Ocean Transportation Intermediaries such as Non-Vessel Operating Common Carriers commonly referred to as the NVOCCs, and Freight Forwarders are systematised by the FMC (Federal Maritime Commission).
Due to similar classifications by the FMC, they are often reckoned as similar during many transportation procedures. However, they have significant differences based on how they function. This blog will help you understand what is an NVOCC and a Freight Forwarder and the differences between the two.
What Is An NVOCC?
An NVOCC (Non-Vessel Owning Common Carrier) performs all ocean carrier services except the vessel operation. The House Bill of Lading (HBL), issued by NVOCC, typically falls under the NVOCC Bill of Lading.
The HBL virtually contains the same field of data corresponding to the Master Bill of Lading issued by the vessel operator. An NVOCC buys services from ocean carriers after being licensed by the FMC. With appropriate rate filings, they can mark up freight costs to resell services to their clients.
What Is A Freight Forwarder?
A Freight Forwarder company can be an agent or a partner of an NVOCC. They critically provide third-party logistics plus supply chain services on behalf of the client. Freight Forwarders can manage the goods for an importer or exporter through multiple activities like:
- Shipping arrangements
- Preparation of documents
- Customs clearance activities
- Warehousing and delivery
Differences Between NVOCC & Freight Forwarder
We’ve discussed what is an NVOCC and a Freight Forwarder. Let us now understand the fundamental differences between the two and why they are an essential part of global logistics and trade.
- Freight Forwarders are affiliated with international associations like- FIATA (International Federation of Freight Forwarders Association). Whereas NVOCCs have no such involvement with any of the international associations.
- The documents that the Freight Forwarder uses follow the FIATA standard and protocols. On the other hand, NVOCC does not possess any standard format of documentation.
- Freight Forwarding companies generally indicate agents to the shippers, but the NVOCCs act in terms of carriers.
- Freight Forwarders have no possession of container ownership or do not operate on any containers. NVOCC happens to be the most significant trade maker for the shipment of containers.
- Freight Forwarding companies own their or the third-parties warehouses and operate on the same for loading cargoes to the destination from the airport.
- Whereas NVOCCs generally do not have any such operation related to warehousing. In exceptional cases, larger NVOCCs own warehouses and can manage the overall functioning of a freight forwarding company.
The freight forwarders altogether cooperate worldwide to reduce their operational costs. They also work to improve timely deliveries. But, NVOCCs are independent companies. NVOCCs use third party agents who can provide them with working support.
Above all, the significant difference between NVOCC and shipping line is that NVOCC guarantees the shipment of a certain number of units per year by signing contracts with the shipping line. At the same time, the shipping line, in return, offers the NVOCC favourable rates.
The difference between NVOCC and shipping line exists due to their functionality. There also exists a distinction between a freight forwarder and a shipping line. Shipping lines operate on cargo vessels, and freight forwarders work in cooperation with the shipping lines. Anyone can write for us finance article or like this at my website.
Why Should You Care About NVOCC & Freight Forwarder?
If you are still wondering whether the NVOCC Bill of Lading is essential or not, then the answer is yes! The issuance of the HBL goes to the end customer. Those listed on the HBL are conserved as actual shippers or exporters.
Transportations of goods from one place to another involves stakeholders, and NVOCC bridges the gap between the carriers and shippers. In contrast, Freight Forwarders provide essential solutions to the client.
