Year of the NVO

Year of the NVO       There's every indication that 2009, with all of its hardships, will go down in the history of international shipping as the year of the non-vessel-operating common carrier.
      Why you ask? The answer lies with the shippers themselves.
      Since the economic downturn, shippers have suddenly found themselves with less customer orders, translating to fewer containerloads. Traffic managers are also under pressure from the top of their organizations to cut costs wherever possible. In addition, the economic uncertainty has left many shippers with a fear of commitment to liner carrier service contracts.
      This unfortunate circumstance is the perfect time for NVOs to flourish, and for a variety of reasons.
      First, NVOs welcome any amount of freight, not just full containerloads. They are the masters at consolidating multiple shipments into single loads, and most are able to quote their customers freight rates in a matter of minutes.
      Second, NVOs are largely non-asset based, and compete amongst themselves for business based on service. The freight forwarder-affiliated NVOs, in particular, can offer shippers end-to-end services, including forwarding and customs house brokerage, all under a single invoice. They can also offer shippers favorable credit terms.
      Third, with liner carriers forced to cut back on service levels, NVOs are able to fill in the gaps by offering shippers services throughout the world based on their ability to access multiple carriers.
      Even large shippers, many who pride themselves on the ability to secure big volume service contracts with favorable terms from the liner carriers, are now putting their procurement egos aside and turning to NVOs for immediate savings and bottom-line improvements.
      Now none of this means NVO freight volumes are growing in leaps and bounds. These operators are mostly earning their pay today based on their responsiveness and ability to deliver on service to shippers in this distressed global market.
      As Thomas Keene, vice president of BDP Transport, the NVO arm of BDP International, based in Philadelphia, recently put it to American Shipper, 'We are busier than ever, even with a drop in overall volumes, due mainly to the volatility in the marketplace and in trying to keep our customers current on today's moving rates.'
         It's also not a time for NVOs to become smug toward their ailing liner carrier brethren. Without the vessel-operating common carriers, NVOs would also fail to deliver on their service promises to shippers. NVOs should use this time to strengthen partnerships with key liner carriers, and ride out the economic downturn together.