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October 28 2019

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22 The Journal of Commerce | October 28 2019 International Maritime IN WHAT IS expected to be a long- term trend, smaller, more aggressive non-vessel-operating common carri- ers (NVOs) are chipping away at the market share of the top five NVOs in United States imports from Asia. That development is gaining momentum as sourcing shifts from China to other countries in the region. Smaller NVOs say they respond more quickly to price movements in the spot market than the largest NVOs, and as sourcing of consumer merchandise gradually shifts to countries in Southeast Asia and the Indian subcontinent, they can offer tailored services that shippers in those regions have not necessarily had access to in the past. However, the top five NVOs in the US import trade from Asia — Expeditors International, Apex Group, C.H. Robinson, OEC Group, and Kuehne + Nagel International — are so dominant that any market share erosion they experience in the largest US trade lane will be negligible. As long as China remains the largest source of US merchan- dise imports, these companies will continue to control that trade. An analysis of NVO market share of US containerized imports from Asia in January through June over the past five years by PIERS, a Journal of Commerce sister com- pany within IHS Markit, shows the combined market share of the top five NVOs has fallen from 24 per- cent to 21.8 percent, while the combined market share of the next tier of NVOs ranked six through 10 increased from 8.7 percent to 11 percent. But drawing industry-wide conclusions from the data is risky because each company has its own story to tell. "There's an anecdote for every situation," said a carrier rep- resentative. Generally, though, the carrier said the trend in the Asia–US trades is that the largest NVOs who serve the large US retailers import- ing from China will likely experi- ence incremental erosion of market share. Smaller NVOs that pursue business from smaller exporters in Asia will incrementally grow their business. "The big guys like the big cus- tomers, and the small guys like the small customers," he said. Leaner, nimbler The gradual increase in market share for smaller, nimbler NVOs, many of which are based in Asia, has been under way for at least the past five years, said supply chain consul- tant Jon Monroe. "They don't have the legacy costs of the big NVOs," he told The Journal of Commerce. "They're lean. They get the spot rates out faster." Because NVOs as an industry are mostly non-asset based, and they have contracts with a num- ber of carriers, cost and service are the advantages that NVOs have in dealing with beneficial cargo owners (BCOs). In today's Asia–US trade lanes, which have been ravaged by Trump administration tariffs on imports from China, "cost is king," Monroe said. When spot rates move downward suddenly, smaller NVOs can move faster to take advantage than larger NVOs with big-name accounts, Monroe said. Merchandise imports from China have historically been controlled by large US retailers and by the largest NVOs, who leverage their volumes with carriers in order to get the lowest contract rates in the trade. Over the past five years, though, US importers have turned Small but hungry Largest NVOs losing Asia–US market share By Bill Mongelluzzo "Smaller NVOs are lean. They get the spot rates out faster." The combined market share of the top five Asia-US NVOs has fallen from 24 percent in H1 2015 to 21.8 percent in H1 2019. Importing & Exporting | Ports | Carriers | Breakbulk | Global Logistics

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