For the NVOCC industry, 2017 will witness further stratification of the organizations providing both import and export services as technology providers increasingly challenge historical business patterns. For those companies that find a way to provide a combination of direct customer contact coupled with online services, the road forward should provide ample opportunity for success. For those ignoring the challenges presented by disrupters, the available cargo market will continue to shrink as will the associated margins.
The impact of technology will continue to grow, and with the level of funding now supporting the “disrupter” organizations collectively topping $100 million, we should expect the speed of disruption to increase. While supply chain complexity is certainly greater than the selling of a hotel room, rental car, or airline seat, these industries provide a roadmap for the development of new transport technology.
A second trend the NVO community is experiencing is the consolidation of buying power into fewer and fewer organizations. Looking at trans-Pacific eastbound trade data, you find that the top 15 NVOs shipped 225,000 TEUs in both September and October, while the next 85 NVOs shipped just over 200,000 TEUs in each month. This continued consolidation of business into a smaller group of market participants ultimately provide less channels for VOCC to draw support from and changes the pricing dynamic as well. Contract terms are evolving to the detriment of the smaller players, allowing the top 15 to attack the traditional BCO supporters of the small to midsize NVO.
Change will not be a light switch in either of the above cases, but will act more like the dimmer bulbs we all have in our homes. Some dimmer and some brighter opportunities will exist for all.