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Unravelling NVOCC And Freight Forwarder: Vital Insights Revealed

Do you have an international shipment to do but confused about what platform to use? Struggling to choose between NVOCC and Freight Forwarder?
Unravelling NVOCC And Freight Forwarder: Vital Insights Revealed,NVOCC

Table of Contents

THE FREIGHT SERVICE YOU CHOOSE GREATLY EFFECTS YOUR LOGISTICS EFFICIENCY, SAFETY, AND COST.

So let’s understand what is NVOCC and freight forwarder……

NVOCCs and freight forwarders serve as logistics coordinators for the shipping of goods internationally. Similar to travel agents, they focus on aspects such as cost-effectiveness, service quality, and timely delivery to cater to their clients’ needs. Yet there are differences between them that make them unique.

Want to know more? Let’s start with the definitions:

What is NVOCC?

What is NVOCC?

NVOCCs is an acronym for Non-Vessel Operating Common Carriers. A NVOCC functions as an ocean carrier but does not own the vessels.

Conversely, a NVOCC is a middleman; it purchases space from the carriers and resells it to shippers. The NVOCC takes up some of the responsibilities and obligations of the carrier, which include the issuance of a house bill of lading.

What is a Freight Forwarder?

The freight forwarders are the logistics experts that arrange the most convenient way of transporting cargo by several means, such as sea shipping, rail, air, or road.

The thing you need to know about freight forwarders is that they do not move your freight but only arrange for it.

The process of exporting goods includes several steps, documents, and certificates, which can be perplexing to newcomers. With the freight forwarder, all these complexities are put in their hands, while for you, the function is already simplified.

What is an NVOCC License?

A NVOCC license is a credential issued by a maritime regulatory authority. It enables NVOCCs not only to be a middleman for shipping, but also to purchase vessel space from a vessel-operating carrier and then resell it to shippers.

With this license, NVOCCs can arrange the cargo, make the freight tariff, and execute the carrier responsibilities.

Like in the US, the Federal Maritime Commission oversees US-based ocean transport. US freight forwarders and NVOCCs need an Ocean Transportation Intermediary (OTI) license from the FMC to operate.

What Does NVOCC Do?

An NVOCC is an entity that works as an intermediary in the transportation of cargo. As the name suggests, it carries the cargo without having vessels of its own.

They purchase space from the vessel operating common carriers (VOCC), and then they sell it to the shippers. They strike an agreement with ocean carriers to handle freight services.

This way, they create their own tariffs and charge customers for the space on the shipping lines. Through being intermediaries, they make cargo transportation more efficient and safer, and they also take on carrier responsibilities.

NVOCCs are the key link in the supply chain, allowing the transportation of goods from the source to the end point.

What Does a Freight Forwarder Do?

Arranging international shipping is complex, and it requires particular attention to documentation and coordination. Freight forwarders take care of all these details.

The role of freight forwarders is to play a middleman role in the supply chain between a shipper and transportation services that could consist of ocean shipping, trucking, rail, or expedited air freight.

Since they deal with many transport providers spread across different regions, countries, and continents to move their merchandise, this adds to their total overhead.

A freight forwarder will use existing links with transit carriers in order to find transport costs and shipping routes. They aim at adopting an economic route balancing speed, price, and reliability.

Key Differences Between NVOCC and Freight Forwarder

Now you have an insight into NVOCC and freight forwarder definitions, functions, and responsibilities.

It is obvious that they mostly have similar functions, but they’re not the same. So, let’s have a look at what separates NVOCC from freight forwarders.

The difference between NVOCCs and freight forwarders is that they have different relations with shippers and stakeholders. NVOCs act as intermediaries between shippers and vessel operators, providing their own bills of lading.

On the contrary, in addition to being authorised by shippers to act on their behalf, freight forwarders can make decisions for them.

Another distinguishing factor is that exporters/importers use freight forwarders as their agents, while they approach NVOCCs as carriers. The entities of logistics have their own roles that they play in the logistics chain, providing customised services to their clients.

Aspect NVOCC Freight Forwarder
Ownership of Cargo Acts as a carrier and takes legal responsibility for cargo Acts as an agent in relation to shippers does not take legal
Documentation Issues bills of lading directly to customers Does not Issues bills of lading
Liability Assumes liability as a carrier Limited liability, acts as an agent for customers
Capacity Owns or leases space on vessels Doesn't own transportation assets directly
Negotiation Negotiates directly with shipping lines Negotiates with various carriers and consolidates shipments
Business Model Primarily transportation-focused Offers broader logistics services
Transportation Only Specialises in Ocean freight Specialises in all types of transportation means
Regulatory Compliance Subject to carrier regulations and requirements Subject to regulations but less directly involved with transportation

Why Choose a Freight Forwarder over an NVOCC?

Expertise and Flexibility

Freight forwarders provide for a wider range of services, such as customs clearance, documentation, and multi-modal transportation solutions. With their skills of moving through the systems and networks of shipping regulations, they are able to provide more flexible and targeted solutions to diverse logistics needs.

Single Point of Contact

In contrast to NVOCCs, freight forwarders always assume the role of a single contact person on all shipping related issues. This makes communication easier and simplifies the shipment process for businesses that in turn result in saving of time and resources.

Customized Solutions

Freight forwarders are skilled in providing customized solutions that are tailor-made to requirements of individual shipments. They use their logistics competence and carriers’ network to find out which ones are the most suitable routes, means of shipping and prices, to be able to organize efficient and cost-effective deliveries.

Risk Management

Freight forwarders shoulder more responsibility for cargo and provide risk management services, such as insurance coverage and mitigation strategies, all-inclusive. This creates a great relief for businesses as unpredictable circumstances are minimized and hence, the losses due to unplanned situations are reduced.

Why NVOCC Falls Short

Generally, NVOCCs are engaged in transportation and they do not offer the full-fledged services and expertise as international forwarders do.

Moreover, NVOCCs, as the carriers, are sometimes put in the position of having to depend on the freight forwarders in this regard, leading to bottlenecks and other problems in the shipping processes.

Outro

While both NVOCCs and freight forwarders are key players in the shipping industry, freight forwarders offer a wide range of personalised and flexible services.

This is in particular useful in a range of logistics requirements in which they master. When firms look for diversity in services, freight forwarder is a go-to option as they can tailor for their specific needs and prompt service.

But at the end of the day, grasping the differences between both help to make the judicious decision.

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