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Case Study of Shipping

In: Business and Management

Submitted By jimwongyk
Words 675
Pages 3
1.
BCO
BCO stands for Beneficial Cargo Owner. Zepol, a top U.S. trade data provider, defines BCO as “an importer that takes control of their cargo at the point of entry and does not utilize a third party source.” This means that a BCO is a company with enough importing clout, bringing in enough freight to negotiate contracts directly with a VOCC. Typically, most BCO’s expect to import at least 100 TEU’s. The easiest examples of BCO’s are your large retailers like Walmart, Target, Best Buy.

According to Datamyne, in 2015, approximately 63% of all vessel imports, in terms of TEUs, were imported by a BCO. In 2005, this figure was about 74%. The graph below illustrates this trend for the past 12 years, showing the percent of imports by Beneficial Cargo Owners slowly declining. This trend also indicates that more importers are utilizing third party sources like NVOCCs or Freight Forwarders to bring their goods safely into the United States.

NVOCC
A Non Vessel Operating Common Carrier is a cargo consolidator who does not own any vessel, but acts as a carrier legally by accepting required responsibilities of a carrier who issues his own bill of lading (or airway bill), which is called House bill of lading under sea shipment and House airway bill under air shipment. Activities between a NVOCC and a Freight Forwarder are similar to each other except some differences. An NVOCC need not be an agent or partner of a Freight Forwarding company, whereas a Freight Forwarding company can act as a partner or agent for an NVOCC.

Basically speaking, NVOCC acts a ‘carrier to shipper’ and ‘shipper to carrier’.
NVOCC can own and operate their own or leased containers. NVOCC acts as a virtual carrier and accepts all liabilities of a carrier legally, in certain areas of operation.”

An NVOCC is able to take the clout of its many customers and negotiate with the VOCC’s for better pricing. It can work with these steamship lines by bringing estimates to the table of expected freight volume for certain lanes and gain tariff relief (discounts). As Thomas Cook states in his book,Mastering Import & Export Management, 5 “the NVOCC becomes like a buying cooperative or purchasing group that works on the concept of clout in negotiation. The clients of the NVOCC benefit as the membership grows and the management becomes stronger.”

Liner economies of scale were also likely to lead to increased friction with shippers looking for lower costs and more direct services, which are being driven out of the system with the arrival of bigger ships and bigger alliances

2. Possible disadvantages during co-operation There is no question to be evaluated as having the ultimate disadvantages in this part, but the market competition among partners may cause a bit of worry to these experts as shown in Table 8. The compatibility and market reputation of partners also bring the middle level of the anxiety for the respondents. As well as the inherent instability between partners and the decision making procedure within the alliance possibly become the barriers of their communication. The possibilities to be merged or acquired by other partners cannot affect the relationships among the members. Members of the studied group sufficiently presented their faith to their co-operative relationships from the answers in this part. They have a firm confidence that they will not be merged or acquired by their partners in the alliance. However, they seem only worry little about both the external and internal possible disadvantages of alliances. The former includes business scope, i.e. market competition and reputation of partners, while the latter comprises of partners’ compatibility, inherent instability, and inefficient decision-making procedure. These interior causes are mostly similar with the earlier observation in Midoro and Pitto [9]. We estimate these conflicts to have significantly taken place in the process of their co-operation, but they may have accumulated too much experience on inner discussion and practical operation to construct an acceptable implemented model. These attainments are not easily destroyed.

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