Navigating change, just part of being an NVO

Repost from an article by George Lauriat, Editor in Chief of the American Journal of Transportation (AJOT)

NVOs (Non-Vessel Owning Common Carriers) are by “statute” in the middle of it all when it comes to ocean carriage. And when change is occurring fast in the shipping industry, as it is today, NVOs like Troy Container Line are among the first that get the call from their clients.

Being a Non-Vessel Owning Common Carrier, better known as an NVOCC or in the shorter form, an NVO, isn’t an easy business to explain. After all they sit in the middle of the ocean shipping transaction, neither fish nor fowl but something of each. In the NVO case, their role is that of an intermediary, buying slots from the steamship lines and selling space to shippers and freight forwarders. Thus, the NVO’s primary customer-base comes through the freight forwarder side of the business. As a consequence of being in the middle — a transportation intermediary as the Federal Maritime Commission (FMC) would categorize the profession — the NVOs must avoid rustling the freight forwarders’ clients while trying not to collide with the sale interests of the ocean container carriers, which are usually trying to sell FCL (Full Container Loads) thus leaving the LCL (Less Container Loads) sales to the NVOs.

For neutral NVOs like Red Bank, New Jersey–based Troy Container, this unique positioning makes the company’s role more than just an alternative to ocean carrier services for a forwarder or shipper looking to move LCL or FCL loads. But because of their middle positioning in the market, NVOs are a source of market intelligence, which will help shippers and freight forwarders make strategic decisions with their freight.

Existential Urgency: Planning for the Unknown

In an interview with AJOT, Michael Troy II was asked how the business is doing with the chaos of tariffs and other supply chain challenges and surprisingly he answered, “It’s like you are in a consulting job…” Troy explained that many of his clients were developing their own strategies and looking for ideas on alternative supply chain strategies — is there a better way to make this move or set up their supply chain for the uncertain future.

As Troy explained, “We’re getting busy with some strange requests… out-of-the norm requests for us [Troy Container Line], clients looking into more bonded long-term storage options to buy themselves time.”

These clients have often never been deeply involved in their freight movements but now, “importers asking their freight forwarders more questions about the tariffs and wanting to control a lot more of their import costs here in the US rather than leaving that to the suppliers… So, we’ve had some freight forwarding clients here that are asking more about controlling the import costing, and that’s a good opportunity that has come out of it as well [for Troy Container Line].”

Of course, building a long-term plan is itself a challenge. As Troy says, “Clients front-loading inventory works for a certain period of time but that’s not a long-term strategy. So, I think a lot of clients are trying to figure that long-term strategy out because you can’t shift these larger supply chains within two or three years... A lot of [clients] had shifted to a China plus one model…. and now their plus one [an alternative sourcing nation like Vietnam] might be at risk of having some volatility there as well. I think that’s the biggest challenge, trying to sort out both short term and long term of clients.”

Other Options

One of the ways that importers have been looking at improving their situation is through strategic storage and the extended New Jersey region offers a lot of alternatives, “If you’re bringing goods in that’s on the water, obviously nothing’s impacted [in terms of tariffs] as long as it’s on the water…but if you want to buy yourself another two months, three months to see if anything changes [like the tariffs], importers can still put the goods in a bonded facility and [then] clear it if something gets worked out [with the tariffs] in a month or two down the line,” Troy said of the storage option.

According to Troy the storage option has been in play for a while. As inventories have climbed in preparation for the tariffs taking effect, available space has tightened and has increased storage rates along the Northeast Corridor.

Nonetheless moving freight is a complex business and each shipper must carve out the solution that works best for their situation. As Troy relates, “We have a lot of clients that didn’t front-load their inventory and still do need to bring raw materials, and they’re the same suppliers. So, we have a hybrid mix of everybody’s different strategy. We [NVOs] sit in a unique position that it’s not all one way or all the other way. Our freight forwarding client mix has their importers that sit in all [types of] different verticals. And each one of those importers had a different strategy on how to handle this [current situation] ... and It’s just not the tariffs.”

It is an ongoing challenge for shippers and forwarders that must keep the pipeline of goods full and moving. “It seems like a long time ago, but it wasn’t. A lot of inventories got moved ahead of that January date [the date set for a potential ILA strike if the master contract proposal hadn’t been accepted] ... but we do have a lot of clients that still need to move this cargo this week and next week and the week after. They just don’t have the bandwidth, or the infrastructure set up to bring it in all last year. We’re still busy with those conversations right now, and it’s just us educating our clients on what these changes are and how it impacts them. There’s not much anybody can do one way or the other about it, but it’s just being aware of what the changes are as it happens,” Troy said.

Challenge for Ocean Carriers

It isn’t just the forwarders and shippers that have had to adjust their strategies. The ocean carriers were already in the process of altering their vessel rotations around the new structure of carrier alliances. With the new structure, there are now three carrier alliances [GEMINI, Ocean Alliance and Premier Alliance] along with the independents MSC, the world’s largest carrier and Zim which collaborates with MSC on some routes. But there were a few big changes from the structure in 2024 as GEMINI was formed by combining Maersk and Hapag Lloyd as MSC and Maersk dissolved their 2M Alliance. Hapag Lloyd, in joining Maersk, dropped out of THE Alliance which rebranded as the Premier Alliance. With these changes came a massive realignment of vessel rotations in the beginning of the year.

As Troy points out, “They [Ocean Carriers] were going through their own changes in February. Everybody [the ocean carriers] at the end of those three, four, five weeks, [to start 2025] were going through their rotational changes, getting into their new alliances and settling into their new capacities. Port strike and tariffs aside, just the reshuffling of the alliances that’s been going on has been creating a little disruption on their side. Take this week and last week out of it, there were still changes going on with the carrier end that they needed to figure out for their long-term strategies and the new alliances.”

And the ocean carriers, like the industry as a whole are trying to take a measured approach to their deployments. “The carriers, I think, are being extra careful as they’re settling into these new rotations as well to how much capacity is on the market, and with those routes, what the impacts are of any reroutes or if any bottlenecks open up. I think the carrier people react to control that capacity on the market or congestion,” Troy remarked.

An NVOs Key to Navigating Change

From Michael Troy’s perspective, one of the keys to handling changes like the industry is experiencing now is early planning. “If you’re trying to piece together things, now you’re in trouble… We’ve had a long-term strategic plan…This goes back to COVID. You learn …from the volatility of the business that you need as many different gateway options as possible. So, making sure that you’re offering for us consolidation, LCL consolidation and FCL services, import, export, not just East Coast or not just West Coast, you need to be able to flip that cargo through multiple gateways, and that’s the same thing on the foreign side. You want to make sure that you’re coming in and out of as many direct ports of call as possible, just the way the carriers do.”

Troy Line’s flexibility comes from pre-planning and “just having as much diversity in our portfolio as possible from a service standpoint and options from a service standpoint. If we have a bottleneck somewhere, we can reroute something through another gateway or through another service, and that’s a function of being built over years, not so much trying to put something together in a short period of time.”

At Freyt Consol, we proudly share the expertise of industry leaders driving change and innovation in the world of consolidation. This article is originally written by George Lauriat, Editor in Chief of American Journal of Transportation featuring Michael Troy II, CEO of Troy Container Line. 

Article written by

George Lauriat

Editor in Chief, American Journal of Transportation (AJOT)

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