South Florida market continues to attract a steady flow of newcomers aiming to get their piece of the freight.
Miami remains the place to be for newly minted ocean freight forwarders and non-vessel-operating common carriers looking to make their mark in the industry.
“The market overall is very friendly to small NVO/forwarder operations,” said Albert Saphir, a longtime South Florida-based consultant to this industry. “Miami remains highly fragmented, so there are no top leaders that control a huge share of the market. Most of the new startups are led by individuals who have worked in the forwarder segment for some time.”
Michael Thybo worked a dozen years as the branch manager for a global forwarder/NVO in Houston, but the bigger the company became through acquisitions the more it lost its entrepreneurial spirit among its staff and customers.
“The big corporations continue to get bigger and lose their personality,” he said. “I could not see myself continuing to work in that environment any longer.”
By early 2018, Thybo had enough and took up an offer from European forwarder JTM Group to set up an office in Miami, its first in the U.S. market.
Today, as the vice president for JTM Group, Thybo said his passion for the forwarding industry has been rekindled by the Miami’s market’s myriad customers and strong competition.
“Here in Miami, it’s the small and midsize clients that we focus on,” he said. “It’s those with one, two or three containers a month who want personalized service and want to speak with someone on the phone.”
Saphir said Miami is no different than other locations in the country in terms of what it takes to secure an ocean transportation intermediary (OTI) license from the U.S. Federal Maritime Commission, and there is plenty of accessible office space in the city and surrounding suburbs.
“Overall, it is easy once someone has made up their mind and has the finances to get a new business started,” he said. “Other than having the QI (qualified individual) and the OTI bond in place, there are no unique or complicated steps involved.”
There are also readily available and easy-to-deploy third-party forwarding software on the market, such as Magaya, Descartes and CargoWise, and access to ocean carriers of all sizes that serve not just South and Central America and the Caribbean but markets throughout Europe and Asia. Niche carriers, such as Seaboard Marine, King Ocean, Tropical Shipping and Crowley, dominate the transport of containerized goods to these often small markets.
“The only item that everyone struggles at times with in South Florida is the availability of well-trained staff,” Saphir said. “But that applies to all established players the same way.”
Miami remains a difficult market for any individual NVO, no matter the size, to secure significant market share. However, there are some large players in the market, such as Kuehne + Nagel, Panalpina, CEVA, Hellmann Worldwide, DB Schenker USA, JAS Worldwide, Expeditors, CaroTrans Global, C.H. Robinson, Vanguard Logistics and Ecu-Line.
“It’s a melting pot for freight forwarding,” said Miriam Wohlers, branch manager for A. Hartrodt (U.S.A.) in Miami. “It’s a competitive market and completely price-driven. A customer might literally drop you for a penny.”
Wohlers, who has worked in Miami’s forwarding industry since 2005, was recruited by Hamburg, Germany-based A. Hartrodt to open its Miami office in January 2016. She first had to establish a customer base, which she did by traveling to South America. By March 2016, she hired several people to staff a small office. In 2017, the company obtained a 12,000-square-foot warehouse space.
Under Wohlers’ leadership, A. Hartrodt’s Miami operation has grown by focusing on a handful of key commodities, including office supplies and spare parts to South America and food and beverages to the U.S. “We’ll bring in cargo from China, place it in our bonded warehouse and then export it to South American importers when they order,” she said.
Today, the forwarder has 12 employees and a warehouse space that has recently expanded to 21,000 square feet. “We first get the new business on board and then add people,” Wohlers said.
“We have had a number of newcomers in recent years, many from Latin America and some from Europe,” Saphir said. “Miami is the gateway to Latin America, so it is logical for companies from Latin America to consider Miami as their first location. For European companies, there’s often a Latin American connection as well.”
According to the FMC, there are about 1,020 registered OTIs in Florida, which accounts for more than 15% of these companies operating nationwide. The majority of those registered OTIs in Florida are located in and around Miami.
“Most of them start out with one to three primary customers and yet that can become an issue if a customer does not pay its bills or suddenly decides to go somewhere else,” Saphir said. “The more diversified the client base can be the better it is.”
Saphir also warned that too many Miami area-based forwarders and NVOs depend on one overseas agent or country market. “It is OK when times are good, but I have met many small forwarders that were primarily dealing with Venezuela, for example, and likely many of them either closed or needed to add other trade lanes to survive,” he said.
“There’s a strong NVO community here because we have so many trade lanes into South Florida,” said Gabriel Rodriguez, president of A Customs Brokerage in Doral, Fla., who also serves on the board of the Florida Customs Brokers and Forwarders Association. “The result is that we have a lot of niche players.”
Mergers and acquisitions among forwarders and NVOs do occur in the South Florida market, but at a much smaller scale than found in other U.S. ports. “No one player is gobbling up players. Most M&As are based on existing relationships between the company owners,” Rodriguez said.
“I continue to be very optimistic for the SME forwarders here as the market is so diverse with so many niche opportunities that they can continue to prosper,” Saphir said.
“I am especially optimistic about South Florida as we not only have ocean activities to everywhere in the world, but more importantly also incredible air service,” he added. “I truly believe that the air cargo capacity and flight connections offered from primarily Miami not only to the Caribbean and Latin America, but also Asia, Middle East and Europe, create so much opportunity for many.”
Miami International Airport has become the largest international cargo airport in the U.S. at 1.93 million tons handled in 2017, followed by Los Angeles at 1.43 million tons and Chicago O’Hare at 1.35 million tons.
Forwarders and shippers also have benefited from access to South Florida’s expansive free-trade zones. The use of FTZs will become increasingly important for imports transshipping through Miami to Latin America and may be subject to U.S. tariffs, Saphir said.