How Laufer’s fixed-rate contracts provide stability in times of uncertainty
As a result of the global pandemic and related lockdowns, the 2020 peak season brought many disruptions to international trade. Multiple events, including blank sailings, supply chain bottlenecks and surging imports, have forced many importers to reevaluate how they will prepare for the 2021 season. The standard ways of planning for the transportation of goods simply will not apply.
Many importers, including some of the big-box retailers, turned to Non-Vessel-Operating Common Carriers (NVOCCs) for additional capacity when they exceeded monthly volume commitments made with carriers as part of their annual service contracts. In 2021, we expect that trend to continue, as importers look to NVOCCs, like Laufer Group International, for fixed-rate contract solutions as one method to address the unpredictability of pricing and transit times in their supply chains.
What is an NSA (NVOCC Service Agreement) fixed-rate contract agreement?
An NSA is a contractual container volume commitment between a shipper/importer and an NVOCC—typically for a term of 52 weeks—that incorporates fixed pricing between specific port pairs as well as other custom accessorials, per diem allowances, bunker fuel clauses, and Peak Season Surcharge applicability. Typically, in an NSA, the rate levels are not subject to any General Rate Increase (GRI). NSAs are designed to help both importers and NVOCCs partner around expectations and allocations to ship forecasted container volume and manage costs more predictably throughout the year. The volume committed by both parties is called the Minimum Quantity Commitment (MQC).
Are NSAs available in all trade lanes?
The vast majority of successful NSAs and fixed-rate agreements are in the Transpacific Eastbound Trade.
What’s the typical duration of an NSA?
The typical NSA period is for one year, starting May 1 through April 30. There are occasions when NSAs can be agreed to prior to May 1 and even extend beyond April 30, but they are rare.