Shipper survey shows emerging interest in NSAs

Shipper survey shows emerging interest in NSAs    The ability for non-vessel-operating common carriers to enter confidential service arrangements may be more than a year old, but the concept is starting to gain interest among shippers.
   According to a recent survey conducted jointly by BDP International, the National Industrial Transportation League and American Shipper, only a quarter of shippers have a “clear understanding” of how NVO service arrangements (NSAs) work.
   However, the survey results, released today by BDP, pointed out that more than two-thirds of those shippers would consider entering NSAs, especially if the NVOs were able to provide flexible volume commitments.
   The survey was conducted in March, with about 85 shippers responding.
   More than half of the surveyed shippers expressed interest in NSAs to “lock in competitive rates for small volumes in certain niche trade lanes.”
   The survey found that 42 percent of the respondents preferred multiple carrier options through a single source. Not surprising, “preference for direct contracts with carriers was cited by 39 percent of all respondents, but by 60 percent of those with 1,000 to 5,000 TEUs a year and over 75 percent of those with more than 5,000 TEUs,” BDP said in statement.
   The survey also found that about 35 percent of respondents would not enter an NSA because of perceived minimum volume commitments, while 25 percent said they required more information because the concept is new. More than half of the respondents did not know that NSAs could be structured to provide flexible pricing.
   More than two-thirds of the shipper respondents would consider entering an NSA. That percentage increases to more than 80 percent among respondents in the 100-to-500 TEU range and almost 90 percent among those shippers in the 500-to-1,000 TEU range, which suggests the interest is high among small to medium-sized shippers.
   “Results of the survey seem to reflect the prevailing industry view that NSAs have received a rather lukewarm reception, but are expected to gain momentum going forward, based on pent-up interest and receptivity among ocean shippers,” BDP said.
   According to the Federal Maritime Commission in mid-February, out of 3,398 NVOs operating in U.S. international trades, only 351 have registered to become NSA filers. Of that group, only 53 NVOs have actually filed NSAs with the commission. By Feb. 14, the FMC had received 222 original NSAs and 144 amendments to those contracts.
   “This anemic response to the concept, which was adopted in January 2005, appears to be largely attributed to a modest communication effort on the part of NVOs and a resulting lack of awareness among shippers,” BDP said. “The survey showed that only a quarter of respondents had been approached by an NVO regarding NSAs, and just 18 percent had actively approached an NVO.”
   Ocean carriers have been filing confidential service contracts with the FMC since the implementation of the 1998 Ocean Shipping Reform Act. Last year, ocean carriers filed 46,809 original service contracts and 236,921 service contract amendments to the commission.
   Tom Keene, president of BDP Transport, will further discuss the results of the survey during a NIT League-American Shipper-The Cameron Group ocean freight contracting teleconference Thursday. For more details, access the NIT League Web site at https://www.nitl.org.