Traditionally, BCOs or Beneficial Cargo Owners go straight to the lines (ocean carriers) during negotiations. However, a good contract is a well-balanced contract with regards to utilizing NVOCCs (NVO) and depending on your volumes the Carriers/Lines as well. Below are SimpliShip’s top reasons to include NVOCCs in your contract this season.
This may go against the traditional school of thought but NVOCCs play a critical role in managing capacity on your behalf whether you are a large global enterprise or a medium size Shipper. Historically, many BCOs believe they are getting the best possible outcome when it comes to getting capacity commitments by going straight to the Lines. However, in times of capacity constraints an NVO plays a critical role as they have contracts with many different Carriers and have much more flexibility. So, they may be able allocate your shipment to a Carrier that has space and is willing to take your freight much easier and quicker that you would be able to.
As of late, alliances are becoming much more prominent as the Lines try to mitigate costs and increase profitability which is their main goal just like any other business. From a BCO perspective this means increased risk. If you contract the majority of your freight in one lane to one Carrier, you are potentially exposing your company to the following:
- Your shipment being rolled (as discussed above in capacity management)
- Cancelled sailings
- Cancelled port callings
- Financial challenges
On the other hand, a good NVO will have a good feel for the pulse of the industry. They will keep you up to date on these challenges and will also proactively put counter measures in place to ensure the risk is mitigated.
It’s important to not forget that you are partnering with people as well as technology. In many cases, NVOs can offer superior customer service. This is an easy one to forget when going into contract season because the focus in many cases is around schedule reliability, price, transit times, etc. But, what happens when you need to get someone on the phone to discuss classification issues, rerouting a container, or a new lane that you didn’t foresee and contract in at the beginning of the season? A good NVO will have the skill set and willingness to partner and address these concerns for you.
Historically, the thought process is that you will automatically receive better rates from a Carrier than an NVO. However, in many cases this simply is not true. NVOs can be aggressive and willing to do what it takes to win the business. At the very least, they will be competitive and with the above reasons the overall value prop becomes very attractive.
SimpliShip utilizes technology and industry expertise to ensure our customers get the best combination of rates and service from NVOs and Forwarders. We continue to support both spot rates and contracts utilizing our software and proprietary data. If you would like to learn more about how we can support your contract negotiations please do not hesitate to reach out