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ASF President, Phillip Ousley spoke with Inbound Logistics for the October 2023 Issue of their Online Publication:
Importers have several options when negotiating rates with NVOCCs (non-vessel operating common carrier), such as yearly or quarterly contract rates, spot rates, or hybrid contract/spot models. No matter what form these agreements take, relationships should be established long before it’s time for contract negotiations. Building strong NVOCC partnerships through collaborative planning, an open dialogue and respect, builds a solid foundation for negotiations and optimal year round interactions.
You’ll find that when market conditions change, and they always do, there’s a significant benefit to having a deep-rooted, trusted partnership with your NVO, as they offer a high-level of expertise, dedicated support, and customer care.
As specialists in global logistics and transportation services, NVOs provide cost-effective pricing due to bulk-volume contracts, and flexible, multi-carrier service options. NVOs, such as ASF Global Logistics, have established long-term carrier relationships with guaranteed space and competitive rates, that provide reliable, cost-effective service alternatives.
A forwarder/NVOCC’s job is to work closely with shipper customers to understand their supply chain needs and strategy. Through this personalized, true partnership approach a forwarder/NVO then serves as the link to ocean carriers regularly providing updated cargo volume forecasts and accurate customer documentation. This helps carriers with one of their most important operational tasks, effectively planning space and equipment allocations.
At the most basic level, shipper, NVO, and carrier relationships mutually need trust and predictability. Importers need the equipment and space they book and carriers need to know that cargo will show up on the docks as expected. Strong, trusted business relationships help alleviate mishaps that cause operational problems for all parties.
Accountability and honesty in these relations ensures a mutually beneficial approach that provides a strong foundation for constructive negotiations that provide guaranteed space and competitive rates to reduce business risk. The management of freight rate volatility will be eased when open, informed discussions occur due to these meaningful relationships.
In addition, shippers and their NVO partners that have established a loyal and stable long-term business relationship with ocean carriers will find that their cargo is prioritized for loading on a ship when cargo is being rolled. Rolling cargo occurs when a vessel runs out of capacity resulting in a shipment not being loaded onto the vessel it was scheduled to sail on.
The crux of successful ocean transportation negotiations lies in forging robust partnerships long before negotiations commence. The essence of collaboration, transparency, and respect lays a strong groundwork for year-round interactions. As market dynamics inevitably shift, the value of well-established, trusted relationships becomes apparent. Importers must understand that pushing carriers into corners, or forcing down rates may seem like a winning mentality, but is likely a short term win leading to a long term loss.
With accountability and honesty at the forefront, negotiations take on a constructive tone, paving the way for guaranteed space, competitive rates, and a fortified global supply chain. In this dynamic industry, the power of partnership in shaping resilience, stability, and effective dialogue cannot be overstated.
