Container Rollovers: Understanding the Causes and Ways to Minimize Rollovers

With the unprecedented supply chain disruptions across the globe, container rollovers have become a common problem, affecting exporters far too frequently. Global container rollovers increased to 45% in December 2021, after fluctuating between 38% to 42% in the preceding months of 2021, and the situation is expected to persist throughout 2022.

Prevalence and Causes

Common causes include overbooking, space constraints, skipped port calls, incomplete documentation, etc. Periods of high demand, high levels of port activity that exceed current capacity, and compromised schedule reliability, such as what occurred with COVID-19, can all increase the frequency of rollovers. Rollovers impact shippers in a myriad of ways, disrupting operational planning, causing unforeseen significant delays, and incurring additional costs in case expedited alternate arrangements need to be made.

Reasons for rollovers are manifold, being attributable to either the Carrier or the Exporter:

Carrier

1. Overbookings: Carriers may choose to accept bookings beyond the available capacity. This is to counter cancelled bookings, which result in the vessel sailing light, incurring revenue losses. Carriers, therefore, accept more cargo than allocated capacity, based on the historical booking cancellation ratio. In the event that cancellations are less than average, carriers are forced to rollover the excess containers onto the next sailing.
2. Yield optimization: When freight rates are high, carriers tend to prioritize higher-paying cargo in order to maximize revenue. This is seen in the current market when carriers levy premiums for guaranteeing space.
3. Vessels skipping ports and late departures: When a vessel skips a scheduled port of call, containers are rolled over to the next available vessel. This is common during periods of high port congestion, peak/holiday seasons or when schedule integrity is impacted by an ocean disruption (i.e. Suez Canal Blockage), compelling the carrier to cut port calls to maintain schedules. In cases where the vessel managed to arrive late at the port, late departure from the port is more likely, since.
4. Missed/delayed transshipment connections: Rollovers are more common when transshipment is involved. A vessel arriving late to the transshipment port increases the likelihood of a rollover if there is not enough time to load the container on board of the connecting vessel/feeder.

Shippers

1. Incomplete documentation: When documentary requirements or procedural formalities have not been complied with, the container will not be loaded until the deficiencies have been rectified.
2. Cargo/weight misdeclaration: Exporters at times, either inadvertently or deliberately, misdeclare the nature of commodity/weight, which can result in sub-optimal stowage planning or non-compliance with regulations. The container is rolled over at such times until the correct information is provided and relevant documents rectified.

Global factors

Global factors or force majeure events comprise a third category, which can result in rollovers. Examples include:

1. Russia/Ukraine conflict: Major Container Carriers like Maersk, Hapag-Lloyd, MSC and ONE having ceased cargo acceptance to and from Russian ports. While new cargo isn’t accepted, freight already ashore in the EU and supposed to be on cancelled ships heading to and from Russian ports will be rolled over. Besides the impact of the conflict on freight capacity and vessel equipment, there is also a shortage of seafarers and crew to man vessels and retaliatory cyberattacks targeting stakeholders. All this will vastly increase the likelihood of rollovers in international transport.
2. Congestion and supply chain disruptions: With heavy congestion witnessed at major ports in North America and Europe since 2020, rollovers are on the rise. Congestion might lead to vessels running late on schedules and skipping ports.
3. Force majeure events: Examples include the Suez Canal blockage or port closures, such as the Covid-induced lockdown at Ningbo in 2021, which caused a massive spurt in rollovers.

Minimizing the risk of rollovers

While a few factors are obviously beyond control, being proactive and taking certain elementary precautions will significantly help in minimizing the risk of rollover (or mitigate the impact thereof):‍‍

Demand forecasting‍

Robust demand forecasting and planning is a fundamental step that can eliminate the majority of controllable reasons for rollovers. Demand forecasting includes planning the flow and time of cargo movement and ensuring that all documentary and regulatory requirements are complied with well in advance. Forecasting also aids in compliance with all relevant rules and regulations by preparing accurate and complete paperwork. Lastly, demand forecasting allows for better planning of movements from origin to destination and pre-empting possible delays and circumventing bottlenecks. Given the increased probability of rollovers in the past two years, a good practice is to build a reasonable buffer to delivery schedules.‍

Flexibility in routing‍

Avoid congested ports and capacity-constrained routes by:

• Identify and use less congested ports with available capacity, which lowers the probability of rollovers. For example, US East Coast ports such as Newark and Charleston are less heavily congested than West Coast ports like Los Angeles and Long Beach.
• Explore sailings on alternative routes to bypass bottlenecks (a notable instance was Asia-Europe bound cargo routed via the Cape of Good Hope when the traditional Suez Canal route was blocked due to a vessel grounding).

Real time visibility‍

Take timely mitigative actions thus minimizing the impact of rollovers on operations:

• Predictive visibility platforms such as Portcast, can enable the user to identify which vessels are running significantly late on schedule; containers supposed to load on that vessel would have a higher risk of rollovers.
• Real time container tracking can enable firms get quick alerts on potential rollovers (for e.g. by knowing that the vessel has departed but container has not been loaded) and make alternative arrangements.

Keep abreast of latest developments

Pre-empt potential delays arising from known or foreseeable causes, such as:

• Peak season (when higher demand increases the probability of rollovers) – planning cargo movement before or after the peak season.
• Labor issues – such as ILWU negotiations at US Pacific Coast Ports, have traditionally resulted in a deliberate slowing of operations and rollover of cargo.

Hedging transportation delay risk

Spread key shipments by spreading shipments over a period of time, using a combination of carriers and trade lanes, and using innovative multi-modal transport options such as Air (for high-value cargo) or Sea-Rail (balance between cost and speed).