We hear a lot about port congestion especially on the West Coast. In shipping there is always another way and it seems that the NVOCC’s are coming out of the woodwork offering East Coast and Gulf Coast alternatives to the West Coast routes. They are prospering. I am not sure the regulars are in the container trades. So how does this work?
NVOCC’s act likes carriers and book cargoes but they do not operate vessels but charter slots or ships on the spot market or for the customer. They are more than forwarders. But the point here is that they can be very nimble.
Say Company X wants to get 30 40-ft containers from Whampoa to Oakland thence on a throughbill to New York City. The cargo is critical to the customer to arrive on time because of JIT inventory constraints. The customer is expecting a three day delay which is quite difficult to deal with. The NVOCC to the rescue. The NVOCC finds two vessels with space going to Houston and often can carve out some of the critical cargo in some commodities to be flown for initial inventory if the customer is willing. The vessels arrive and truck transport is arranged from Houston to New York. The operation is more complex and he risk is slightly higher and the cost may be higher but the two ships are slightly faster and when the net losses of the expected delay is subtracted the cargo gets to New York, say, 24 hours later rather than four days later than expected which reduces any net anticipated loss by 25%.
The arithmetic is simple. The contortions sometimes are not so simple to meet the need. However, the NVOCs do this daily so clever solutions are their stock in trade. They are doing quite well right now because they work in the shadow of the majors and bypass the problems swiftly and well.
In transport there is always a way. The trade works best with containers which are so tightly tuned to time sensitivities that any disruption cascades through the system. The container system is wonderful when it works. When it does not the NVOCC to the rescue which often is a gain in client relations for the NVOCC at the expense of the majors who might never return as preferred carriers.
So this is a case where an ill wind is blowing some good to the NVOCCs. From time to time the NVOCCs get lucky. The port congestion is one these times.
The opinions expressed by Dr. John A.C. Cartner in the ‘Conversations with Cartner’ Video Series and accompanying blogs are the opinions of Dr. Cartner and do not necessarily reflect the views of the staff and management of Maritime TV, or its parent network, TV Worldwide, Inc