New ocean procurement tool helps small shippers act big

Chainalytics and Drewry have partnered on the Ocean Buying Group, a project that allows small and mid-size shippers to pool their volume to increase buying power with carriers.    Late last week, two of the more prominent advisory groups in global freight announced they had partnered on a new concept to help small and medium-sized shippers pool their ocean freight volume to gain leverage in negotiations with liner carriers.
   The Ocean Buying Group (OBG) sees Atlanta-based Chainalytics teaming up with London-based consulting firm Drewry to provide smaller shippers with an ocean freight procurement solution that mimics “big shipper” characteristics that large volume beneficial cargo owners enjoy with liner carriers and non-vessel-operating common carriers (NVOs).
   The concept is not necessarily revolutionary. There have long been shipper associations (such as the Wine and Spirits Shippers Association, the American Coffee Corp., and the fashion-based Gemini Shippers Association) that attempt to augment the buying power of their individual members through a pooling of volume. In some cases, those associations even offer members relevant procurement or transportation management tools.
   In addition, some holding companies that own different companies in different industries often aggregate their volume when they present it to carriers, like Leonard Green Partners (which owns retailers BJ’s, David’s Bridal, JCrew, Joann, and The Container Store, among others). Another example of a holding company pooling volume across a diverse set of shippers is the Carlyle Group, which uses group purchasing to increase buying power for its companies that are big freight movers.
   The uniqueness of the Chainalytics/Drewry concept, however, comes from its ability to connect small and mid-size shippers who are unaffiliated with such association or holding companies.
   “By combining propositions, we’re able to offer a unique service delivering much needed improved ocean carrier contractual terms with full transparency, cost stability and predictability, market intelligence and technology-driven category management to a segment of the market that often suffers pricing volatility and opaque service levels,” said Philip Damas, head of Drewry’s logistics practice.
   John Westwood, senior manager of Chainalytics transportation practice, said the group was designed “to provide companies often outsized by competitors the opportunity to gain ‘big’ shipper value relative to the size of its organization and quantity of shipments.”
   Drewry has long helped ocean shippers with their procurement strategies. It also offers a procurement tool, called eSOFS, which it developed in tandem with the procurement software provider Keelvar. Drewry also offers shippers of all sizes the chance to benchmark their rates through its Drewry Benchmarking Club and World Container Index products.
   Chainalytics, meanwhile, has become a well-regarded name in helping shippers manage complex freight buying decisions, most notably through its Freight Market Intelligence Consortium.
   Damas told The Loadstar this week that Drewry has been able to aggregate 100,000 TEUs of volume from smaller shippers in the pilot phase of OBG.