The main difference between NVOCC and Freight Forwarder is that the NVOCC works as an OTI providing the carrier service under its bill of lading, whereas Freight Forwarder is also an OTI that provides expert advice and consultancy services.
NVOCC vs. Freight Forwarder
NVOCC is an abbreviation for “Non-Vessel Operating Common Carrier.” It works as an OTI (Ocean Transportation Intermediaries), providing the carrier service under its bill of lading. A freight forwarder is also an OTI that provides expert advice and consultancy services. NVOCC does not take an international or worldwide association; on the contrary, a freight forwarder is taking the International or worldwide Federation of FIATA (Freight Forwarders Association). NVOCC comes under the category of carriers to shippers. Freight forwarders are known to be the agents for the shippers.
NVOCC does not go for a format of standard documentation. Freight forwarders work according to the standards of FIATA. NVOCC holds the cargo containers or manages them, but it does not hold and operate warehouses. A freight forwarder does not hold or operate the containers while it owns and operates the warehouses which it uses for its cargo. NVOCC prefers to work independently under their responsibility with the support of agents or third-party companies. Freight forwarder cooperates to reduce costs and improve time deliveries worldwide. It also sometimes acts as an agent of NVOCC.
Some NVOCCs (especially those which own containers) appoint the agents at different ports to handle their commercial and operational tasks. Most of the freight forwarders cooperate worldwide as network partners on an exclusive or non-exclusive basis in import and export. It is occasional for NVOCC to act as a partner/agent for a freight forwarder. But it is common for a freight forwarder to act as an agent/partner for NVOCC.
What is NVOCC?
NVOCC (non-vessel operating common carrier) is an OTI classified by the Federal Maritime Commission (FMC). It works as the carrier that transports cargo from one point to the other. It is not having vessels. It is termed as ‘carrier to shipper’ and ‘shipper to carrier.’ It means that an NVOCC enters into volume-based ocean freight arrangements along with so many shipping lines that are operating across the trade lanes. An NVOCC provides its agent at the Port of Load and Discharge. This agent handles the requirements for the release of goods and containers to various clients.
NVOCC is a cargo consolidator that acts as a carrier legally. There are so many NVOCCs, but the US has the most significant number of NVOCCs around the world. The clients of NVOCC are BCO (Beneficial Cargo Owner), Freight forwarder, clearing agent, and freight broker. The definition of NVOCC is different from the government of various countries. An NVOCC can occasionally possess and operate their own or tanks and containers. It is having the status of a virtual “carrier” in some contracts.
Activities of NVOCC
- Concludes contracts of international carriage of goods
- Manages the movement of cargo from one point to another
- Receives cargo and deliver it as carriers
- Issues the bills of lading
- Collects freight and other service charges
- Arranges to ship with mainline carriers
- Pays port to transportation charges
- Uses its CFS or 3rd party for consolidation and deconsolidation of containers
What is Freight Forwarder?
A FREIGHT FORWARDER (FF) is an OTI and known to be the agents for the shippers. It is a part of the International Federation of Freight Forwarders Association (FIATA). It handles the goods for an importer or exporter by providing expert advice and consultancy services. The responsibility of a freight forwarder is to move the load or cargo between the seaports, airports, and warehouses. Its duty is to arrange the transfer of cargo to international destinations or from one point to the other.
A right freight forwarder must be experienced in all modes of transportation. These modes of transportation can be road, sea, rail, and naval. It is capable enough to provide reliable and efficient cargo shipping solutions. It must know the ways to arrange and store the cargo. A freight forwarder can arrange the distribution or “forwarding” according to the requirement of their client.
Activities of Freight Forwarder
- Represents the interests of customers n the negotiation of transportation contracts
- Takes responsibility for handling and processing all cargo documents
- Uses one or more transportation modes
- Represents customers’ interests in the negotiation of transportation contracts
- Provides the information regarding Incoterms, letters of credit, and bank clearance
- Tells the importer or exporter about the safest and cheapest way to move cargo from point A to point B
- Uses its warehouses or third party-warehouses to store customer cargo
- NVOCC works as an OTI providing the carrier service under its bill of lading; in contrast, the freight forwarder is also an OTI that provides expert advice and consultancy services.
- NVOCC does not necessarily require an agent or partner from the freight forwarding company. On the other side, a freight forwarding company sometimes acts as an agent or partner of NVOCC.
- Some NVOCCs appoint the agents at different ports to handle their commercial and operational requirements, whereas most of the freight forwarders cooperate round the world as network partners on an exclusive or non-exclusive basis in dealing with the cargo.
- NVOCC does not belong to an international association; on the other hand, a freight forwarder is the part of the International Federation of Freight Forwarders Association (FIATA).
- NVOCC holds the cargo containers or manages them. Still, it does not hold and operate warehouses contrarily freight forwarder does not hold or operate the containers. At the same time, it owns and operates the warehouses which it uses for its cargo.
- It is sporadic for NVOCC to act as a partner or an agent for a freight forwarder; on the other hand, it is typical for a freight forwarder to act as an agent for NVOCC.
- Documentation used by NVOCC does not follow a standard documentation format contrarily freight forwarders work according to the standards of FIATA.
- NVOCC prefers to work independently under their responsibility with the support of agents or third-party companies on the converse; freight forwarder cooperates in their operations to reduce costs and improve time deliveries worldwide.
- NVOCC comes under the category of carriers to shippers and shippers to the carriers; on the contrary, freight forwarders are known to be the agents to/for the shippers.
NVOCC and Freight Forwarders are the Ocean Transportation Intermediaries that are classified by the Federal Maritime Commission (FMC). Both are similar in most of their transportation procedures, yet both are different from one another.