Shipping market intelligence outfit SeaIntel has found some interesting differences between NVOCCs and container lines. In bad times, the volumes handled by the large forwarders fall faster than those of the carriers, but when conditions improve the volumes grow faster than those of the lines.
SeaIntel found this was reflected in the profits of both parties. In 2009 during the worst part of the global financial crisis, container lines lost US$20 billion, but the major NVOCCs made a profit.
The carriers with the highest growth rate in lifted volumes between 2008 and 2012 were Cosco, Hanjin, MSC, APL and Maersk Line, while those at the poor end of the scale were RCL, CSAV, Hapag Lloyd and Zim that could not get volumes above their 2008 level. Among the forwarders, Hellmann Logistics, DB Schenker and Kuehne + Nagel had the highest growth between 2008 and 2012.
SeaIntel makes no conclusions in their Sunday Spotlight analysis, perhaps because interesting though it is, there are none to be drawn in what is really an apples and oranges comparison.
The key to being an NVOCC can be found in the first three letters of its abbreviation, "non vessel owning". Unlike the container lines, the large forwarders do not have to tie up billions in expensive assets. They do not need to bother themselves with replenishing the fleet, scrapping vessels, repositioning and, most importantly, they don't have to contend with an orderbook.
Without a huge amount of capacity to manage - or mismanage, as the case may be - the forwarders have the flexibility to respond immediately to any upturn in trade and increases in volumes. Sure, they suffer more when the market collapses, but they are better equipped to keep costs low and absorb cuts in margins than their shipping partners.
Forwarders have been lean and mean for years and are quite used to operating in an environment of wafer thin margins. Container lines have cut costs as much as possible, but ships still need to run on fuel, they must be managed and staffed, and schedules must be maintained even if the ship returns to Asia half full.
Without the assets to manage, forwarders have been able to show stable development and most of the large outfits are reporting a steady improvement in business. Unfortunately for the container lines, they will continue to be hammered by volatility, excess capacity and poor rates.