Shippers or cargo owners are expected not to be over worried about the floating booking (space) in domestic shipping as the system is actually not a new practice, Indonesian National Shipowners Association (INSA) said in responding reactions from forwarders.
INSA chairwoman Carmelita Hartoto notes that the system (floating booking) has actually been running in domestic market. Even, the fix booking is very rarely taken in domestic market.
“This is actually not a new practice. Shipping lines have actually adopted this system in domestic market for a long time, compared to other one of fix booking system. The fix booking system is mostly run by international trade and rarely applied in domestic market, while the floating booking is actually a dominant practice in domestic shipping,” Carmelita said.
“Of course, this is referring to the plus minus of those systems,” Carmelita said, explaining that the floating booking will not give fix cost but there will be some benefits from it, including no penalties. “There will be no dead freight from this system (floating booking),” she said.
On the other hand, shippers will be benefited with fix cost from fix booking system, but there will be penalties in case of empty or lower volume. “Shippers have to pay for dead freight,” she said.
As reported earlier, Indonesian Logistics and Forwarders Association (ALFI/ILFA) has warned that the adoption of floating booking space system will potentially trigger a further sky rocketing freight rate in domestic shipment, while on the same time the system creates uncertainty in space availability.
“This so regretful. This will trigger a further increase of the domestic freight that has already been sky rocketing, increasing up to 80%. This is due to unavailability of vessel space,” Yukki said in a press statement today, Monday, 13 December 2021.
Yukki explained that the freight rate has been variously increasing in domestic routes this year, from the beginning of 2021 to date. The routes with high volume of Jakarta-Medan and Jakarta-Makassar increased by 30-60% and 30-80%, respectively. This freight increase, he said, would continue next year (2022).
Yukki predicts the domestic freight rate will continue to increase until mid-2022. Therefore, the cargo owners and forwarders members of ALFI as well are also waiting for the transparency of the increase in freight from shipping companies.
“I have informed this issue to all executive boards of ALFI Chapters throughout 34 provinces nationwide. We have asked them (executive boards of ALFI Chapters) to forward this information to cargo owners,” he said.
This is because the increase in domestic freight has had impacts on several companies. “Food and beverages producers have indicated to increase the price of their goods,” Yukki reminds, adding that some domestic commodities will also increase. “This condition cannot be avoided due to the increase in freight,” he said.