Who Do You Have
Your Ocean Freight
Contracts With?

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Ocean freight negotiations are
a source of constant tussle
between shippers and their
service providers. This is
especially true, post 2008
where the freight rates have
been on a roller coaster ride
making it very difficult to work
with fixed shipping costs.

The volatility of the ocean freight
rates may also depend on “who” the
shipper has entered into an ocean
freight contract with.

We asked our social media
community who they have their
ocean freight contracts with.

Our survey revealed that 33% of shippers
have ocean freight contracts with a
carrier directly and a collective 33% (25%
with freight forwarder and 8% with
NVOCC) had ocean freight contracts with
an OTI and 34% had an ocean freight
contract with a mixture of the above.

Definitions

A carrier maybe defined as an entity who
undertakes to perform, directly or indirectly
the carriage of cargo by sea, rail, road, air,
inland waterway or a combination of these
modes, normally under a contract of
carriage.
Carrrier

A freight forwarder is someone who
undertakes to handle the movement of
goods from point to point on behalf of the
cargo owner and assists a customer using
their experience of global and local
transportation, global and local
infrastructure and freight documentary
requirements.
Freight Forwarder

A NVOCC, an abbreviation for non-vessel
operating common carrier, is an entity whose
functional activities overlap that of a freight
forwarder in some cases and a carrier in
some cases, hence may be defined as a
“carrier to shippers” and “shipper to carriers”.
NVOCC

An OTI is a collective term for a freight
forwarder and NVOCC who while providing
their individual services to the clients, are
ultimately dependent on the carrier for the
movement of their cargo.
OTI

No One-size-fits-all

Freight forwarders
that either access
NVOCCS, or is an
nvocc, specialize in
taking the hassle out
of logistics, and offer
up long list of value
added services such
as real time visibility,
guaranteed on-time
delivery, port-to-port
deliveries and more.

Shipping lines needed to imitate freight
forwarders and offer a greater range of
services, as well as differentiate their
offering from competitors.
Rolf Niese, until recently head of logistics
operations at British American Tobacco

Each freight business and shipment is different and there is no
fixed formula or a one-size-fits all solution for ocean freight
contract negotiation.
Therefore, in their own interest, it would be prudent for shippers to
look at which solution fits them best, whether it is a direct
contract with a carrier or a contract with an oti or a mixture of
both within their various businesses.

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