Today, some logistics service providers present themselves as NVOCC, some as freight forwarders, and some define their business as multimodal carriers.
Regardless of the divisions, two standard terms are used interchangeably in the freight forwarding industry: NVOCC and freight forwarder. However, they are different terms, especially when it comes to obligations and documentation.
It can sometimes be difficult for small and medium-sized businesses to deal directly with large shipping lines and shippers because they may not always need a whole container to ship their goods. There are beneficial special agencies known as “Non-Vessel Owning Common Carrier” (NVOCC), which are suitable for LCL shipments of smaller volume.
Successful NVOCC experts are empowered to act on your behalf. They negotiate competitive prices and use a global network of resources to facilitate the transportation and unimpeded passage of goods through customs.
NVOCC services make up the entire and cost-effective process of importing or exporting goods. Because of the benefits they offer, they are of particular value to the SME market.
As the name suggests, a non-ship carrier (NVOCC) does not own or operate shipping ships. Instead, NVOCC agents negotiate with shipowners or freight shipping lines.
Both NVOCC agents and freight forwarders have their place in the industry. How to differentiate them from each other, what they do, and what challenges they face; this article covers it all.
What is NVOCC?
NVOCC (Non-Vessel Operating Common Carrier) is an abbreviation for a common carrier that does not operate a ship and acts on behalf of the seller or buyer.
The International Federation of Freight Forwarders (FIATA) defines NVOCC as "a company that issues bills of lading and assumes freight forwarders' role." As a result, they take on more responsibility than service providers who act as "transport agents."
NVOCC is an intermediary for maritime transport and a liner without a ship. It is a company that takes care of the organization of shipments for corporations and individuals. Their primary task is to provide services to manufacturers in the market while ensuring timely and safe delivery of products to the customer.
In practice, the NVOCC collects cargo and consolidates the goods of different clients within the same container. In short, they are owners of transport capacities who then sell that capacity to customers and take full responsibility for it.
NVOCC companies act as shipping companies that manage logistics from start to finish of goods transportation, issue their bills of lading and equivalent documents.
The NVOCC's main tasks are cargo reservation, organization of cargo movement, negotiation of contract prices with various carriers, consulting, preparation, and processing of appropriate shipments. NVOCC also takes responsibility for organizing shipments and signing contracts with the carrier.
Freight Forwarder vs. NVOCC: Is there a difference?
Is there a difference between an NVOCC and a freight forwarder? This is a question we often face. NVOCC and freight forwarders are essential stakeholders in the logistics process.
Different countries define the work of freight forwarders and NVOCC differently. The legal obligations that NVOCC agents and freight forwarders have to the government, clients and the public vary from state to state.
What does a freight forwarder actually do, and how does a freight forwarder’s job differ from an NVOCC agent’s job?
The freight forwarder ensures that the cargo is picked up from the seller and delivered to the buyer at the required place, at the optimal price, and with the most convenient transport.
Freight forwarders and NVOCC are two entities that have become almost synonymous over the years. One of the main reasons for this is business expansion. This led many companies to function as freight forwarders and as an NVOCC.
There are more differences between freight forwarders and NVOCCs, especially when it comes to documentation and obligations. The most significant difference is in the way it acts concerning the shipment.
The NVOCC operates as the cargo carrier, while the freight forwarder does not act as the carrier. It is a company that organizes shipments for individuals or companies to get goods to market, to a customer, or an endpoint of distribution. NVOCCs sign contracts with shipping lines to guarantee the shipment of a certain number of containers.
Freight forwarders act on behalf of the cargo owner to make the cargo easier to transport from the point of origin to their destination. A freight forwarder is a person who contracts a carrier who takes over shipment and performs boarding on a ship or aircraft. This cargo is then picked up by another carrier at the port, together with all the documentation.
A freight forwarder is an individual or a company that dispatches consignments through common carriers or otherwise arranges the space for consignments on behalf of the shipping company. International freight forwarders prepare and process documentation and perform other activities related to consignments.
NVOCCs provide carrier services under their official bill of lading, known as HBL (House Bill of Lading, proof of ownership over the goods being carried).
A bill of lading is a contract of carriage and is a legal document that binds both parties to the agreed terms. It is an essential document due to which the NVOCC agent is responsible if the cargo is lost or damaged in transit. Unlike NVOCC agents, freight forwarders do not issue bills of lading or bear responsibility for the damaged or lost shipment.
For example, to issue a bill of lading in China, a company must be an NVOCC to provide HBL. If you are importing from China and dealing with a freight forwarding company based in Asia, they are likely to be an NVOCC company.
NVOCCs usually do not have warehouses, but some of them may have their own container fleet. They can also offer cargo consolidation services and container cleaning and repairing services.
Who to choose: NVOCC or freight forwarder?
Various factors such as CFS (container loading and unloading), proper packing and loading of goods, safe passage during the journey, customs clearance of goods, and other customs checks should be considered when shipping the goods.
To go through these procedures without difficulty and eliminate potential problems, you can hire NVOCC agents. As your intermediary, NVOCC agents will help you successfully overcome many challenges.
For example, suppose you are buying or renting an apartment or house. In that case, you will likely seek the help of a real estate agent or agency to get your property as successfully and quickly as possible. The same thing is with NVOCC agents when shipping goods.
Some of the benefits of NVOCC:
Ease of doing business
NVOCC agents issue the bill of lading themselves, which significantly simplifies collecting documentation for the customer, and thus the ease of doing business. International transport of goods is a complex process. Things can go in the wrong direction very easily and quickly at any stage of the supply chain.
Adverse weather conditions, customs clearance problems, and congested ports are just some of the potential dangers. When things like this happen, the NVOCC will alleviate the issues quickly, painlessly, and cost-effectively.
Networking with local authorities
NVOCC companies maintain a good network of contacts with local trucking associations, unions, port customs, etc. Such a diverse and efficient network helps to do business smoothly. With good contacts and reputation in the industry, NVOCC can help mitigate the risks associated with various freight transportation problems.
One of the main advantages of working with NVOCC agents is that they offer their clients a flawless and personalized service and ensure the best transportation prices whenever possible.
Cargo monitoring is crucial when it comes to meeting business deadlines and obligations. Most NVOCC companies offer cargo tracking services and provide insight into the delivery time.
What are the NVOCC challenges?
In recent years, a lot has been happening in the shipping industry - from technology impact to the state of the global economy, politics, and international trade.
The main challenges of NVOCC companies are:
Competition: They face uncertainties such as additional costs while at the same time try to remain competitive. As more and more traditional logistics companies now provide NVOCC services, the competition is growing.
Risk: Maritime transport is a very demanding business, based on complex prices and non-transparent contracts.
Despite the challenges of reduced cargo and customer orders, shipping methods, and many changes to suppliers and schedules of shipping companies, NVOCC companies can take specific steps to survive in the marketplace.
To adapt to new challenges, they need to offer superior service to their current customers. It is essential to optimize the management of continuous schedule changes and carrier performance to improve service.
In addition to maintaining a professional level of customer service and flexibility in handling your resources, a valuable and reliable service can also save you many hassles.
If you need to arrange transportation, you are at the right place! Hubbig is an innovative digital platform that connects shipping companies, airlines, trucking companies, freight forwarders, and NVOCC agents with importers and exporters. Through digitalization, it ensures savings in time and resources.
The Hubbig platform centralizes communication, paperwork, and other key shipping processes and offers everything you need to transport your shipment in one place. This saves your time and allows you to dedicate yourself to your business entirely.
Using the platform brings many benefits. It helps logisticians find new clients and gives users of transport and forwarding services an expanded choice of logisticians and their services. The client requesting freight transport can choose between several offers. On the requested route, it is possible to select the best offer according to reviews and price and transit time criteria.
Since the industry is very complex, always carefully consider your business's form and scope and collaborate with the freight forwarder or NVOCC agent that best suits your needs.
We hope that this article has brought you at least a little closer to the concept of NVOCC. But keep in mind that you should not be too attached to the definitions of NVOCC or freight forwarder. The most important thing is that the service provider is of good quality, responsible, and able to resolve all requests in any unforeseen events.
What is your opinion on this topic? How do you differentiate between NVOCC agents and freight forwarders? Let us know in the comments below.