Nippon Express Helps Rice Supplier Stabilize Shipping Costs
“Nippon Express was able to secure a temporary [general rate increase] waiver for the rice supplier, translating to as much as a 50 percent mitigation…”
Because rice is a commodity with razor-thin margins for sellers, a major supplier of rice relies on Nippon Express to maintain profits by stabilizing shipping costs.
The ability to maintain sell rates for international rice commerce is compromised by yearly and quarterly shipping increases. The Westbound Trans-Pacific Stabilization Agreement (WTSA) is comprised of the major ocean carriers from U.S. to Asia. The WTSA agrees upon a yearly general rate increase(GRI) for agriculture products (among others) as well as quarterly bunker surcharges to adjust for variables such as fuel price changes. The yearly GRI can be an increase from $80 to $240 per 20-ft container of rice.
Nippon Express has relationships with the major WTSA providers and the ability to offer the carriers shipping business in deficit shipping lanes, thereby filling their otherwise empty cargo ships returning to the United States. Nippon Express leverages this relationship with the carriers on behalf of its rice clientele to mitigate GRI increases.
Nippon Express negotiated with each WSTA carrier individually to minimize the impact of the new GRI. Nippon was able to secure a temporary GRI waiver for the rice supplier, translating to as much as a 50 percent reduction of the agricultural rate increase.