Difference between NVOCC and Freight Forwarder

Is there any difference between a freight forwarder and NVOCC? Who is a freight forwarder? How NVOCC works? How NVOCC differs from a freight forwarder. This is a common question in international trade.

In this article let us discuss about the difference between a freight forwarder and adn NVOCC.

The definition and act of a freight forwarder and NVOCC is described by government of various countries differently. The legal obligations to government, clients and public vary from country to country for an NVOCC and a Freight forwarder.
The NVOCC means Non-Vessel Operating Common Carrier.

A Non vessel operating common carrier is a cargo consolidator who does not own any vessel, but acts as a carrier legally by accepting required responsibilities of a carrier who issues his own bill of lading (or airway bill), which is called House bill of lading under sea shipment and House airway bill under air shipment.

Activities between a NVOCC and a freight forwarder are similar to each other except some differences.

An NVOCC need not be an agent or partner of a freight forwarding company, where as a freight forwarding company can act as a partner or agent for an NVOCC.

Basically speaking, NVOCC acts a ‘carrier to shipper’ and ‘shipper to carrier’.

NVOCC can own and operate their own or leased containers. NVOCC acts as a virtual carrier and accepts all liabilities of a carrier legally, in certain areas of operation.

Apart from the above, there are no major differences between a freight forwarder and NVOCC which is similar to each other.

Difference between NVOCC and Freight Forwarder

Is there any difference between a freight forwarder and NVOCC? Who is a freight forwarder? How NVOCC works? How NVOCC differs from a freight forwarder. This is a common question in international trade.

In this article let us discuss about the difference between a freight forwarder and NVOCC.

The definition and act of a freight forwarder and NVOCC is described by government of various countries differently. The legal obligations to government, clients and public vary from country to country for an NVOCC and a Freight forwarder.
The NVOCC means Non-Vessel Operating Common Carrier.

A Non vessel operating common carrier is a cargo consolidator who does not own any vessel, but acts as a carrier legally by accepting required responsibilities of a carrier who issues his own bill of lading (or airway bill), which is called House bill of lading under sea shipment and House airway bill under air shipment.

Activities between a NVOCC and a freight forwarder are similar to each other except some differences.

An NVOCC need not be an agent or partner of a freight forwarding company, where as a freight forwarding company can act as a partner or agent for an NVOCC.

Basically speaking, NVOCC acts a ‘carrier to shipper’ and ‘shipper to carrier’.

NVOCC can own and operate their own or leased containers. NVOCC acts as a virtual carrier and accepts all liabilities of a carrier legally, in certain areas of operation.

Apart from the above, there are no major differences between a freight forwarder and NVOCC which is similar to each other. You can click here to read more about – What is NVOCC? How NVOCC can provide better rate than the main shipping carriers

Top 5 Ways An NVOCC Can Help Small to Midsized Shippers with International Transportation

If you are a small to midsized shipper, a full service Non-Vessel Operating Common Carrier (NVOCC) can be the solution to your unique international transportation challenges.

NVOCCs have contracts with a diverse mix of steamship carriers, allowing them to offer benefits of particular value to the small and midsized business market.

Challenges for small and midsized businesses:

A logistics department of just a few people—or only one personUnable to obtain competitive, consistent rates or capacity due to lower shipping volumesTreated as a small fish in a big sea when contacting carriers directlyLacking technology or manpower (or both) to properly track cargo through transit.

Successful NVOCCs are experts at managing the entire process from origin to final delivery. They are empowered to act on your behalf, negotiate directly with steamship lines for competitive pricing, and use a global resource network to facilitate a smooth transition through customs, to ground transportation, and into the warehouse.

Here are the top 5 reasons you should use an NVOCC:

1. Price Stability
International shipping rates increased six times in 2013, either by a general rate increase (GRI) or peak season surcharge (PSS). Rate volatility has continued in 2014:

January 6th PSS — rate increase of $100–150 per 40’ containerJanuary 15th GRI — rate increase of $300 per 40’ containerMarch 15th GRI – rate increase estimated at $200-$250 per 40’ containerApril 15th GRI — rate increase of $300 per 40’ container
Pricing becomes even more of a question mark when shipping LCL (Less than Container Load). NVOCCs specialize in brokering LCL shipments, ensuring a competitive price.

2. Capacity
Many carriers have contracts with large companies reserving space far in advance, so when you need space, it may be difficult to come by.

NVOCCs are experts at finding capacity for shipments of all sizes.

3. Flexibility
Depending on your business, your international transportation needs may vary from month to month. NVOCCs have the flexibility of a diverse carrier base, and can leverage it to find capacity or more favorable pricing.

4. Service
Service and communication are paramount in supply chain transportation. A trusted NVOCC partner using Tier 1 technology can provide tailored workflows and reporting, based on individual shipper needs, and will maintain communication to ensure smooth delivery.

5. Visibility
Global transportation technology means a comprehensive view on the up-to-the-minute status of all products, at all times. Consistent, proactive shipment communication from hands-on customer service representatives is crucial to ensure shippers can get their products to market and meet client demand.

7 Types of Transport Documents Used in Global Supply Chain Management

There are numerous documents involved in International Trade: commercial documents, financial documents, insurance documents, and more. Here let’s look at some of the common documents used for transport in global supply chain management.

Delivery Order
A Delivery Order (D/O) is a document from a consignee, an owner or an agent of a freight carrier that orders the release of the transportation of cargo to another party. This written order allows for the direct delivery of goods to a warehouseman, carrier or another person who issues warehouse receipts or Bills of Lading. This document should not be confused with delivery instructions. Delivery Instructions provide specific details to carriers regarding the arrangement made by the forwarder to deliver the merchandise to a particular destination.

Dock Receipt
A Doc Receipt confirms that cargo has been received for shipment. This document is issued by a shipping company and transfers the accountability for the safe transport of the cargo from the shipper to the carrier. It is the basis for preparing the bill of lading.

Bill of Lading (B/L)
A Bill of Lading is evidence that there is a contract between a shipper of goods and a carrier. The customer typically needs this original copy as proof and in order to take ownership of the goods. This document includes the conditions under which the transportation was conducted and acts as a receipt. This dcument may be endorsed or transferred to a third party even while goods are in transit.

Sea Waybill
A Sea Waybill is a contract that is not needed for cargo delivery and is only issued as a cargo receipt. This document of title is used on a trust basis between the shipper and importer, which means that no Bill of Lading is necessary and goods are automoatically authorized to be released once they arrive at the destination.

Air Waybill
An Air Waybill (AWB) is used when carrying goods via air transport. This document acts as a receipt of goods and reports the condition of the goods.

This is a non-negotiable document that must name a recipient (may be the buyer). The AWB indicates acceptance of goods for carriage. It is prepared by IATA agents or arlines.

Shipping Guarantee
A Shipping Guarantee is a written document issued by the bank which will take on joint liability. It is handed from the importer to the carrier or its agent for picking up the goods. This document is used in case of arrival before shipping documents.

Packing Note or List
A Packing List provides the information needed for transportation purposes. It includes the details of the invoice, the buyer, the consginee, country of origin, transport date, delivery destination, shipping and container marks, weight and volume. It is a more detailed version of a commercial invoice and excludes pricing information. It is typically attached to the shipment and a copy is sent t the consignee so that he or she can check the shipment once received. It is not required by all countries, but by some.