A shippers’ association can have enormous benefits for the buyer and seller. The concept has survived thousands of years and is firmly entrenched in the commercial market place. Below are 10 ways a shippers’ association benefits the shipper and the ocean carrier in international trade.
1. Economics. A low-cost factor is the single biggest advantage. Acting as a purchase cooperative, a shippers’ association consolidates and buys in bulk at a volume discount. Small and mid-size shippers have the buying power of very large multinationals. The ocean carrier can secure large volume agreements from numerous small shippers with little effort. 2. Rate Stabilization. Shippers and carriers’ collegial agreements contribute to rate stability in the market; creating a level playing field within a segment of the trade. Agreements based on commodity — wines and spirits, chemicals or footwear, for example — are commonly used to standardize rate levels. This eliminates the need for countless negotiations at varying levels that waste resources and lead to rate instability. A stable rate environment also eliminates mistrust and dissention between shippers and carriers in the marketplace. 3. Ease of Management. The task of managing recordkeeping associated with contracting — including tariff filings, changes in rate agreements, liner services, surcharges and legal concerns — requires expertise and commitment of resources. Outsourcing to an association removes the administrative burden, while sharing the cost among many entities, makes sense. 4. Flexibility. Properly structured agreements allow a shippers’ association to provide global coverage by utilizing several carriers. The members can flow freely between carriers without the constraints of individual contracts based on MQC (minimum volume of cargo) or the confines of a limited coverage. Carriers benefit from a pool of customers utilizing their services who otherwise would not be reachable. 5. Compliance. A properly formed shippers’ association will operate in compliance with governmental regulations and trade requirements. It may offer additional guidance and training on security and related compliance issues. Shippers and carriers have the assurance that they are operating within a safe environment fully compliant and protected from the liability of penalties and fines. 6. Market Intelligence. Members of a shippers’ association share a sort of market awareness that is only available to a few large conglomerates. Members have a global prospective on a local level. A hawk’s-eye view and firsthand knowledge of any trade or port pair, whether they are a top player or a newcomer. A great equalizer of competition whereby the shipper of 50 containers has the buying power of 5,000. Other intelligence offered, including carrier selection, costs, transit times, and space and equipment availability, is readily obtainable and aids one’s competitiveness. 7. Common Carriage vs. Contract Carriage. A shippers’ association offers a way to compete in the post-OSRA world of common carriage. Removing the price factor from the equation shifts the emphasis of ocean shipping back to services and relationships as a way to differentiate the competitors from each another. 8. Networking opportunities. A shippers’ association can offer a variety of opportunities to all members under the auspices of a single umbrella, including pricing on all sorts of purchases unrelated to the core business; shared agency networks; and internal cross-selling. 9. Targeted Sales. Working in conjunction, the shipper and carrier can collaborate on targeted sales programs that are mutually beneficial. Sales campaigns can be focused on port pairs, regions, commodities, repositioning of equipment and even on obtaining mutual clients/suppliers. 10. Common Mentality. A shippers’ association creates a bonding of common-minded businesspeople working together for the greater good of the industry, offering a safe haven for the best possible business practices in a very competitive environment.
