In an interview with the AJOT, Mike Troy, founder of the NVO Troy Container Line, Ltd., talks about the recession, negotiating and how to succeed as “neutral” in a decidedly non-neutral business environment. By George Lauriat, AJOT Mike Troy, founder and CEO (and chief negotiator) for Troy Container Line, a Red Bank, NJ-based NVO (Non Vessel Owning Common Carrier), has for nearly thirty years been in the business of shuffling boxes to and fro. Mike got the maritime bug early. He worked as a rate clerk for Big Blue and later sales for a international freight forwarder, before embarking on his own adventure – Troy Container Line - in 1984.
Mike Troy – founder & CEO, Troy Container Line
Being a neutral NVO is an unusual calling. “I guess we’re all OTIs (Ocean Transportation Intermediaries) now,” Troy said with a shade of cynicism. It’s understandable, a neutral NVO is a rare bird, and lumping the NVOs in with everyone else’s’ transportation business just doesn’t feel right on a number of levels. For starters, a NVO in the US market is licensed by the FMC (Federal Maritime Commission) and pays a bond for the privilege. And being “neutral” is the operative word in describing Troy compared to a large roster of FMC approved NVOs. Many NVOs are a division within an ocean carrier, international freight forwarder, consolidator or 3PL. How “independent” the behavior of the captive NVO depends largely on how its role is defined by upper management of the parent company. Being a neutral NVO is about horse-trading or more specifically box trading. As an NVO, if you don’t like negotiating you’re probably better off looking for another avenue of employment. Fortunately, Mike Troy likes negotiating. “Pricing [freight rates or slots] is really like buying a car. Some take the sticker price, some the invoice, some true market value…every step is negotiated. It’s just a matter of who negotiates better,” Troy said with a chuckle. And there is a lot for an NVO to negotiate. In the simplest of terms, the NVO is the man in the middle. The NVO buys blocks of space from container lines and re-sells, in a manner similar to a steamship line, to a customer. That customer can be a BCO (beneficial cargo owner) or international freight forwarder (IFF) and can be FCL (Full Container Load) or LCL (Less Container Load). Those boxes are then loaded on an ocean carrier (the one the NVO bought the space from) and head off to foreign lands. Another aspect of the business is consolidation. In the maritime trade dictionaries, prior to acronyms like OTI, the NVO was described as a company that consolidates small shipments into containers for onward shipping. Consolidation is another wrinkle in the NVO business, and sometimes the business is in-house and other times done with 3rd parties, which requires more negotiation. Warehousing is also an element that could require more third parties…and yes, more negotiations. Reverse is a little different. Outside the US, being an NVO or consolidator is more a job description than a separate business, as a guy with a wheel barrow pouring the contents into a bigger wheel barrow, can be a consolidator. NVOs either open their own offices or use agents. Obviously, finding the right agent to handle the business requires research and …and negotiation on how to divvy up commissions. In the rough and tumble real world of shipping contracts, never mind the natural competition with fellow NVOs, an NVO can be competing with the very container line from which it bought the slots for a BCO’s freight. Equally, the “IFF” can also be bidding against the NVO for BCOs business. All in all, if after a few decades, an NVO is folically challenged, they’ve earned it. Weathering the Recession Even during this period of weak economic performance, roller coaster freight rates, and equipment challenges, Troy has continued to grow. To a large degree, Mike attributes the continued growth