When you start to export or import for the first time, you will not be familiar with the workings of the shipping industry. Initially, it can be somewhat tough to locate the right resources that suit your schedule and budget. However, soon you will realize that you are not the only one in the market, and there is a large network in your industry that you can become a member that can assist you to get more competitive shipping rates. For a small company, joining a shippers’ association can be beneficial in several ways. Some examples:
Unarguably the most overwhelming reason for joining a shipper’s association is to enjoy lower rates. A shippers’ association consolidates the requirements of its members and negotiates with carriers for volume discounts. With this kind of leverage, even small and medium shippers can get close to the buying power of large companies. The advantage to the shipping line is that it gets to lock in many small shippers with relatively little effort and gets an assured commitment of capacity utilization. The carriers often prefer to deal with the freight association because it is too time-consuming and expensive to identify, negotiate, and execute contracts with the companies individually.
The agreements made by the carriers with the shippers act to provide stability of the rates applicable to industries based on the commodity. For example, the rates can be decided in advance for specified routes for companies engaged in distinct industries like chemicals, footwear, electronics, wines, and spirits, etc. The advantage of doing this is in addition to the elimination of rate fluctuation, there is no wastage of time in negotiation by individual companies. A pre-approved schedule of freight rates serves to provide greater transparency and eliminates confusion and mistrust between carriers and shippers.
When you become a member of a shippers’ association, you get the advantage of the flexibility to give your custom to any carrier without having to negotiate and execute individual contracts based on the minimum volume of cargo or geography. Association members can choose any carrier of their liking while the carriers benefit from getting access to the smaller customers that they would not have been ordinarily able to reach.
Superior Market Information
With all members of the shipping association being at the same level, they feel encouraged to share market intelligence more freely among themselves. By joining a shippers’ association, members can get a global perspective of the logistics industry easily. It enables leveling of the playing field between experienced companies and newcomers. In addition to exhaustive information about the prevailing rates and likely trends, members get first-hand knowledge on carrier selection, transit times, carrier availability, etc. readily, which they can use to boost their market competitiveness. According to Forbes, a consortium of shipping associations is looking to reduce carbon emissions with newer sources of energy.
The fundamental purpose of a shippers’ association is to provide a platform for networking for its members. It provides a single umbrella under which its members can access a large variety of services, knowledge about best practices, and work for the common good.