NVOCC vs Freight Forwarder is a question that often arises in international shipping. Several questions are generally asked, which surround what they are, how they operate, their primary functions, and how they will benefit an importer or exporter.
NCOCCs and Freight Forwarders are intermediaries in international shipping. NVOCCs are licensed by the Federal Maritime Commission (FMC) to facilitate the arrangement and leasing of space aboard ocean vessels. While freight forwarders arrange and manage transportation services from the point of origin to the destination.
Find out more about these two solutions and how they can impact your business of importing goods into the United States.
Non-vessel operating common carriers, or NVOCCs, are ocean transport intermediaries (OTI) in ocean freight transportation. These intermediaries do not operate or own transport vessels of any kind. Instead, they work with shipping lines across the globe to arrange cargo space for importers and exporters.
These intermediaries select a vessel operating ocean carrier (VOCC) based on the importer’s needs or export.
Space is purchased according to:
Once arrangements are made with the VOCC, the NVOCC sets the desired rate for service and sells that space contractually to the shipper. It is important to note that the shipper can be an importer, exporter, customs agent, or even working with a freight forwarder.
Commonly, the ones who work with an NVOCC are importers and exporters. Although transport services are contracted to the shipping line, the NVOCC reserves full responsibility for your cargo aboard the VOCCs ship during the voyage across the sea.
The primary function of an NVOCC is securing transport space on board a VOCC for clients worldwide, as mentioned in the earlier section. The NVOCC issues its bill of lading, often referred to as the House Bill of Lading.
The bill of lading is issued as a result of licensing, which is given by the Federal Maritime Commission (FMC). Similar to ocean freight forwarders (OFF), licensing must be established through the FMC to conduct maritime transportation legally.
NVOCCs offer other functions and services but depend on the company’s abilities. Below is a list of various functions and features that might be provided.
Again, it is very important to note that these alternative functions are not always available when dealing with this OTI. They’re nice, but don’t count on them being available through all intermediaries.
It is also essential to note that all NVOCCs follow 46 CFR § 520.3, establishing the publication of tariffs. This publication outlines any charges, classifications, practices, and rules of the carrier, including their rates.
There are several associated benefits when working with an OTI such as this one. There is a distinct advantage for certain businesses, especially small ones in the shipping industry, who require expert advice or assistance on a more personal level.
When small businesses engage in a shipping line, there is zero flexibility or room to negotiate. These businesses benefit from an OTI, which does have the ability to negotiate on behalf of its clients.
Other common benefits include:
The outlined benefits help paint a clear picture of exactly why using an NVOCC operator has its benefits. This intermediary has the advantage of vast partnered networks, headache-free documentation, better shipping rates, larger capacities, and more personalized customer service.
Like NVOCCs, a freight forwarder is an intermediary between importers, exporters, and carriers. Their role, functions, and responsibilities are far more detailed and wide-reaching than other OTIs.
Freight forwarders assume general responsibility for your shipments from the initial loading of goods to their eventual unloading once they arrive domestically. This concept of ownership regarding responsibility is critically important to a freight forwarder.
The table below shows how massive the global freight industry is in revenue growth. Estimated predictions of the Compound Annual Growth Rate (CAGR) increasing by over three percent over the next few years, showing the demand for freight forwarding services.
| Market Revenue 2021-2022 | CAGR 3.3% Increase 2021-2028 |
| $186 Billion | $192.14 Billion |
They quite literally manage, facilitate, and overcome any logistical challenges. Their industry knowledge and ability to execute make them supply chain experts. Freight forwarders leverage their industry experience, knowledge, and network through meticulous planning.
These shipping pros are the complete solution for allocating modes of transportation and facilitating the movement of goods from start to finish. A complete transportation solution is where they differ from OTIs like NVOCCs.
Read our article on how to choose a freight forwarder to find one that’s right for you.
Essentially, freight forwarders handle everything, giving you, the shipper, the ease and peace of mind to focus on other things. These masters of transportation allocation and facilitation handle the following.
It is essential to understand that freight forwarders are more of a hands-on middleman. Although they are not directly involved with physically moving your goods from one location to another, they are responsible for arranging transport and the goods themselves.
There are many benefits to using a freight forwarder for all your international shipping needs. As mentioned earlier, freight forwarding is a feature-rich total solution. The advantages of a freight forwarding service include:
What exactly does this mean, you might ask? To put things into a broader perspective, using a freight forwarding solution eliminates your need to deal with the complexities of importing goods. The forwarder will quite literally handle every aspect of the shipment for you. They can even use air freight consolidation to combine multiple shipments into one.
The clever play is spending less time on the incidentals and more on your business. This statement is how freight forwarding should be viewed as an easy solution that removes the headache of international importing.
Need to ship freight by air? Learn more about air freight forwarders.
When looking at these two OTIs, one could definitely be confused about how they operate and function, what sets them apart, and which would facilitate your needs. These questions might seem simple.
However, each individual’s needs and scenario differ, including the variables that pop up during shipping. Here are a few examples of similarities and differences that can help paint a general picture of NVOCC vs freight forwarding.
Similarities:
Differences:
In simple terms, one is a partial solution, and the other is a complete solution for importing. It is imperative to understand that these two services function similarly and differently.
Some businesses may already have certain aspects of their international shipping in place, while others do not have those details figured out. Others might just be new to the process or have limited experience in dealing with customs clearance and shipping.
Whatever your case may be, both options have their merits for any situation. However, freight forwarding is the more logical choice regarding the shipment of goods because it is a more complete and well-rounded solution that effectively puts your shipping needs on cruise control.
In the world of international shipping, you never want to go in alone, regardless of your personal experience. USA Freight Forwarding Services is ready to be your trusted partner in global transportation.
Our primary mission is to provide industry-leading service, support, and reliability. Our team of knowledgeable and dedicated consultants can get you importing with ease right away! Our services offer an unmatched white glove experience.
Regardless of what type of freight you’re shipping, we can offer the following services:
Call us anytime at (866) 941-8081, or click here to speak with a consultant and start the importing process today!
