There is an urgent need for more sea freight consolidation businesses. With struggling supply chains, the increased cost of fuel, and delays at container ports around the world due to the pandemic and the war with Russia, companies are looking for more efficient ways to ship their products around the globe.
Are you considering starting a sea freight consolidation business? You need to ensure you plan and structure your business for success.
Here’s what you need to know about starting and growing your sea freight consolidation business
Know the industry
Freight Consolidators are also known as Non-Vessel Operating Common Carriers (NVOCC). They do not own or operate ships, but they buy space on vessels from cargo carriers and sell this space to Freight Forwarders.
It is essential to know how the NVOCC industry works and what it needs to be profitable. You should hire people and consultants who know the industry and have experience in multiple areas of the shipping ecosystem. Having these members on your team will help you understand shipping trends, predict future prices and potential complications, and help you evolve your business to stay on top of the latest developments.
Know the benefits to your customer
Your business will attract freight forwarders with regular Less than Container Load (LCL) or Less than Truck Load (LTL) shipments. It’s not economical or environmentally conscious for them to ship independently, so they are looking to your business to provide them with the consolidated space they need.
In your marketing or outreach to Freight Forwarders, be the solution to help them:
- minimize or better manage shipping expenditures
- get better shipment scheduling
- get faster shipping options
- provide privacy for their customers
Be a Neutral freight consolidator
If you want to build stronger relationships with freight forwarding companies and minimize your capital and overhead expenses, become a neutral freight consolidator. Neutral freight consolidators do not own their own cargo ships. Instead, they lease space on other ocean carriers and sell it to freight forwarders.
Within neutral freight consolidation, you can keep costs down for freight forwarders and provide the necessary privacy for their customers. Freight Fowarders won’t need to worry that their customers would bypass them and going directly to a carrier.
Remove barriers for Freight Forwarders
Another good business-building strategy is to remove as many barriers as possible for someone wanting to do business with you. In a seafreight consolidation business, this means providing neutral tools for all freight forwarders, regardless of their cargo. Ensure that shipment tracking and digital document transmission don’t become barriers to signing up with your business.
For pricing, it means upfront, transparent pricing that can be easily calculated without special quotes for each job and order. They never have to worry if they got the best rate while waiting for their shipment to be booked.
Build relationships with carriers
There are seafreight carriers who want to work with your business. Due to the wholesaling agreements you have with your clients, you provide carriers with a guaranteed number of pods or containers you need for each sailing. This allows you to get a better rate than if the end customer went directly to the carrier for a LCL booking.
Promote social responsibility
Becoming a shipping consolidator can support your social responsibility mandates and values. Since you are helping to reduce wasted space on cargo ships and are not sending your own partially filled ships and containers, you can reduce CO2 emissions from extra shipping runs.
Promote this aspect in your business marketing, and it can attract other socially conscious freight forwarders to partner with you.
Work within an alliance or network
Join business networks and associations in the industry. Networking within your industry helps you share information, find collaboration opportunities, and possibly pass referrals to each other. For example, The Neptune Consol Network is a global group of freight consolidators who, like you, exclusively serve freight forwarders. Members have been in business for at least three years and are ready to connect with other consolidators worldwide.
If you are looking to join a network of shipping businesses, check out the alliances and opportunities through RW Solutions. We’re helping organize the busy world of freight forwarding by providing safe and reliable partnership networking for businesses worldwide.