The shipping industry utilises a pool of logistics service providers for the smooth movement of goods across the supply chain. These providers facilitate the shippers by covering transportation, documentation, storage and other services related to the shipping of goods. Non-vessel operating common carriers (NVOCC) and freight forwarders are two logistics service providers that offer different services to shippers and help them transport cargo through intermodal or multimodal transportation. Let us learn more about the difference between NVOCC and freight forwarders.
What do you mean by NVOCC?
NVOCC is an abbreviation for non-vessel operating common carrier commonly used in the shipping and logistics industry. The term is generally used in maritime shipping and offers transportation services similar to ocean carriers. Various shipping lines and shipping companies own a fleet of vessels operating on sea routes to provide maritime transportation services to importers and exporters. NVOCC is a shipping carrier that extends transportation services on international waters but owns no shipping vessels. They are three-party logistics service providers that help organise and consolidate FCL and LCL shipments and then outsource the transportation to other ocean carriers.
NVOCC is an intermediate between the shipper and the carrier and looks into booking shipping lines, arranging containerisation, and documentation handling. For example- If you need to ship your goods via sea, you may contact an NVOCC, which does not own a shipping line but will arrange all logistics activities. This way, you will not have to go through the hassle of cooperating with different shipping parties and managing transportation.
Benefits of NVOCC
The advantages of NVOCC in maritime shipping are-
- Cost-effective– Since NVOCCs don’t own their shipping lines or vessels, they can find competitive market rates and access all sorts of ocean carriers, big or small.
- Customised services– NVOCC has diverse contacts with multiple carriers and therefore understands the exporters’ shipping needs to offer the best services to enhance customer experience.
- Tracking shipments– NVOCC offer tracking services to allow customers to track their cargo from the port of origin to the destination, thereby ensuring timely delivery.
- Streamlining logistics– It is challenging for shippers to locate a suitable shipping carrier and carry out documentation processes. NVOCC benefits its clients by offering logistics facilities such as cargo consolidation, customs clearances, documentation such as bills of lading and entry, and container space arrangements.
What do you mean by freight forwarder?
A freight forwarder is an individual or company that offers logistics services by transporting goods internationally on behalf of the shipper. The work of freight forwarders is to arrange shipping for the exporter from the shipping lines or shipping company. They are dedicated to facilitating the seamless movement of cargo from their origin to destination without laying much burden on the shipper. These shipping parties arrange for multimodal logistics and are responsible for carrying transportation through all modes of transport in the supply chain. Documentations, allotment of cargo spaces, packaging, insurance, customs clearances, container tracking, and providing warehouse facilities to shippers in need are the prime functions of freight forwarders. For example- If your shipment needs intermodal transportation service and requires arrangement and coordination between two or more modes of transport, you may hire a freight forwarder.
Benefits of freight forwarding
- Compliance with regulations– All importing countries need exporters to follow specific guidelines and regulations to perform cross-border trade. Freight forwarders know and adhere to the various guidelines of the destination location to ensure seamless movement of goods across borders.
- Global expansion– Freight forwarders are connected to carriers in every part of the globe and through all modes of transport. By employing a freight forwarder, shippers can outsource the responsibility of carrying out various logistics activities anywhere in the world.
- Supply chain visibility– Freight forwarders allow shippers to track cargo in transit to improve reliability and minimise cargo loss or delays.
- Warehousing: Freight forwarders ensure timely delivery of shipments. However, if, due to some reasons, the shipment cannot be initiated on time, freight forwarders offer warehousing or temporarily storing the shipment securely before its time for transit.
What’s the difference between NVOCC and freight forwarders?
Logistics service providers facilitate international shipping for exporters but have different roles. The difference between NVOCC and freight forwarders is –
- Freight management– While NVOCCs are service providers that serve as shipping carriers to transport freight internationally, freight forwarders are employed to act as shipping agents and arrange transportation services.
- Role– NVOCCs act as intermediaries between exporters and ocean carriers and are specifically dedicated to maritime shipping. Freight forwarders are logistics service providers that act as intermediaries between shippers and any mode of transport.
- Function– NVOCCs are responsible for cargo consolidation for FCL and LCL shipments. It is followed by booking container spaces for maritime shipping. Freight forwarders are responsible for managing shipments inbound for all modes of transportation. Additionally, they also look into various logistics operations such as warehousing and customs clearances.
- Paperwork– NVOCCs are concerned with shipping documents required for maritime shipping, such as bill of entry and bill of lading. Freight forwarders ensure that all necessary documents concerning customs inspection and cross-border trade are duly completed and maintained.
- Flexibility– NVOCCs are limited to ocean shipping and have expertise in allocating resources and navigating shipping complexities. Freight forwarders have diverse sources and can satisfy all shipping needs of shippers by suggesting the best transportation method.
In what ways do NVOCCs and freight forwarders contribute to the supply chain?
Although the difference between NVOCC and freight forwarders states that they have varied functions and roles, they are similar in a few ways. Suppose you are willing to transport any cargo internationally; in that case, you must decide the required type of shipping container and the economical and faster mode of transport to reach the desired destination.
- International transportation– You may find arranging for an economical and suitable transportation carrier challenging. By employing freight forwarders or NVOCC, finding spaces in containers and other logistics activities during peak season gets minimised as these logistics service providers ensure the best services.
- Documentation– Customs clearances and shipping paperwork are often hectic, going back and forth from one place to another. Freight forwarders and NVOCCs are experts in arranging legal documents for cross-border trade via their chosen modes of transport.
- Resolving issues– Being experts in the field of logistics services, they are skilled in mitigating risks and resolving any emerging issues related to transportation, such as routes, schedules, customs clearances and contingency planning.
By knowing the role and difference between NVOCC and freight forwarders, shippers can obtain better services and enhance profitability in trade.
LOTUS Containers is a shipping container service provider operating on a global scale. We buy and lease all old and new shipping containers to transport goods internationally.