WHICH TACTIC HURTS THE OCEAN FREIGHT NEGOTIATION PROCESS

THE MOST?

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@XENETA_AS

ABOUTXENETA

At Xeneta we believe there is an untapped potential for everyone in the industry, to systematically learn from our individual and collective efforts. We hold true that "if you cannot measure it, you cannot improve it". That’s why we think actionable metrics is the key to continuously evolve for every business, and ultimately the entire industry. Rethinking global logistics is the vision of Xeneta.

With international experience from the logistics industry, we have first-hand knowledge of the challenges related to high volatility and lack of transparency in the ocean freight market. By combining logistics background and information technology expertise, we found the solution

WE ARE TRANSFORMING GLOBAL LOGISTICS

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FREIGHT RATES?

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SHIPPING COSTS ARE ONE OF THE MOST MISUNDERSTOOD OR MISCOMMUNICATED TERMS IN SHIPPING AND FREIGHT AND IN A LOT OF THE CASES MEANS THE DIFFERENCE BETWEEN A SUCCESSFUL TRADE DEAL OR NOT.

LAST WEEK WE ASKED OUR COMMUNITY THE FOLLOWING

QUESTION: “ WHICH TACTIC HURTS THE OCEAN FREIGHT NEGOTIATION PROCESS THE

MOST?”

OCEAN FREIGHT NEGOTIATION IS AN IMPORTANT PART IN THE WHOLE TRADE PROCESS AND INVOLVES SEVERAL ENTITIES SUCH AS THE CARRIER, THE BCO (BENEFICIAL

CARGO OWNER ALSO KNOWN AS SHIPPER), OR AN OCEAN TRANSPORT INTERMEDIARY SUCH AS NVOCC OR

FREIGHT FORWARDER.

SURVERY RESULSTS

GUIDE TO OCEAN FREIGHT PRICING TRANSPARENCY

DOWNLOADFREE WEBINAR

THE HARDBALLERS

MANY CUSTOMERS TRY TO BULLDOZE THEIR WAY THROUGH NEGOTIATIONS PURELY BECAUSE THEY FEEL THAT THEY ARE “ENTITLED” TO THE LOWEST RATE AND THE BEST SERVICE FROM A SHIPPING LINE BASED ON THE VOLUMES THAT THEY GIVE THE SHIPPING LINE.

HOWEVER, THESE CUSTOMERS FORGET THAT EACH SHIPPING LINE HAS A THRESHOLD UP TO WHICH THEY CAN WITHSTAND THE CONTINUOUS LOWER FREIGHT RATES IN THE MARKET..

HANJIN SHIPPING’S FILING FOR COURT RECEIVERSHIP IN 2016 AND THE SUBSEQUENT OFFICIAL ANNOUNCEMENT OF HANJIN’S BANKRUPTCY IN 2017 IS A GRIM REMINDER ABOUT SUCH THRESHOLDS.

SHIPPING LINES SHOULD NOT FOLLOW THE PRACTICE OF PRIORITIZING VOLUME OVER GOOD/QUALITY CUSTOMERS WHO DO NOT

NEGOTIATE ON THE BASIS OF VOLUMES BUT MORE ON THE BASIS OF THEIR

SPECIALIZATION AND THE RELIABILITY THEY CAN PROVIDE TO THE SHIPPING LINE.

SPECIALIST PERISHABLE CARGO SERVICE PROVIDER EASY FRESH GLOBAL

LEARN HOW XENETA CAN HELPYOU GET INSIGHT INTO YOUR

GLOBAL OCEAN FREIGHT PRICES.

REQUEST DEMO NOW

DON’T BE BLINDSIDED

SOME CLIENTS ENTER BLINDLY INTO

NEGOTIATIONS WITHOUT ANALYZING THE CURRENT MARKET CONDITIONS AND

WHAT THEIR COMPETITION IS ABLE TO

NEGOTIATE IN THE MARKET. THIS BECOMES

MORE RELEVANT IN CASES WHERE THE

CURRENT MARKET RATES MAY BE LESS THAN WHAT

YOU ARE NEGOTIATING AND EVENTUALLY YOU

MAY END UP PAYING MORE BECAUSE YOU

WERE NOT AWARE OF THE MARKET.

RELATEDREADING:

[INFOGRAPHIC] 12 STEPS TO BENCHMARKING ANYTHING IN YOUR SUPPLY CHAIN

CLICK TOREAD

CONSIDER MARKET VOLATILITY

VOLATILITY IN OCEAN FREIGHT RATES IS AN IMPORTANT FACTOR TO CONSIDER IN OCEAN FREIGHT NEGOTIATION. A CUSTOMER SHOULD IGNORE THE IMPORTANCE OF MARKET VOLATILITY AT THEIR OWN PERIL.

WHILE THERE IS NO HARD AND FAST RULE FOR A CUSTOMER TO FOLLOW WHEN DECIDING WHO THEY MUST HAVE THE OCEAN CONTRACT WITH, NOT CONSIDERING THE SEASONALITY OF SUCH NEGOTIATIONS MAY BE SUICIDAL.

USING 3RD PARTY SERVICES

NEGOTIATING OCEAN FREIGHT RATES MAY NOT BE A FORTE FOR MANY

SHIPPERS, BUT THERE ARE SEVERAL SERVICE PROVIDERS THAT CAN HELP

WITH THIS. USING SUCH SERVICE PROVIDERS CAN IMPROVE THE

MANAGEMENT OF RATES, ROUTES, SCHEDULES AND ULTIMATELY THE

ENTIRE CONTRACT FOR THE SHIPPER.

CONCLUSION

AN OCEAN FREIGHT NEGOTIATION SHOULD BE LOOKED UPON AS THE

FIRST STEP IN A LASTING BUSINESS RELATIONSHIP

BETWEEN A CARRIER AND SHIPPER AND SHOULD NOT BE LOOKED

UPON AS SHOWING ONE’S SUPERIORITY OVER THE OTHER.

HOW YOU MANAGE YOUR OCEAN FREIGHT NEGOTIATION AND THE APPROACH YOU TAKE TOWARDS

THESE NEGOTIATIONS CAN AFFECT YOUR RELATIONSHIPS AND IN A

MARKET, THAT IS EVER CHANGING DUE TO THE SUPPLY AND DEMAND

VOLATILITY.