International trade is fiercely competitive, with businesses from all over the globe trying to leverage whatever advantage they can get in sourcing, manufacturing, distribution, and marketing. The role of logistics and supply chain management is no less critical. With over 90% of global trade comprising ocean freight, the role of shipping companies and freight services are vital for business competitiveness. Like in other aspects of trade and commerce, many shipping companies have discovered the benefits of coming together under a common umbrella of a trade Shippers. Some of the main advantages of a Shippers Association are explained:
Perhaps the most significant benefit of a Shippers Association is that it gets a lot of strength and negotiating power with the support of many members. The shipping association can act like a cooperative to consolidate and buy cargo space in bulk to avail of handsome discounts that can benefit the members. In this manner, even small and medium-sized shippers can get trade discounts of a magnitude that would not have been possible on their own, according to export.gov. Ocean carriers also gain as they secure agreements for large volume shipments that make it possible to keep investing in their assets and operations.
With shipping companies and associations having a lot of clout on the demand and supply of shipping volumes, it acts as a natural check on the shipping companies from arbitrarily hiking rates. With long-term agreements coming into play between the ocean freight carriers and freight forwarders, the playing field becomes leveler, and the rates remain stable. Also, multiple contracts for commodities like chemicals, foodstuffs, etc., serve as the basis for standardizing rates. The membership freight forwarder facility is also helpful because it eliminates the need for time-consuming negotiations every time a business wants to ship something and prevents shoppers from taking advantage of small businesses. Stable rates help companies plan better and remove the opportunity for confusion or disagreement between carriers and shippers.
There are quite a few tasks, including recordkeeping of shipping contracts, filing tariffs, executing changes in the rate contracts, legal issues, liner charges, taxation, and advocacy involved in shipping. These require more time and expertise than what individual shippers can commit. With the Shippers Association mandated to look into all aspects and look after the best interest of its members, it is more convenient and economical for shippers.
Better Compliance with Rules and Regulations
A shippers’ association is better poised to ensure that its members operate according to industry standards and government rules and regulations. With the association’s involvement, individual shippers can be more confident of being fully compliant with the applicable rules and regulations. They can be surer that they will not attract fines and penalties as may be applicable. Also, most associations will offer training and guidance on compliance-related issues.
Above everything else, a shippers’ association offers its members the opportunity of networking with each other. It can open up diverse business opportunities and preferential pricing and sharing of resources.