Difference Between Freight Forwarding and NVOCC
Knowing the definitions and roles of different transport services can get confusing for those needing to ship cargo. The difference between freight forwarding and NVOCC (Non-Vessel Operating Common Carrier) is important although they are considered to be the same by many, they do have different roles and services. People often considering them to be the same is mainly attributed to their classification as an Ocean Transportation Intermediary (also known as OTI). However, regardless of which one you need, both are required to obtain a license from the FMC if they plan to operate in the United States.
What is the difference between freight forwarding and NVOCC?
Even though both a Freight Forwarder and a NVOCC are classified as OTI’s, there are some very specific differences between them. It is important to note that in order to be a NVOCC, one must first be a Freight Forwarder. Adding NVOCC designation gives a freight forwarder the ability to add ocean shipping services to their menu. That is not to say there is no cross over in activities because there are several. However, the differences between them can impact whether or not one might suit your needs better. As mentioned, the difference between a Freight Forwarder and a NVOCC is in their daily activities as well as their legalities.
A forwarder may not be a NVOCC, but an NVOCC may also be a freight forwarder. In many cases a NVOCC can own and operate their own containers while freight forwarders may not. Let us take a closer look at what they both do to fully understand the difference. Freight Forwarders offer knowledgeable advice and a broad range of consultancy services. Services can include customs documentation and clearing, warehousing, booking cargo with carriers, and more. A NVOCC provides actual ocean carrier services usually under their own bill of lading. They act as the shipper to the carrier and the carrier to the shipper. However, most of their services are related to ocean shipping.
MCS Global Transport offers both freight forwarding and NVOCC services. Whether you are shipping your cargo by land, sea, or air, we can help!
What are the activities of a Freight Forwarder?
A freight forwarder is simply an agent or company that is contracted by a shipper to oversee activities related to their cargo shipments. A freight forwarders daily activities include all aspects of shipping their clients goods such as:
- Arrange the transport of cargo from Point A to Point B using various forms of shipping such as ocean, air, rail, or road.
- Booking cargo with reliable carriers under their own service contract or the BCO’s service/freight contract.
- Negotiating rates with various carriers and arranging bids on behalf of their clients.
- Preparing and processing all necessary documentation related to each shipment.
- This includes customs and port documents, bills of lading, Certificates of Origin, letter of credit, correct intercoms, permits, insurance, and more.
- Issuing their own house bill of lading or commonly known as HBL.
- Oversee drayage or haulage of shipment from/to the clients’ premises, port, or forwarders warehouse.
- Arranging the storage of cargo. Often large freight forwarders provide their own warehouse space as an added service. Using these storage facilities, freight forwarders manage the distribution or “forwarding” of the cargo based on their clients needs.
- Leverage long standing relationships with shipping lines and carriers to achieve faster turn around and better rates.
- Provide reliable advice on over border cargo transport to avoid delays and additional fees.
- Arrange customs clearance.
What is NVOCC?
A NVOCC is defined by the NCBFAA (National Customs Brokers & Forwarders Association Of America) as; The USA definition of an NVOCC is a Non-Vessel-Operating Common Carrier, who performs all services of an ocean carrier except without operating the vessels. The NVOCC issues its own bill of lading (typically referred to as a House Bill of Lading, hereafter HBL) that contains virtually the same data fields as the corresponding Master Bill of Lading issued by the vessel operator.
Each serving as a contract of carriage, but for different parties. The Master Bill of Lading is a contract issued by the ocean carrier that is between the NVOCC and their agent (at origin or destination), while the HBL is the contract of carriage issued by the NVOCC between the actual shipper and actual consignee. Licensed by the Federal Maritime Commission, NVOCC’s buy services from ocean carriers, and though issuance of their HBL with appropriate rate filings, are able to mark-up freight costs as they resell these services to their clients.
That is a bit wordy so let us just say a NVOCC is an entity that provides ocean shipping services as a “carrier” whether it be with their own operated vessels or not. A NVOCC basically purchases slots of space from carriers (VOCC – Vessel Operating Common Carrier). Those slots are then resold to their clients. The clients that purchase these slots from a NVOCC can either be exporters, importers, or even freight forwarders. A NVOCC can own their own containers and they can also contract this off to a third party. NVOCC’s do issue their own bills of lading as the carrier and therefore take on all responsibilities and liabilities subject to the terms of their bill of lading. This means that they are responsible for any damage or claims just as if they were the carrier transporting your cargo.
Do I Need A Freight Forwarder Or NVOCC?
Here is another difference between a Freight Forwarder and a NVOCC. A NVOCC is required to publish their tariff prior to operating in the United States. The tariff contains the freight rates, rules, surcharges, freight classifications, terms, and regulations. (VOCC or NVOCC). Usually a NVOCC does not offer the same services as freight forwarders or the other way around. But there are some cases where you can work with one firm that provides both services. There are many ways of finding such a firm, however you are in luck. MCS Global Transport offers a full line of cargo shipping services including both freight forwarding and NVOCC services. To push it even further, we also offer in-house warehousing and trucking services.