Ratings of NPSA Members makes for better transactions
Wouldn’t it be great if we could rate container vendors and container buyers? If you could buy from a container vendor or sell to a portable storage company knowing what other people’s experience dealing with this company is? Other than the comfort level of what the rating says, think of how you can operate your business more efficiently. Your employees don’t have to consult you every time they are selling a container to a member of NPSA. Or, if you are buying, your employees know that he can buy from an NPSA rated vendor within guide lines that your company has set up. Even better, with a good rating you could pay for containers on terms rather than when they are delivered to you or up front.
Are We Blind & Trusting?
Primarily our industry is dealing in second hand shipping containers, we buy them, most often without having seen them, from vendors that haven’t seen them either. Neither party has any idea of where the container has been nor what has happened to it during the last 12-15 years. Based on our comfort with the vendor, whom we have never met, and who sometimes is in another part of the world, we send money long before we receive the containers or they trust us to send them money at a later date. Purchasing transactions in the portable storage or container trading business are very much based on trust and reputation. Like in all industries there are companies that have financial difficulties at times and there are companies that have bad intentions. The challenge is to buy from suppliers who have what you need, are reputable and value the relationship for the long term.
Outside of our world there are credit ratings institutes such as Moody’s, Standard’s & Poor’s and Fidget’s. These companies, are so powerful that they can change the relative value of currencies or create movements on the stock markets in the billions of US dollars. However, neither of them knows anything about the second-hand container or portable storage industry. For the container shipping industry, the leading rating company is the Dutch company Dynamar, and they look at the portable storage industry from the prospective of maritime container leasing.
Finally, there is personal credit rating companies that rates us individually based on how timely we pay our loans, what kind of debt we can handle and our personal financial situation. Experian, Equifax and TransUnion are the rating agencies that decides if you personally are “good credit” or not.
Is there a Better Way?
It looks like our industry needs a program that can give a rating of portable storage companies and container trading companies. A supplier of a service who understands our industry and the unique products and circumstances we work with.
Container Trading Companies/Intermediaries
These companies are vendors to most portable storage companies. They purchase containers in larger quantities from the shipping lines, maritime leasing companies or container factories and bring them to your area of the United States or Canada. Some of them you have met at the NPSA or other events and feel comfortable sending money to, against a commitment to deliver a certain number of containers to you within a certain time frame, or committing to purchase and pay for a volume of equipment at a future date or over a period of time. If the level of trust and your financial position is strong there should be no need to pay in advance, except in the case of special equipment. Most often these companies have long lasting relationships and credit with their vendors so your payments aren’t required to fully fund their purchases, which contributes to your trust in their ability and minimizes your risk.
On the other side of the spectrum is the small trader without a long-lasting relationship or without a credit relationship with their vendors. Dealing with this type of trading company, if something goes wrong, means that your payment or deposit has already been spent and the trader has no leverage vis a vis the vendor.
Rating of Container Trading Companies
Nothing says that the big trader is a good guy and that a small trader is a bad guy but you only know that from yours’s and other’s experience. You could talk with fellow a NPSA members about their experiences with suppliers. But what if the NPSA had a system of financial and relational accountability that members could agree to be subject too? It would serve as a way to assure regular members of the credit worthiness and relational reputation of suppliers that were new to them.
Credit Rating of Portable Storage Companies
How does the container trading companies look at their customers, the portable storage companies? The situation is the same as above, some of the portable storage companies are good to deal with and some are not. The base of our suppliers are in the business of leasing containers to shipping companies and a portable storage company is a very different type of company. Therefore, a rating by NPSA of its regular members in accordance with criteria that the vendors can understand and agree to would give the vendors more comfort in giving terms to their NPSA customers.
It is a big task for NPSA to assemble information of its members experience of dealing with vendors and buyers and give the members a Buyer’s or Seller’s Rating. However, it can be done, perhaps with the help of an outside credit rating company.