PHILADELPHIA, Pa., April 18, 2006 - Only a quarter of ocean shippers have a clear understanding of non-vessel operating common carrier (NVO) confidential service arrangements (NSAs), according to a recent survey conducted by BDP International (BDP), a global logistics and transportation management company. The same survey, however, indicates that more than two-thirds would consider entering into such arrangements, particularly if NVOs were to be flexible about volume commitments.
As of February of this year, only 351 of the 3,398 NVOs operating in U.S. international trades had registered to become NSA filers, according to the Federal Maritime Commission (FMC). Of these, 53 had filed just 222 NSAs.
This anemic response to the concept, which was adopted in January 2005, appears to be largely attributable to a modest communication effort on the part of NVOs and a resulting lack of awareness among shippers. 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.
Queried as to why they
might enter into an NSA, more than half of the respondents cited
the ability to lock in competitive rates for small volumes in
certain niche trade lanes. Guaranteed rates during periods of
price instability were noted by 45 percent. And 42 percent
indicated a preference for multiple carrier options through
a single source. 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
Nearly 35 percent indicated they would not enter into an NSA because of perceived minimum volume commitments, while 25 percent indicated they need more information because the concept is too new. These numbers jump to 47 percent and 36 percent respectively among small-to medium-size shippers with annual shipment volumes of fewer than 1,000 TEUs. Significantly, more than half of the respondents were not aware that an NSA could be structured to provide price flexibility.
Even though only half of the respondents thought NSAs will become widely adopted, more than two-thirds indicated they would consider entering one. That percentage jumps to over 80 percent among respondents in the 100-to-500-TEU range and nearly 90 percent among those in the 500-to-1,000 range, or small-to-medium-size 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.
Conducted in March of this year, the limited survey drew 85 respondents, with primarily transportation, logistics or supply chain responsibilities. It was distributed electronically to NIT League members, readers of American Shipper magazine's on-line newsletter and a BDP database of approximately 450 shippers.
For further information, contact Arnie Bornstein, Director - Marketing & Corporate Communications, BDP International, Inc., 510 Walnut Street, Philadelphia, PA 19106. Phone: 215-629-8493. E-mail: abornstein@bdpnet.com; or Henry Raab, Vice President - Public Relations, Stiegler, Wells, Brunswick & Roth, Inc., 3865 Adler Place, Bethlehem, PA 18017. Phone: 610-866-0611. E-mail: hraab@swb.com
