An Ill Wind Blows on Eastbound TransPacific. So, Who's Your Buddy? REALLY.
by Johnny Dollar
For the small volume import container shipper, NEVER FORGET that the NVOCC IS YOUR FRIEND!
WHY? Because they are capable of providing their collective container volume clout in negotiating import container rates that the small volume customer is incapable of doing for themselves. So, when someone attempts to hurt our friend, the NVOCC, we need to let the world know about it, and perhaps help to reverse the apparent injustice.
These are tough economic times. Small businesses are struggling to survive. Overseas purchasing can be a critical part of a company’s business plan, and doing budget projections and developing target profit goals based on a reasonable profit margin on imported products is critical.
But, there is a wild card out there that is making this increasingly difficult, and there is no effective international legal recourse to stop it. What could it be? The TSA Eastbound alliance members are sticking it to the NVOCCs, allegedly in retaliation for the NVO's stealing market share from the steamship lines themselves. The net effect for you, the shipper, is that if you use an NVO as your import forwarder, the import rate will be +/- $200 per container MORE than if you had contracted directly with the steamship line for the same move.
It is noteworthy that the losses ocean carriers are incurring are a direct result of their decision to purchase new, larger capacity container vessels. The end result of their decision has been to create a soft market as a result of this increase in capacity and increase their debt load related to the new vessel purchases.
What a wonderful idea. But who are the steamship lines really screwing with this move? The NVOCC? Or the many import customers who choose not to contract directly with the steamship lines for whatever reason.
Rule of thumb has been that it takes a certain critical mass of import container volume to be able to obtain a reasonable ocean rate if you were interested in contracting directly with a steamship line. Otherwise, the customer lacked sufficient clout to have enough gravitas to effect a reasonable negotiating position with the carrier.
There are many, many small businesses, and other businesses with small volume import container programs that are being hurt, economically and otherwise, by the steamship lines’ decision to arbitrarily jack up the rates on the NVOCCs.
When ocean cartels such as the Transpacific Stabilization Agreement Conference take advantage of their members’ “voluntary participation” to foist such an added cost burden on the marketplace, which ultimately serves to depress the market and punish those who don’t deal directly with them, it’s up to the steamship lines’ clients to force them to stop.
Do YOU import containers? Do YOU use an NVOCC to do this? What action are you contemplating to push back against the predatory pricing of the monopolistic steam ship lines?
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