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Today's Feature

 

Proper route planning could help cut freight costs

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THE expert planning of shipping routes by ship owners could help lessen the burden on shippers of escalating freight costs.

A well planned route that avoids hazardous sea lanes and routes that compromise the safety of the cargo and crew are just a couple of keys that shippers can look at in a bid to achieve greater cost savings on their total supply chain. 

It is also a way for vessel operators to differentiate themselves from their competitors on rates alone.

"Amid low demand for shipping service, shipowners must therefore judiciously plan the routes of these giant vessels in such a way that they minimize the number of port calls and ensure optimal cargo load”, declared Nazery Khalid, a maritime academic with the Maritime Institute of Malaysia.

According to Mr Khalid it is vital for shippers to have an appreciation of sea routes and the dangers latent in some of these sea voyages.

That entails detailed discussions with owners on the transportation of cargo, he added.

The escalating costs of freight led by the see-sawing prices of bunker fuel have undoubtedly hurt shippers extremely hard over the last few years. That plight has worsened by decreasing cargo output meant for export owing to the weak European, American and Japanese economies.

Weather planning or routing is crucial, says Mr Khalid, because an inadequate or worse still, non-existent weather plan arrived at in concert with shippers, would mean shippers have to fork out for additional costs that had not been initially planned for. And it is these unexpected costs that hurt the most, as they are not, and cannot be, budgeted for. 

At a time in the industry’s history where slow steaming has become very much in vogue, due to its reputed cost savings potential, Mr Khalid goes against the flow by arguing that it could be advantageous to adopt fast steaming for quicker turnaround times.

The importance of planning for voyages and fast steaming becomes particularly crucial when considering the marine insurance implication that insulates cargo and crew from hazards.
Carrier-provided insurance is usually deemed insufficient and cannot in most cases conceivably make up for the cost of replacement. Freight insurance can be obtained from third parties that more often than not exceed carrier liability.

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