what rates could be offered to customers prior to changing over to CargoSphere was a nightmare.

Better visibility of the services on offer‘The e-commerce tool now enables us to centrally house our NVOCCs steamship line contracts in a way that permits us to search available rates quickly and efficiently, to give our rate department better visibility of the services we can offer our customers.

‘The ability to easily do maintenance on these contract rates allows us better access to the most current rates. Moving from a manual, paper-intensive system of record-keeping to the automated CargoSphere system has saved our company thousands of dollars a year, right from the start.’

Another customer, Peter Porse, executive vice president of US-based ClearFreight, said: ‘Our network currently consists of 10 offices in the US, two in the Netherlands and one in Japan, in addition to which we are rate-sharing with many partners and forwarding networks, so keeping everyone well informed on prices prior to centralising our tariffs with CargoSphere was very time-consuming.’

CargoSphere’s Rate Network (CRN) additionally supports large scale rate aggregation and rate connections among its clients. More succinctly, it provides a vehicle for ocean carriers, NVOs, forwarders and associations to confidentially network rates using their CargoSphere Systems. The ‘cloud’ computer network also enhances global co-operation by connecting partners wishing to work together and share rates from system to system.

Participation in CRN is optional for those companies wishing to remain in a completely standalone environment.

Fosberry elaborated: ‘This rate-sharing network enables us to work with our “trusted competitors” and partners by sharing our niche contracts with each other. It has helped us to develop good relationships with our partners and competitors, and gives us the ability to better benchmark the rates we receive from carriers.

‘For example, if we receive a customer enquiry for traffic that has to move from a part of the US where we are weak, we can quickly see what other rates are available in the market, accepting that we may have to pay a small premium for the one that suits our customer best.’

Porse added: ‘During the past two years we have seen a big increase in the number of

service providers using CargoSphere. Once a new member joins, its rates almost immediately become available to us, and our rates to it.

‘So, if I do a Baltimore to Lima (Peru) search on my rate enquiry, and I don’t filter it, many more rates will appear in the network than before, and will immediately be clearly presented. These could be from other NVOs, an agent, a partner and even one of my own offices. In this business, we receive rates from China almost every day, which, at present, are all over the place, so we need help more than ever in managing the information electronically.’

CargoSphere also provides a collaborative platform for rate requests (RFQs) and responses between all participants in the quoting process: shippers, agents, internal sales and pricing staff, and carriers. Advance quoting tools enable customers to produce branded and professional-looking quotation packages for full container load and less container load cargo, as well as airfreight, and a range in size from single rates to over 1,000 rates.

It is claimed that many companies are now adopting the RFQ portal feature to have rate requests go right from their websites into their CargoSphere system. Its software is web-based, and requires no software installation – just a web-based browser for users to securely access their system.

John S. James Co is one of them, as Fosberry made clear: ‘This is where we get the most value from the system. Our quotations to our customers are branded, professional and clear.

‘They also offer a means to communicate directly with the carriers and our customers, giving us the ability to negotiate the rates from the beginning to final acceptance by our customer. When CargoSphere added the ability to host and maintain our NVOCC tariff, we thought this made the quotation process complete.’

Porse said: ‘CargoSphere’s RFQ feature is indeed a very strong selling point for us, and we now use it almost exclusively for making quotations.

‘Apart from making these look professional, it enables us to add disclaimers and warnings of approaching rate increases. If we send a quote to an agent, there is a button on it that makes the deal interactive, allowing feedback on whether it is too high, or not flexible enough.’

Summarising the overall benefits of CargoSphere, its president Neil Barni, enthused: ‘Our track record over the past 10 years shows that we are much more than a good idea.

‘We have also served the National Customs Brokers and Forwarders Association of America (NCBFAA-SA) and its members for 10 years (www.ncbfaa.org), and work with many China-based NVOs and their global networks.

‘Moreover, we work with key neutral NVOs such as Vanguard, Carotrans, Econocaribe and Troy Container Lines, all of whom use CRN to share carrier-to-carrier agreements with NVO co-loaders.

‘All of which has resulted in us now handling over 100 million rate connections globally, compared with just five million a year earlier.’ ■

SOLUTIONS• E-commerce solutions enable

complicated freight agreements to be more easily accessed by remote offices

• Updating rates and surcharges becomes easier

• There is less margin for error

• E-commerce applications can now be made interactive

CHALLENGES• Freight invoicing is still so inaccurate

that every invoice has to be laboriously checked for errors

• Human error is the problem

• Freight contracts are now inundated with surcharges that need to be regularly updated

• Globalisation has created the need for more centralised freight agreement databases

‘With six o� ces in the US, keeping everyone up to date on what rates could be o� ered to customers prior to changing over to CargoSphere was a nightmare’

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