LCL console is one of the critical areas for many small to medium-sized logistics companies, sometimes even the backbone of an enterprise. This interview, conducted with our founding member China NVOCC Container Lines Limited (China NVOCC), gave us a swift insight into the logistics business, especially LCL consoles in terms of sea and rail freight. Moreover, the conversation also covered the history of the company and the exponential growth they experience in the early 2000s.
Our interview was conducted with the Managing Director of China NVOCC Wang Yong and the Overseas Network and Marketing Manager, Leo Liao. The conversation gave an interesting perspective of the competition between sea and rail freight. At the same time, we also delved into the need to explore the rail connection between China and Europe and finally learned about new developments taking place within the company.
In conversation with China NVOCC...
NSRN: As a qualified LCL consolidator, China NVOCC has a significantly strong network in China with 500 employees and 20 offices covering the port cities and those in the inland. This is remarkable progress for a company to achieve in less than 15 years since its establishment. Many companies in the west take 4 or 5 decades to reach this kind of growth. What do you think are the contributing factors? And What was the journey like for China NVOCC since 2007?
CHINA NVOCC: Yes, CHINA NVOCC was established in the year 2007. In the past 13 years, we have multiplied with the help of the Chinese Economic Development Program, especially in the area of export and import trading development. We have dedicated services within export & import logistics. Simultaneously, we have concentrated on a robust overseas network with premium console service, allowing us to grow our business in the past 13 years rapidly.
At the same time, our core staff and teammates have over ten years of LCL console experience. Our branches can be found, covering all over China, including the main ports. This coverage is essential for a company focusing on LCL. These are some of the core factors contributing to our expansion and made us a more substantial and efficient company.
NSRN: China NVOCC’s primary business is sea and rail freight. As most people witness, rail is usually trying to compete with sea freight in terms of speed. Rail freight also gained attention during the coronavirus pandemic and performed exceptionally well. As a company that works with both rail and sea, what do you think are the advantages and disadvantages of both?
China NVOCC: We are primarily dedicated to westbound shipments, mainly from China to Europe. We undertake and are acquainted with sea freight and rail freight console service. To compare sea and rail, it is evident that the coverage offered by sea freight is much more expansive than rail freight. However, for the same destination, rail freight generally provides faster transit time as compared to sea freight.
It is well known that sea freight is more mature and stable than rail freight because rail freight is generally impacted by respective local government agencies and their policies. This affects the rail freight service making it a critical factor contributing to the instability of rail freight space. But at the same time, due to lack of space, the prices have severely increased for sea freight in the last year, making it almost equal to rail freight.
Even though sea freight and rail freight costs are similar, many clients continue to tend to rely on sea freight to transport their cargo because rail freight from China to Europe is still not as popular. However, we usually make the transportation plan for our client according to their actual demands, instead of worrying about the popularity of sea or rail freight. In the end, it all depends on finding a suitable solution at that moment, regardless of the transport mode.
NSRN: China NVOCC’s has a strong Europe-Asia business. What do you think are the few aspects that the companies doing business through Europe -Asia should keep in mind? Moreover, for European freight forwarders approaching Chinese freight companies, what is the most crucial aspect you expect?
China NVOCC: We must keep in mind a few aspects before choosing an agent to partner with and work together. First and foremost, we make sure that the finances are secure, which helps in increasing the reliability of our partners. Secondly, since our core business is LCL console, we require that our cooperated agents have some FOB nomination volume to support us and make a joint console box. Finally, stable, and secure handling needs to be provided at the destination of the cargo. This is why we are content on developing good contacts through the network with local agents in foreign countries.
NSRN: Recently, the container and space shortage has affected businesses and has also largely affected the freight forwarding industry. Did your company see any effects? If so, how were they tackled?
China NVOCC: We faced a significant impact due to space and equipment shortage in the past few months. However, thanks to our long-term relationship with local carriers, we avoided any heavy repercussions. For the past many years, we have only cooperated with one or two carriers and considered them our core partners. No matter the market situation, whether a slack or a peak season, we always chose and supported them. This long-term cooperation and understanding allowed us to acquire a guarantee from the carrier to safeguard sufficient space/equipment needed for our LCL console business.
NSRN: Finally, as a Chinese company in the New Silk Road Network, how do you think the “One Belt One Road” Initiative has impacted your business opportunities in the past several years? Do you expect trade and business volume to continue to grow in the next few years? What steps must individual companies like yourself take to be part of this trend?
China NVOCC: Under the Chinese government’s promotion of ‘One belt One road’ or the Belt and Road Initiative, we have put much effort into China to Europe rail freight development. We want to seize this opportunity and have dedicated services for rail freight from China to Europe. We believe that in the future, we will have to put in more capacities to enhance our rail freight coverage in Europe, and we are actively working towards that.
For now, we have a regular console service from China to Germany and Poland. For our next phase, we will develop a new console service from China to Italy and Lithuania. For the Eastbound service, we are in the planning and researching stage, and we hope that soon we will also set up import console service from Europe to China. Overall, we are working on enhancing our export & import rail service between China and Europe.