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DOING BUSINESS LIKE A BIG OCEAN SHIPPER
LTD SUPPLY CHAINwww.ltdsupplychain.com
Presented by:
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MY PERSPECTIVE
Real world logistics experience with major importers and exporters (and domestic)
LTD Shippers Association—for SMEs for Imports primarily
Spoke at NITL seminars on OSRA LTD Supply Chain—4PL / LLP for Import
Supply Chains (4PL is neutral party) SCM consulting for 3PLs, Importers,
Manufacturers, Wholesalers, Retailers
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WHAT NEW RULE (NSAs) MEANS
Two beneficiaries—SMEs 3PLs
NVO as competitive alternative to carrier deals with large shippers
Change the relationship between SME and NVO
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NVOCC SERVICE AGREEMENTS--Basic Terms--
Origin port(s) Destination port(s)
and Inlands point(s) Commodity (ies) Minimum volume Service commits Liquidated damages
(if any)
DurationLegal names and
addresses Shipment records to
be maintainedAll other provisions
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DEAL WITH NVO VS OCEAN CARRIER
Given your volume and complexity:How many ocean carriers you needWhat service(s) you requireFlexibility ( Plan B)Whether space or containers is tightTrend of rates
• Better as Beneficial Cargo Owner / Direct Account or not?
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KNOW WHAT YOU ARE BUYING
What do you need for service? What rates do you need—port to port, port to
door, door to door? What carrier(s) is NVO quoting? Which service (note: each carrier has multiple
sailings) is NVO quoting? What transit time? What service/delivery reliability? Ability to get you containers and get on ship
as needed? And if not?
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WHAT YOU ARE BUYING
Ability of NVO to add surcharges and increase surcharges or create new surcharges?
Ability to get lower rates in off-peak / soft market?
Need for Plan B flexibility in a commit agreement?
Insurance coverage and rate? Free time and demurrage cost? Do you deal with one or multiple NVOs or
deal with NVO and a carrier?
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WHAT YOU ARE BUYING
Void contract if too many service failures?
Volume commitAre two commits
• By NVO to ocean carrier• Importer / Exporter to NVO
Protection to importer / exporter in event NVO fails to meet his commit to carrier(s) and there are penalties
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CONVERSELY FROM NVO VIEW
What do you bring to the table besides volume?
How well can you define your import supply chain process and operation? What problems are there and why? (Dumping problems on to NVO does not solve anything)
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SUPPLY CHAIN ISSUES--Go Beyond the Freight Rate--
Freight is a derivative of the purchase order
It’s about what’s in the container, not the container itself
25+% of import POs are not shipped or delivered on time
Supplier performance is key concern
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SUPPLY CHAIN ISSUES
Supply chain visibility is more than just a freight portal
Need for multi-carrier/multi-service strategy to align with different inventories (A vs B vs C)
Need an NVO or a 3PL / 4PL?Don’t forget about Sarbanes Oxley
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DOWN THE ROAD
Service Agreements can--go beyond just freight ratesbecome a vehicle for supply chain
optimizationlessen the competitive gap between
the large shipper and the SME
Think beyond just rates
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IN CONCLUSION