How India's NVOCC segment is Becoming Resilient

Abhrasnata Das | Friday, 14 January 2022

The Indian maritime freight business has suffered a huge setback as a result of Covid, and NVOCC is no exception. As per a recent survey by Kearney, blank sailings, trip cancellations, right-size capacity and declining market demand are the major challenges limiting the growth of NVOCC industry.

Additionally the report also stated, “About 36 percent of respondents cited challenges within their supply chain, with many growing concerned about port congestion. Hundreds of thousands of containers remain stranded around the world given social lockdowns, ports’ limited ability to clear landed boxes, and blank sailings leaving export containers stuck. Shippers are unable to pick up previously shipped containers that have been sitting at the ports due to full or closed warehouses unavailable for import delivery.”

However, it is important to note that, NVOCC segment of India and around the globe are increasingly bringing in new practices to curb this prevalent circumstance. In this article, let’s explore the latest trends that the NVOCC players are bringing in to deal with the current business situation.

Cloud computing and NVOCC

With the advent of numerous vendors in the market, the NVOCC aggregator industry is experiencing a huge difficulty. Small and medium-sized NVOCC aggregators are finding it challenging to stay competitive in the market as a result of the rising number of consolidations and acquisitions. As a result, NVOCC aggregators are increasingly relying on innovative IT solutions to improve the security, efficiency, and dependability of marine operations while lowering operational expenses. As a result, cloud computing is the most recent technology that has been widely available in NVOCC firms.

According to a senior analyst at Technavio for research on transportation and distribution, “Cloud computing assists NVOCC aggregators in optimizing the utilization of information resources. It reduces the cost by helping operators to render services at a comparatively lower price while maintaining the ensured level of quality. Many services that can be provided by cloud computing as the SaaS model for shipping industries are fleet management, documentation management, maintenance management, and reporting the status of ships or fleet.”

IoT and Smart tracking

In the current business structure, transparency is turning out to be the key for the NVOCC players. Today, the use of smart container tracking insights is giving the NVOCC aggregators the predictive insights they need to manage container allocation effectively.

NVOCC aggregators can better track containers and receive data via online smart tracking using IoT (Internet of Things) devices, allowing them to improve fleet allocation and better match supply with shipper demand.

Additionally, IoT devices with sensors send out real-time alerts to shippers when their products are departing or arriving at a port, for example. These characteristics could improve client experiences and ocean carriers' operations in 2022, resulting in increased efficiencies and revenues.

The existing market scenario is imposing major challenges on the NVOCC operators, which is extensively jeopardizing the NVOCC market, causing a gap in the demand and supply structure. Some of the major challenges are:

Container shortage

Container scarcity has become a major issue. For the NVOCC category, which has a significant negative influence on manufacturers, traders, and, of course, retail enterprises, as well as the worldwide shipping industry.

When countries went into lockdown, their economic activities were restricted, including the number of workers in ports, depots, container freight stations (CFS), which drastically decreased. As a result, cargo/customs handling and clearing times were significantly slowed.

In addition, several small and medium-sized manufacturers in Asia, primarily China, have temporarily closed. With the uncertainty of the future, a huge number of containers came to a halt and became long-aging units at terminals and inland depots.

This situation is hampering the NVOCC industry in two critical ways. Firstly, due to shortage of containers, the NVOCC firms can not perform in the optimum manner, thereby generating a direct impact to the clients motive. Secondly, for limited container access, manufacturers have driven up the prices of new containers, and traders who sell used containers have already created a price bubble; this is a phenomenon that is occurring not only in Asia/Europe, but almost everywhere; as a result, cargo worthy containers that an NVOCC could easily buy in the US$800-US$1200 bracket before 2020 now cost US$2200-US$2800, and container leasing rates have also risen by 30% to 50%.

The Future

With Covid on board the current situation does not seem to be favourable for the Indian NVOCC segment. However, the shift of the industry towards automation and digitization like application of AI, IoT, cloud computing in the operational line will be the key driving factor that will revive the NVOCC from its current allied state. With the application of modern tech, transparency and accountability will come into play, and with it the trust and reliance of the clients on the NVOCC firms is expected to develop.