BCOs traditionally have win-lose contracts with ocean freight companies for the import and export of their goods. The BCO and freight forwarder would play a kind of high-low game of chance in contract negotiation, based on forecasts or simple assumptions about extremely volatile freight rates in the open market for the coming year. To avoid getting stuck in bad contracts where BCOs pay more than the market value of their international shipping, BFOs have hired freight forwarders or NVOCCs to give them the best spot market prices. Could you write an article about shipping indexes – it`s damn useful in negotiations. Example: en.sse.net.cn/indices/scfinew.jsp I suspect that the index value indicates the shipping costs in USD/TEU to Europe (base port) from Shanghai (only 1083 USD) – but I don`t know how to actually use it (I know this includes all the fees for the carrier), but what about doc fees, THC, etc. and maybe you could solve the matter – I`m not an expert. I would say that the airlines` focus on what is best for themselves, rather than for their customers, is the most important factor in their near-pandemic profitability problems in recent years. Although NRAs` terms were limited to sea freight rates, as the name implied, customers wanted to include other terms such as credit, dispute resolution and liability in their contracts. The CMF responded with a final rule that ”provides just about everything the NCBFAA has asked for,” said Rich Roche, chair of the NVOCC subcommittee of the NCBFAA Transport Committee. Experienced freight forwarders and NVOCCs work hard and have the know-how to transport their customers` cargo as easily as possible. Not only do they pay attention to carriers that make many empty trips and transshipments on which routes, but carriers and NVOCCs also monitor other factors that could disrupt, delay or be costly for shippers. It is very important to be up to date on market trends when running a business.
You always want to know what benefits you and what doesn`t. NVOCCs will now be able to enter into commercial agreements with their customers, just as ocean freight companies have contracted with BCOs for years. Wednesday`s decision ends a petitions process that began in 2004. ”FMC commissioners deserve a big thank you,” Ed Greenberg, general counsel for the National Customs Brokers and Forwarders Association of America (NCBFAA), said in JOC.com after the vote. Thanks to the new rules promulgated by the Federal Maritime Commission (FMC) in June 2018, BCOs will be able to conclude highly flexible and easily modifiable contracts with NVOCCs and carriers. Many BCOs find these flexible contracts they enter into with carriers or NVOCCs much better than the win-lose contracts that BCOs enter into with carriers. 28% of BCOs complained that their supplier had attempted to renegotiate their contract during the peak season, even though they had fully complied with the terms of the minimum/maximum quantities. In addition to the potential cost savings, the NVOCC also offers better protection for your shipment as the company takes control and responsibility for the goods. A freight forwarder places this responsibility on the shoulders of freight forwarders. The NVOCC, on the other hand, issues its own bill of lading and thus assumes responsibility for what happens to your cargo. NVOCC companies may or may not have their own leased or owned vessels, but they generally offer a wider range of services when entering into contracts outside their own fleet. This additional option means that a smaller shipper has access to better discounts based on bulk shipping and NVOCC`s contractual agreements.
”During the high season, there is a rush to support profitability, often at the expense of contractual obligations, to the point of burning relationships,” Schreiber said. ”This contradicts the more customer-centric approach that freight forwarders spend much of their time on.” Contract negotiations between an OCB and a carrier can be tedious, and once the agreement is finalized, it usually takes carriers a year to sit down with them again (unless a carrier wants to get a BCO to pay more than its contract rates) to negotiate a new agreement that may be more in line with what`s happening in the industry. Other characteristics of a good BCO entrepreneur are transparency in trade, fair prices, global connections to other forums of this type, practical experience, reputation and excellent customer service. A document that constitutes an irrevocable obligation on the part of the bank to pay a certain amount of money if the party for whom the bank provides the guarantee does not comply with its contractual obligations under the bill of lading. TO ALL FREIGHT BROKERS AND LOGISTICS SERVICE PROVIDERS: The BCO is important and required at the time of preparation of the national intermodal transport offer, as it is required by Class I railways at a contractual rate. A BCO contract is a contract that specifies sea freight through direct and indirect channels and does not use a third-party source. Especially when the peak season arrives and demand brings freight rates to the highest level, carriers sometimes prioritize the most expensive spot shipments on the market over the contractually cheaper freight of their BCOs. Sometimes carriers even try to renegotiate BCO contracts so that their BCOs pay more than what is contractually obligated.
The CMF simplifies NVOCC requirements with two common contractual instruments – Negotiated Collective Agreements (NRAs) and NVOCC Service Agreements (NSAs). Important provisions of the rule will allow NRAs to be modified at any time and NRAs will be allowed to process both conditions of use and freight rates. Acceptance of the NRA Terms by the BCO is determined by booking the shipment. Such good information is what I was looking for. Thank you before you make your decisions regarding shipping, if you are still confused about something related to BCO and want to know more about what BCO is, then you can ping us EJET.com we will answer all your questions about it. The Federal Maritime Commission`s final rule, released Wednesday, will simplify the contracting process between non-marine operators (NVOCCs) and their economic cargo owner (BCO) customers and close NVOCC petitions for nearly 15 years to allow them to negotiate with BCOs on the same terms as ocean freight companies. (Above: A loading area in the port of Oakland.) Photo credit: Shutterstock.com. The Federal Maritime Commission (FMC) on Wednesday issued final regulations exempting non-ship operators (NVOCCs) from certain filing requirements that affect their ability to respond quickly to the changing needs of their customers with economic cargo owners (BCO) in today`s rapidly changing maritime contractual environment. BCOs have hired NVOCCs and carriers and are therefore in a better position to win orders. BCOs may actually find themselves in win-win situations with carriers or NVOCCs by signing ongoing contracts without tying BCOs to fixed rates. Once the contract ended, someone would win and someone would lose.