 Carriers seeking highest-paying freight |
Source |
American Shipper |
Post Date |
11/18/2020 |
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Jon Monroe, who serves as a consultant to NVOs, said carriers in today¡¯s tight market generate their highest revenue on ¡°freight all-kind¡± (FAK) shipments tered by NVOs. The FAK rates track the spot rates, which have been at record highs this fall.
Monroe said that in the current market of record US imports from Asia, marked by ¡°extremely tight¡± equipment availability in Asia and full ships leaving Asian load ports, carriers¡¯ priority is to book as much cargo as possible moving under FAK rates.
¡°The focus on FAK will drive freight to NVOs,¡± he said.
Monroe said carriers¡¯ second priority is to book ¡°contract freight plus premium,¡± which means shipments booked under service contract rates that will move on a designated sailing only if the customer pays costly add-ons to guarantee equipment or space on vessels. Loading freight at the low contract rates is carriers¡¯ last priority, he said.
Carriers and NVOs said the ability of mid-size NVOs to attract smaller blocks of cargo that pay high freight rates puts them in a good position in the eastbound trans-Pacific, and the PIERS numbers bear this out. The market share of the top 10 NVOs increased 2.5 percent compared with last year. However, the PIERS numbers for the top 20 NVOs increased 4.4 percent in January through September, which means the next tier of NVOs below the top 10 drove the market gains of the top 20 NVOs.
An utive at a carrier that increased its NVO bookings this year to 48.9 percent of its cargo volume from 47.3 percent in January through September last year said the second-tier NVOs, many of whom have offices in manufacturing hubs in Asia, work closely with origin-based BCOs on pre-paid freight.
¡°On the margins, they have an advantage,¡± he said, because they generate higher-paying freight. Conversely, the largest NVOs have a higher percentage of fixed-rate contracts that generate less revenue for carriers, he said.
A second carrier utive who requested anonymity added that import volumes since summer have been so high that the top-tier NVOs have maxed out on their fixed-rate commitments, which ed the door for mid-sized NVOs to grab the excess freight at FAK rates, and their BCO customers agreed to pay the higher freight rates in order to get their shipments loaded.
¡°Even with the rates being so high, their customer base was already aware of what the market is now,¡± the carri
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