What do service contracts enhance for volume shippers and shippers in associations?

Service contracts play a crucial role in enhancing purchasing power for volume shippers and shippers in associations. By entering into service contracts, shippers can negotiate more favorable terms and rates with Vessel Operating Common Carriers (VOCCs). These contracts typically allow shippers to commit to a certain volume of cargo over a specified period, which strengthens their negotiating position. As a result, this leads to better pricing structures and service arrangements that are tailored to their shipping needs.

The ability to leverage volume commitments not only reduces shipping costs but also secures space on vessels, which is particularly important in fluctuating market conditions. Consequently, volume shippers can enjoy consistent service and potentially improved reliability compared to shippers without such contracts.

While shipping efficiency, flexibility in shipping, and insurance coverage are also important aspects of a shipping strategy, they do not directly encapsulate the primary benefit derived from service contracts. The essence of service contracts is their ability to amplify the purchasing power of shippers, making it a focal point in their shipping operations.