Copyright © 2006 Howard Publications, Inc.
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Copyright © 2006 Howard Publications, Inc. |
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NAAA's 'big' factor Shippers’ association leverages volume to help small, mid-sized NVOs compete with large players. |
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WASHINGTON Those days are over as the Washington-based NVO shippers’ association seeks to build membership and freight volumes. "If we’re going to help our members better compete against the larger players, then we need more cargo volume, and to do that, we need more members," said Joseph T. Saggese, executive managing director for NAAA. The NAAA shippers’ association started in 1992 with seven NVOs, and quickly expanded to about 30 companies. Its initial purpose was to combine members’ freight volumes to secure lower rates and better service commitments from ocean carriers. The shippers’ association focused its early efforts on the transatlantic trade, and by the mid-1990s amassed an annual cargo volume of about 40,000 TEUs. Since then, it has grown its membership to 40 firms and cargo volume to 75,000 TEUs. NAAA divides its cargo volume among service contracts with up to 20 ocean carriers. "Our biggest advantage has been the access to this group of service contracts that we otherwise wouldn’t have alone," said Dominick Ricci, an NAAA board member and president of Cargo Specialists, a Linden, N.J.-based neutral NVO that handles about 600 TEUs of import and export cargo a year with the shippers’ association. "This allows us to be more competitive in the market with bigger NVOs, and still offer more customer-oriented service." While NAAA’s cargo volume sounds big to small NVOs, it’s merely a portion of the volumes managed by today’s multinational operators, such as NACA Global Logistics, Danzas-AEI, Panalpina and Kuehne & Nagel. Saggese said NAAA has to expand its membership and increase cargo volumes to continue to help its members remain competitive against large operators. But it won’t be a free-for-all. Potential new members will be carefully considered for their credibility and market expertise, he said. About two-thirds or 50,000 TEUs of NAAA’s total cargo volume is in the transatlantic trade, with the rest spread out over other cargo markets. "We’re top heavy in the transatlantic compared to the other trade lanes that we serve," Saggese said. Some of NAAA’s long-time members are APA International, C.H. Powell Co., CaroTrans International, Eagle Global Logistics, Emo Trans, Jas Forwarding, Mid-America Overseas, SDV/Trans Service Line, Wilson UTC and Yellow Freight. Some members, such as Shipco, Expeditors International, Panalpina, dropped out of the shippers’ association after the passage of the 1998 Ocean Shipping Reform Act. NAAA picked up additional members and freight volumes in early 2000 after it absorbed the operations of the Dutch NVO shippers’ association, United Forwarders of Rotterdam (Unifor). NAAA is considering potential new members with expertise in other freight markets, such as Africa, South America, Mideast and the Far East. "It’s important that we have a foothold in each continent," Saggese said. The shippers’ association also wants to build up its cargo business in markets where multinational operators have traditionally squeezed small to mid-sized NVOs out. This would give its members the chance to have more control over freight rate decisions on inbound cargo to the United States. "With so much consolidation in the industry, the bigger continue to get bigger," Ricci said. "Our group needs to continue growing." Frank D’Ambra, president of Aries International, a forwarder/NVO based in Franklin Square, N.Y., signed with NAAA over a year ago. "We joined because we wanted to make sure that we’re able to better compete with other types of operators," D’Ambra said. "Unless you can buy ocean transportation cheaply, you can’t compete." The benefit to NAAA is Aries’ specialization in the North Atlantic and Mideast cargo markets, and its import business from the Far East to the United States. Aries moves about 8,500 TEUs annually. "We compete with each other, but at the same time we cooperate on bringing volumes into the association to achieve better rates," D’Ambra said. "The days of standing alone as mid-sized operators are over. We’re a team player." Ultimately, NAAA would like to build annual cargo volumes of 150,000 to 250,000 TEUs during the next several years. "We have to create a balanced spread of cargoes overseas," Saggese said. "NAAA won’t be open to everyone in the market, otherwise you become the market. We have to keep up our competitive edge." An office network in Washington, New York, and Chicago supports NAAA’s U.S. operation. Washington law firm Rodriguez O’Donnell, Fuerst Gonzalez & Williams provides NAAA with legal counsel, and liability and licensing oversight. There are plans to open offices this year in Europe and Asia, in addition to establishing alliances with other shippers’ associations. Last year, NAAA started an aggressive plan to modernize administrative functions through its Web site, at www.naaai.com. "We have a database that includes all our contract information," said Saggese about the first phase of NAAA’s Internet system roll-out, which was launched this month. "This allows our members to drill down into the carrier tariffs. They’re able to input their port pairs and get an accurate rate picture." In the second phase of the systems’ development, NAAA will focus on other Internet applications, such as bill of lading production and cargo tracking and tracing. The shippers’ association is also considering the development of a "less-than-containerload cooperative," in which cargo loads could be posted for co-loading opportunities between members. Overall, NAAA’s systems development should help save members money. "Each member of the group is faced with expensive information technology costs," Saggese said. "Through our collective work, small to mid-sized members will have access to a system equal to what the big players have today, furthering their ability to compete." |
Joseph T. Saggese |
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"We
have to create a balanced spread
of cargoes overseas. NAAA won’t be
open to everyone in the market,
otherwise you become the marrket.
We have to keep up our competitive
edge."