After non-vessel-operating common carriers enjoyed a growth spurt during container shipping’s 2009-10 bust and recovery, some wondered whether they could hold their share in a less volatile market.
Now the answer seems clear. A new report by PIERS, a Journal of Commerce sister company, shows NVOs increased their share of the U.S. import container market to 32.8 percent from 32.7 percent in 2011 and 24.8 percent in 2006.
Barring unforeseen developments, NVOs’ market share is expected to remain close to current levels. “I don’t see anything dramatic at this point that will shift it one way or another in the foreseeable future,” said Albert Saphir of ABS Consulting in Weston, Fla.
Volumes booked by NVOs rose 2.8 percent last year, outpacing a 2.2 percent increase in bookings made directly with vessel operators. Total imports increased 2.4 percent to 17.9 million TEUs. The PIERS report does not cover exports.
The growth of NVOs, which book space with vessel operators and sell it to shippers, has paralleled the expansion of other transportation intermediaries such as brokers that are increasingly relied on to find truck capacity in U.S. domestic markets.
Shippers sent more business to NVOs in 2010, when a post-recession cargo rebound caught carriers short of vessel space and containers. Most NVOs contract with multiple carriers and were able to provide shippers with capacity when vessel operators couldn’t.
“The NVO adds value for an importer or exporter that needs to keep some flexibility in carriers, transit times and pricing,” Saphir said. “Shippers using an NVO can access different carriers quickly and are not necessarily bound to one or two.”
Expeditors International of Washington held its top position for shipments from Northeast Asia, with an 11.7 percent share, and the Indian subcontinent, 15.7 percent, and remained second behind Apex Shipping in the Southeast Asia-U.S. market. Expeditors also ranked first in the much smaller Africa-U.S. market.
Blue Anchor, controlled by forwarding and logistics company Kuehne & Nagel, was first in the North Europe trade, with a 24.8 percent share, and the much smaller Caribbean, Central America and Oceania markets.
Panalpina’s Pantainer Express was tops from the east coast of South America, with a 9.8 percent share. Damco, a subsidiary of A.P. Moller-Maersk, was first in the smaller west coast of South America trade with 13.2 percent.
NVOs are among container ship lines’ biggest customers. “As ocean carriers cut back on sales and customers and support, they’d rather have a contract with one NVO for 2,000 FEUs than have 10 contracts with small customers for 200 FEUs each,” Saphir said.
Top users of NVOs include Matson Navigation, 54.7 percent; China Shipping, 48.2 percent; Mediterranean Shipping, 46.7 percent; Yang Ming, 42.5 percent; Cosco, 40.3 percent; “K” Line, 40.1 percent; Chilean Lines, 36.9 percent; Hapag-Lloyd, 35.1 percent; and Hanjin, 35 percent.
Maersk Line, the largest container ship line, relied on NVOs for 26.6 percent of its bookings last year, compared with 25.5 percent in 2010. APL, which traditionally has had the least involvement with NVOs, relied on them for 15.7 percent of its bookings in 2011, compared with 12.6 percent in 2010, according to PIERS figures.
NVOs’ market share among the top 10 carriers has stabilized but expanded to 34.7 percent from 31.8 percent in 2010 among carriers ranked 11th through 40th in U.S. containerized imports, the PIERS report noted. “NVOCC growth has outpaced or at least kept pace with trade volume growth in every market, and there is no reason to suspect that this relationship will not continue,” the report said.
NVO volume remains concentrated on high-volume east-west trade lanes, led by the trans-Pacific. Their share of cargo from China and other Northeast Asian origins rose to 40.4 percent in 2011 from 39.9 percent in 2010. NVO volume from the region increased 1.3 percent to 4,387,856 20-foot equivalent units.
In the Mediterranean trade, NVOs’ share of import volume slipped to 35.3 percent from 35.4 percent. Their market share rose to 28.3 percent from 27.1 percent in the North Europe market and to 21 percent from 19.9 percent from the east coast of South America. NVOs’ share from the Indian subcontinent slipped to 25.3 percent from 25.8 percent.
NVOs have single-digit market shares in other trade lanes, leading the PIERS report to suggest the intermediaries’ share of these trades is ripe for expansion.
Non-vessel-operating common carriers could benefit from the Federal Maritime Commission’s plans for a “top-to-bottom” review of NVO regulations. The commission is considering possible changes to rules for licensing, registration and proof of financial responsibility for NVOs and forwarders. The commission also is reviewing regulations for NVOCC service arrangements, which allow NVOs to provide the equivalent of confidential service contracts, and negotiated rate agreements, which the intermediaries can use instead of filed tariffs.