A new joint venture aims to provide Kiwi SME exporters a greater presence and an improved representation at the negotiation table with the world’s largest international shipping companies in the wake of global changes.
Logistics service provider Netlogix and pulp, paper and packaging manufacturer Oji Fibre Solutions have formed Bearing360, a shipping solutions company.
Set to launch early next year, the joint venture will manage more than 70,000 twenty-foot equivalent (TEU) of containerised export cargo volumes from New Zealand.
Murray Horne, general manager Lodestar (OJI’s logistics arm), says the joint venture will strengthen reliability across their export supply chain.
“Due to the global oversupply of shipping capacity, there has been significant downward pressure on ocean freight rates to a point where some rates are at historic lows. This is not a sustainable position for the industry, and it is already impacting on shipping services across New Zealand.”
Horne says that whereas three years ago there were around 12 or more separately owned and operated shipping lines servicing the New Zealand market, there are now only seven due to recent merger and acquisition activity.
“Through this joint venture we want to ensure that a range of shipping services continue to support the New Zealand market, and we will use our scale and market presence to help drive that outcome”.
Dritan Ramohitaj, newly appointed general manager of Bearing360, says the intention is to help keep the market sustainable for shipping lines by levelling out cargo flows to improve predictability.
“The shipping lines fix their schedules and vessel sizes in advance, largely in anticipation of expected cargo volumes. We will be relatively consistent with our cargo by levelling out the large ups and downs to provide a more reliable base of container volumes. Ultimately, shipping lines can then get better utilisation of their vessels, which should reflect more sustainable pricing for our customers.”
Ramohitaj says the new service is also about reversing the trend towards the ‘commoditisation’ of container shipping.
“We have the expertise to provide a comprehensive service offering. We take responsibility for the cargo, manage our own warehouses, pack our own containers, coordinate the transport, and operate our own fleet of break bulk vessels, providing visibility throughout the whole process. That is somewhat unique in the New Zealand market. We are the freight company with dirt under our fingernails,” says Ramohitaj.
“We work closely with the shipping lines on cargo care, special container presentation, specialised equipment, on time delivery, timely resolution of issues, and no noise for our end customers. But, you have to be a large scale player in order to deliver the service levels that our joint venture will offer.”
Netlogix is supplying the technology behind the innovative model on the back of its New Zealand freight business. The technology is based on a platform that links otherwise disparate truck companies, allowing customers to send cargo across the country via the most efficient manner.
Netlogix CEO Chin Abeywickrama says that the company worked with Oji Fibre Solutions to build an online portal for the venture that will allow exporters and importers to easily access a comprehensive network of global shipping lines, which may help the lines more accurately predict cargo volumes.
“It will integrate the global shipping market with local shippers. Benefits will include increased visibility of cargo and the ability to make one seamless booking across the whole global network,” says Abeywickrama.
“What is unique about us as a start-up is that we will immediately have significant scale with cargo already moving to more than 160 ports, touching all major international markets with almost every shipping line, and facilities for almost any kind of cargo.
“The last thing the shipping lines or shippers want is for us to double in size and then turn around and make a deal to give all our business to just one shipping line. We are making a commitment with the venture to maintain choice of shipping lines,” he says.
“We recognise that we cannot influence the global market. Therefore we are trying to use our combined scale to do what we can on the local level to maintain relevance and ensure the continued level of choice and frequency of services to New Zealand.”