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- Morgan Hill
A simple math equation has traditionally governed the way ocean carriers allot space to shippers and non-vessel-operating common carriers on a weekly basis over the length of their annual ocean freight contracts: MQC/52. That’s to say that weekly allocations are doled out by dividing a minimum quantity commitment by 52 weeks. Of course, that formula doesn’t account for the ebbs and flows most shippers see across a month, much less the entire year. The issue of differing space needs on different weeks came to the fore in 2021, when ocean capacity in any form became a precious commodity. Carriers were largely unable to accommodate base capacity needs, with much fewer requests for additional space. As 2022 begins, the need to allocate better has to be a priority for all parties. Shippers need more assurance that they can get space that aligns with their volume out of a specific port on a given week. And carriers need more certainty, in advance, of what volume is likely to come so they can plan their network and fully utilize the capacity on their vessels. The 2021 market changed the nature of allocations, in that many freight buyers felt that carriers intentionally cut allocations to sell space on the more lucrative spot market. What strategies and technologies can both sides use to make sure allocations match capacity needs and can fluctuate as those needs shift? This session will incorporate the perspective of a retailer, a technology provider for shippers, and a software vendor for forwarders that has developed a tool to forecast allocations better.