What is neutrality?
In order to fully explain the concept of neutrality in the shipping industry first, we need to explain the difference between NVOCC and freight forwarders. NVOCC stands for Non-Vessel Operating Common Carrier. This indicates that they are an ocean carrier with no ships. They lease space at a special price from ocean carriers and sell the spaces to their clients. NVOCC maintains neutrality by selling their services only to freight forwarders. This type of practice eliminates any possibility of preferential treatment.
Why should you choose a neutral partner?
The key to success for platform businesses is providing value to all business stakeholders. It can only be achieved if the platform is neutral, not interested in controlling the unit of value, but in promoting interaction between the companies that trade those units.
In the logistics business, the value unit is cargo. Logistics businesses, then, need to get to ways that equal the buyers and sellers of cargo. At the moment, the $150 billion annual freight forwarding industry “trades” cargo in a restricted and somewhat manual way. They use different channels for selecting vendors although carrier contracts and service contracts are price discovery tools, traditional approaches such as emails and telephone calls include spot pricing and special promotions.
A logistics platform, on the other hand, analyzes market conditions & demand data to guarantee freight forwarders get a reasonable (not necessarily the lowest) rate. Simultaneously, the platform helps NVOCC gain access to occasions they could not meet without opening more offices. A platform centralizes the communication of shipments and processes that speed up pricing, scheduling, paperwork, and other crucial freight forwarding processes. And since platforms are web-based, they offer these benefits with no cost of deployment or infrastructure investment in technology.
But all that visibility and digital technology are frightening. Who can you trust with your customer data and your pricing information? And if with all these confidential business information, you can’t trust anybody, then how’d you get past the obstacles that slow down your logistics business expansion?
The answer? Neutrality.