LETTERS TO THE EDITOR

LETTERS TO THE EDITOR

Most customers of NVOs don't want NSA contracts

I've just read Peter Tirschwell's May 8 column, " NSAs - why so few?" and don't agree with FMC Chairman Steven Blust. As a businessman in our industry, I do not usually see new regulations move an industry one way or another. It is the resultant market and commercial forces that determine successes or failures.

Ask me if I have ever seen an NSA contract and I'll tell you "no" - because my market and clientele do not want them. Why? Because my customers are B, C and D volume accounts, the same as most other small or intermediate-sized NVOCCs - that other 98 percent of NVOs you allude to.

There are many reasons why shippers prefer to use an independent, smaller NVO or third-party logistics provider, but space and time do not allow that subject today. But one good reason is that many exporters do not fix big business over the long term and are uncertain when and where their next good-sized orders will come from. Why, then, if you are not one of the top 200 exporters-importers, would you enter any agreement with a minimum-quantity contract with uncertain annual volumes? NVOs enter "their" carrier service contracts and can provide built-in extended validity to their client base without the minimum-volume obligation.

As your article accurately states, if you are a large shipper-importer, chances are that you employ a professional staff, fix a price, service, equipment, vessel space and other terms directly with the vessel operator, then put any price margin in your pocket. Theoretically, who would need an NVO in this case (consolidators excluded)? And what would be the benefit of using an NSA with a large NVO in such an instance? I understand that these large logistics companies - NVOs bundle many services together and have the technology to offer, but still . . .

We are not saying we will never use an NSA, but until our market wants, asks for, or accepts such a contract arrangement, we see no commercial benefit.

Dick Rebolledo

President

Seascape Lines Inc.