Features

Success in a seller’s market

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C.H. Robinson was recently named the largest Non Vessel Owning Common Carrier, offering ocean transportation between the US and Oceania. MHD sits down with Andrew Coldrey, Vice President APAC to discuss what is behind the company’s growth in market share.

C.H. Robinson has a track record of securing freight capacity for customers even in tight markets. For a number of years, the business has been the leading forwarder of ocean freight from China to the US in the Transpacific Eastbound (TPEB) trade lane, leveraging major ocean shipping alliances to find better rates and more capacity. Over the last three years, supply chain has entered mainstream discussions like never before. This has translated over to business, as companies realise the importance of a reliable supply chain in conjunction with marketing and sales. Andrew Coldrey, Vice President APAC, says C.H. Robinson uses its scale to its advantage to help businesses improve their supply chain, with 17,000 people globally and just under 7000 in its global forwarding division. 

“The key for us is we have the scale and flexibility to support constantly changing needs,” he says. “People used to think of supply chain as an added cost, but businesses are realising it can be a weapon and real business advantage if you use it well. To do that, you need a partner to either take advantage of positive situations or to be able to react faster than your competitors.” 

Andrew explains that right now the industry is a seller’s market, particularly in the aftermath of COVID-related supply chain disruptions.

“There’s a lot more cargo moving than there is available space,” he says. “At the moment, it’s more about how well you buy – what relationships you have with the ocean carriers to enable you to secure the space. The sales is more of a constant and is easy in today’s environment, but the last couple of years has shown how we take a long term view of our relationships with the carriers. By honouring a commitment to a carrier for a certain volume year-in, year-out, trust has built over a 15-to-20-year period.”

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Andrew Coldrey, Vice President, APAC for C.H. Robinson.

NVOCCs sell cargo or container space onboard mainline transport vessels to customers, leasing or renting space onboard ships, and selling it to clients. As the name suggests, Non-Vessel Operating Common Carriers (NVOCC) do not own or operate ocean transport vessels. Instead, they make arrangements with ship owners, charterers, or shipping lines for transportation of cargo under their own Bill of Lading.

“In between a shipping line and an importer, there is a lot of different factors and roles,” Andrew explains. “The NVOCC basically sits one step down the chain from a shipping line who owns a ship, acting as the shipping line. And the key part of being an NVOCC, particularly in the US – which is governed by the Federal Maritime Commission – is we can also issue our own Bills of Lading. So we have a contract with the ocean carrier, and then we issue a bill of lading, whether it be to another freight forwarder or a shipper.”

C.H. Robinson’s reputation with carriers means that when space is extremely tight, it is able to provide for customers. The company is now the number one NVOCC for the US and Oceania trade – an achievement which has been building momentum over the last six years, according to Andrew. In the US, shipping and freight data is captured, and published by the Journal of Commerce, releasing quarterly statistics on the business of ports, among other trends, including NVOCCS. The USA Oceania market carries around 195,000 twenty foot equivalent units (TEUs), of which CH Robinson controls around six per cent.

“In the last couple of years, it’s been the people who’ve been able to find more creative solutions who have been able to grow their business,” he says. “The key is having strong carrier relationships, the right infrastructure in place to move cargo, and coordinating the export formalities.”

Andrew says that particularly through COVID-19, there was an increase in products globally, with expenditure on retail increasing perhaps to compensate for less expense on holidays and experiences. As a result, supply chains experienced an increase in demand.

“Our volumes everywhere had increased pressure for those kinds of commodities, he says. 

“It comes down to the volumes and the question, ‘Can you move it?’” Coldrey adds. “We were able to grow through that period because we had solutions in place which could move these products. For example, in North America there are lots of issues around truckers and getting transport. As North America’s largest truck broker, we’ve got access to more trucks than anyone else, finding solutions which enabled us to get cargo to the port where others couldn’t. Even though the overall demand was up, there’s still a fixed capacity – so we were able to increase our market share by virtue of the service that we offer.”

On Oceania US trade line, Australia is much more of an importer than exporter, bringing in a variety of different products. Bulk shipments, agricultural exports make up much of the export trade, so container volumes didn’t increase anywhere near as much as containers coming into the country – a trend which is present today and causes its own challenges.

“The terminals can’t unload the containers fast enough,” he notes. “We’ve got problems with too many containers stuck in Australia. For instance, at a terminal, ships are allowed a certain time window of the berth and if there are more import containers, you unload them and don’t have time to load up any empties. So, we’re having all these imports coming in, dropping them off, with no room on no time at the terminal to load empties, resulting in no empty at origin. That’s why you hear about the problems of not having enough equipment in the right places.”

Andrew also explains the impact of trade disputes between Australia and China and conflicts around the world.

“Those geopolitical factors have a big influence. For instance, the issues that we’re having with China probably affected a lot of Australia’s exporters more than anything,” he says. “We’ve started to see a lot of manufacturers diversify out of China. The rise of Southeast Asia is based on risk mitigation – learning from disruptive events to move away from being too dependent on any one source. When we see a move away from China, usually businesses are still working with a Chinese manufacturer, but they’ll have plants in Bangladesh, Vietnam, Cambodia, Philippines. 

“Regardless of what the geopolitical situation is, C.H. Robinson explores and ensures a diversified range of solutions to counter different challenges.” 

For more information on C.H. Robinson, click here.

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