Choosing the Right NVOCC
My last entry I was discussing the differences between BCO’s, VOCC’s, NVOCC’s and Freight Forwarders. Establishing that your company will begin Importing, you have decided to use an NVOCC to assist. You expect your volume the first year to be 10 to 20 TEU and now the question is, which NVOCC to choose? The first thought would be going with one that already has a very large amount of volume and clout. The more volume the NVOCC handles, the better discounts and pricing it should have with the VOCC’s, correct? While this is in fact often the case, going with one of the larger NVOCC’s may or may not be the best idea.
Though using one of the biggest NVOCC’s will most likely help to secure an excellent price, there are many other things to consider. If you are truly new to importing, having access to staff at the NVOCC that is willing and able to take the time educating you on the processes involved is critical. Importing can be quite complex. Your company will not be a top priority for a lot of the larger NVOCC’s. They will be quite busy managing their customers with greater freight volumes.
The NVOCC’s relationship to domestic trucking companies is also important. Many NVOCC’s move tremendous amounts of ocean shipments. But once the freight gets to the U.S. and is Customs Cleared, it will then be imperative that they are able to access a trucking company quickly to make the final delivery to you. Many NVOCC’s have very close relationships with trucking companies, or are a division of a trucking company themselves. This gives this type of NVOCC the added flexibility of handling the final, critical delivery portion of the shipment smoothly and effectively.
Think of it this way. Let’s say not all of your imports will be FCL. You will have some shipments that are just a pallet or two. Furthermore, let’s say that your company is located in a fairly rural part of Indiana. For this example you have a 2 pallet shipment that arrives at the CFS in Chicago. If the NVOCC does not have trucks themselves, then they will have to contract this out, or worse, broker it out! If they are brokering it, your freight can sit for several days while they locate someone willing to go your location.
Oftentimes, Importers get too fixated on price of the freight costs alone. Having multiple options is also important. The NVOCC that you work with will need to have relationships with many VOCC’s. An important key to moving the freight smoothly will be access to space with the carriers. For example, if your shipment is to depart the port of Shanghai and is ready on March 15, but your NVOCC cannot find space for you until a March 30 sailing, the time lost in the freight not departing in a timely fashion negates any savings you may have had by having a low price. In fact, not only does it negate the savings, it ends up costing your company significantly in either down time or your customers’ being upset due to the delay.
Ideally, your NVOCC would present you with multiple options. They may either have a low contract price option with a carrier, or are able to obtain “bullet” or “spot” rates to save money. Similar to when you go to a website like www.priceline.com NVOCC’s have options to get last minute savings from carriers looking to fill out a vessel. The thing to remember here, however, is those low cost options fill up quickly. It’s kind of like going to the supermarket and noticing they have a special on toothpaste, but once they sell all that is on display, the deal is over.
Communication is also very vital. In this day and age, it is so very important to have access to the answers you need, when you need them. Your NVOCC must be in very close contact with the Carriers, its partner Agents, Customs Brokers, CFS locations and other parties to be able to provide you information regarding your freight’s status.
Lastly, flexibility is also an incredibly important characteristic your NVOCC must have. International shipping is amazingly complex. So many things can happen that can cause delays. With freight moving thousands of miles, inclement weather can be a major factor. Also there could be congestion at the ports. There can be issues with the freight clearing Customs. With these types of issues and many more, your NVOCC must have access to different options to help mitigate delays. So much of the just mentioned issues are beyond the NVOCC’s control. But there must be access to fast trucking options, and direct assistance from Customs Brokers to communicate with governments regarding Customs Clearance issues. If you are working with an NVOCC that does not have the time or resources to pay close attention to these details, you will be setting yourself up for disappointment.
Please feel free to post comments!