Reprint from The Exporter -- March 1996 Vol.16 No. 8                                       

Utilization of "Consolidators"... in Export Trade, A Viable Option for Ocean and Air Freight.

     Larger ocean shippers, those with over 100 TEU's per annum are typically at the lower end of the scale but have a minimum clout to negotiate directly with steamship lines for rating discounts and relief from standard tariff's.

     The more volume, the more clout you will have in reducing ocean shipping costs. Large exporter's with over 1000 TEU's are in great position for favorable ocean tariffs.

     Many ocean carriers will only price out shipping, starting at 20' and 40" units. Many will not even look at LCL freight (less then container load). This places the smaller, less frequent ship- per at a disadvantage to larger more frequent shippers. And those shippers with small shipment (LCL) sizes have less options and will typically pay more. Sometimes a LCL shipper will pay more for a third of a container worth of freight, then paying for the whole container, at a full container rate. A good example: A shipper from San Francisco has 12 metric tons of dried vegetables to ship from Port of Oakland to Prague. The LCL rate is $242.00 per MT or $2904.00. The 20' container rate holding approximately 22 MT is only $3900.00 or a difference of $1000.00. Add another 3 MT and it would be better to buy the full container. Of course dimensions would play a role but the example is for demonstration purposes only.

     Shipper's need to check this out, as it maybe more cost effective and certainly less risk to ship the FCL in certain circumstances. The shipper must become an "educated consumer.

     The more practical option is to develop a relationship with a forwarder who access's a NVOCC or one that is a NVOCC. Non Vessel Operating Common Carrier. These NVOCC's licensed by the FMC, Federal Maritime Commission act as consolidators, accept LCL freight and can offer savings to smaller, less frequent shippers, that are not often available in dealing directly with the actual carriers.

     The NVOCC is able to take the volume of "all its shippers" and negotiate with the clout of "many". It can then predict greater volumes with the steamship lines arranging for tariff relief. These discounts can then be passed off in portion to the small shipper. The NVOCC becomes like a buying cooperative or purchasing group, that works on the concept of clout in negotiation. The clients of the NVOCC benefit as the membership grows and me management becomes stronger.

     Two quality NVOCC's are Direct Container Line and RTM Line. They can be reached at 800-444-3433 and 212-406-5803, respectively I mention their names because one must be very careful in choosing NVOCC's, as there are many "fly by night operators" in the industry. They become a direct extension of the carrier, offer their own bill's of lading and accept certain liabilities, as if they were me actual steamship line.

In choosing a NVOCC, I recommend:

• Make sure you get referrals and credit references. Many NVOCC's have expertise in certain commodities or trade routes... make sure the one you chose meets your needs.
• Make sure they carry the proper liability insurance.
• Get all pricing and quotes in writing.
• Identify the specific routing. To save money many NVOCC's will divert freight causing delays and adding unnecessary risk to export cargo.

Both RTM Line and Direct Container Line have the best of reputations, offer competitive pricing and quality service.

     NVOCC's can offer provide inland, warehousing, documentation and logistics/fulfillment services directly, or in conjunction with their forwarding entities or other carrier relationships.

     NVOCC's and consolidators who specialize in various commodities, specific geographic regions or trade routes can often be invaluable in providing export transportation advise and counsel. RTM Line, for example, has an expertise in chemicals, perishables, contract freight and cargo with special needs.

     EconoCaribe Consolidators at 201-656- 4555, specializes in consolidations to the Caribbean and Latin America. Most ocean gateways, such as New York, Miami, Los Angeles, Houston... to name a few are homes to many Consolidators/NVOCC's. Local Port Authorities, Freight Forwarders, World Trade Clubs and International Associations can be excellent referral sources for NVOCC options. Some value added services that these entities can provide are as follows:

• Inland trucking o Warehousing
• Pick and Pack Fulfillment
• Marking and labeling
• Consolidation, repacking
• EDI, exchange of information and tracking of freight
• Documentation, Banking, Collect freight
• Access to freight forwarding services
• Worldwide agency network
• Hazardous material or perishable capability

     The concept of consolidation and nvocc services also extends to air freight. Companies such as ACI, Air Consolidators International, which can be reached at 516-872-1490 or 310-337-0181 based in NY and Los Angeles, with satellites in other cities can offer air freight shippers competitive pricing, particularly to those smaller and less frequent shippers.

     Typically these air consolidators will receive freight at air gateways such as JFK, Miami and Los Angeles and certain days of me week will move freight to a particular city in a foreign country. Their move is typically airport to airport basis, with the terminating airport city being a major inbound gateway to that country and not a smaller inner city point. Examples would be in Australia... Sydney, in Germany... Frankfurt, in Brazil... Sao Paolo, in China... Beijing or Hong Kong etc.. USA importers use air freight consolidators on inbound imports with great frequency and much success, as well.

     Air freight consolidators will typically book space in advance based upon prior experience of freight volumes. They will usually obtain competitive rates. This space then becomes available to the clients of the air freight consolidator, as required wit some portion of the rate discount passed back to them.

     Often freight forwarders, with high volumes of air freight will arrange their own consolidations as needed or prearranged for predictable clients and trade routes.

     Consolidation and the effective use of NVOCC's can be a lucrative method in controlling exporting costs.

Thomas A. Cook is managing director of FSI Global Logistics/ American River International headquarters in Melville NY and an associate editor for the EXPORTER. He can be reached at 516-396-6800..