Why MQC trips up even smart teams?
If you’re the Beneficial Cargo Owner (BCO), the Minimum Quantity Commitment (MQC) is your handshake with a carrier: you commit volume; they commit price and space. The catch? Over-promise and you’ll scramble—or pay for containers you never ship. Under-commit and you’ll fight for allocation when the market tightens. The goal is a number that protects your cost structure and keeps freight moving, in real life, with real demand swings.
Relatable truth: Forecasts are never “right.” The point is to be consistently reasonable and course-correct fast.
The 3-lane framework (so you don’t lock up the wrong freight)
Most importers don’t ship just one lane. Treat each lane differently:
- Anchor lanes (steady SKUs, repeat POs): candidates for BCO contracts + MQC
- Growth lanes (new markets, promotional SKUs): keep flexible via NVOCC until stable
- Overflow/hedge: deliberately uncommitted capacity for seasonality and disruptions
This split lets you negotiate confidently on the lanes you actually control—and avoid promising “stretch” volumes just to chase a headline rate.
Build a forecast you can defend (and sleep on)
Work backward from POs and receiving capacity, not wishful sales targets.
- Weekly view, per port pair. Monthly buckets hide trouble.
- Three scenarios: conservative / base / stretch.
- Confidence tags: A (locked POs), B (likely), C (speculative). Only A+B should influence MQC.
- Reality checks: holidays, factory shutdowns, chassis/appointment lead times, and your DC’s throughput.
Rule of thumb: MQC ≈ somewhere between your conservative and base scenario for Anchor lanes—not the stretch plan.
The MQC playbook you can copy
1) Start with a number you can actually ship
- Use 52-week FEU totals on Anchor lanes.
- Subtract weeks you know will be constrained (Golden Week, Q4 warehouse limits, peak chassis shortages).
- Add a small buffer (5–10%) only if your supplier OTIF and inland capacity are historically reliable.
2) Negotiate guardrails, not just rates
Ask for clauses that protect both sides when reality shifts:
- Swing tolerance: e.g., ±15% by quarter without penalty.
- Allocation cadence: weekly slots vs. monthly buckets, and how rolled bookings are handled.
- QBR: Quarterly Business Review to true-up MQC and reset projections with data.
- Exception path: who to call (by name) when a gate-in or roll threatens storage clocks.
3) Put data in the contract (yes, really)
List the milestones you expect via EDI/API—booking, gate-in, loaded on vessel, departs, arrives, available for pickup, out-gate. If you can’t see your timers, you’ll pay for them.
4) Keep a hedge
Even with a solid MQC, keep a deliberate share of volume with an NVOCC for overflow and alternate routings. This isn’t indecision—it’s risk management.
A simple MQC example (numbers rounded)
- Lane: South China → LA/LB
- Weekly base need: 45 FEU
- Known constraints: 4 peak weeks at 30 FEU; 2 holiday weeks at 20 FEU
- Conservative annualized: ~2,000 FEU
- Base annualized: ~2,250 FEU
- Chosen MQC: 2,100 FEU with ±15% quarterly swing and a QBR clause
- Hedge: 10–20% of throughput reserved for an NVOCC to absorb surges and experiments
Why it works: you secure predictable cost and space on the core, yet you’re not boxed in when promos land or terminals wobble.
Common MQC mistakes (and quick fixes)
Mistake 1: Setting MQC off calendar-year totals
Fix: Budget lives on fiscal years; freight lives on lead times and transit. Plan MQC by sailing week, then aggregate.
Mistake 2: Ignoring inland reality
Fix: If your drayage capacity and DC receiving windows cap you at 35 FEU/week, negotiating 60 FEU of weekly allocation only creates rolled bookings and storage fees.
Mistake 3: Chasing the lowest rate
Fix: Ask for service KPIs (roll rates, equipment availability) and meaningful free-time assumptions. Total landed cost beats a “cheap” base rate that triggers demurrage.
Mistake 4: No owner for the storage clock
Fix: Assign one team (or partner) to watch Last Free Day and appointment lead times daily. Most fees are prevented, not appealed.
How to run the QBR (Quarterly Business Review) so it actually changes things
Bring one page. Make decisions in 30 minutes.
1) What we planned vs. shipped
- Weekly view of FEUs vs. allocation; rolled bookings; root causes.
2) What we paid
- Detention/demurrage per FEU; free-time consumed; waivers obtained.
3) What we’ll change
- MQC adjustment (if needed), swing tolerances, alternate terminals, or a temporary overflow plan through the NVOCC.
4) Who owns the timers
- Name the human watching LFDs, chassis holds, and appointment queues.
Your MQC checklist (paste into Asana)
- Weekly lane forecast (conservative/base/stretch)
- Supplier OTIF & DC capacity check
- Candidate MQC set between conservative & base
- Swing tolerance (±%) by quarter
- Allocation cadence + roll policy
- EDI/API milestones listed in the contract
- Free-time assumptions documented (port + rail + DC)
- QBR schedule set for the year
- Overflow routing reserved with NVOCC
FAQ: Quick answers BCOs actually ask
Should small brands sign MQCs?
If one or two lanes are steady and you can ship them every week, yes—at a modest MQC. Keep everything else flexible until demand proves out.
How much hedge is healthy?
Enough to cover your biggest realistic surge or the loss of one weekly sailing—often 10–25% of your Anchor lane volume.
What if we miss the MQC?
Use the QBR to correct early. If you’re consistently light, reduce MQC next term and shift those FEUs to your NVOCC until the lane stabilizes.
