Non-Vessel Operating Common Carriers (NVOCCs) are ocean carriers that ship cargo without owning any sea vessels.
They do this by buying large volumes of space from other lines that operate ships, called Vessel-Operating Common Carriers (VOCCs). They then resell this space to shippers (consignors), adding their own tariffs.
NVOCCs thus act as middlemen for consignors and VOCCs and provide them benefits such as reduced shipping rates for consignors, and consistent business for VOCCs.
Functions of NVOCCs
NVOCCs mainly act as carriers to consignors and shippers to mainline carriers. This means that they work as clients to VOCCs, while ensuring that the transportation of consigned goods is accounted for.
Booking of Freight Space Onboard Mainline Carriers
NVOCCs are in charge of securing space onboard ocean-bound shipping vessels. Their relationships with VOCCs ensure that consignors get:
- Quick confirmation for the shipment of their cargo via sea vessels
- Lowered rates for their movement of freight
Ensuring the Delivery of Goods to Their Destinations
NVOCCs are responsible for ensuring that cargo is shipped from the agreed upon pick up destination to the drop off destination. To fulfill transportation needs, an NVOCC may arrange for:
- The transportation of goods from a consignor’s facility to the respective port
- Freight consolidation and deconsolidation for less-than-container load (LCL) shipments
- Transportation of goods to consignees after customs clearance
Issuing Their Own Bill of Lading
NVOCCs operate under their own Bill of Lading (BoL), also known as a House Bill of Lading (HBL). They issue this necessary shipment document for their clients, for use during customs clearance.
NVOCC vs Freight Forwarder
Freight forwarders are agents who act on behalf of consignors in all the processes involved in shipping goods from one destination to another. They share a number of similarities and differences with NVOCCs.
Similarities Between NVOCCs and Freight Forwarders
Both NVOCCs and freight forwarders:
- Function as 3PLs to transport goods from one place to another
- Operate under their own HBLs
- Have close working relationships with other logistics companies, giving them access to better routes, prices and schedule availabilities
Differences Between NVOCCs and Freight Forwarders
The main difference between both entities is that:
- NVOCCs – Act as carriers for consignors
- Freight forwarders – Act as agents on behalf of consignors
Freight forwarders are in charge of the full freight shipment process, while NVOCCs only ensure the aspect of sea transportation in shipping. This results in the following differences.
- Preparation of documents
NVOCCs only issue BoLs, while freight forwarders ensure all shipping documents are in order like the BoL, Certificate of Origin, commercial invoice and more.
- Modes of transport
NVOCCs largely provide shipping services via sea, though they may sometimes coordinate land shipments to consignees. Freight forwarders arrange for shipments via sea, air, road and rail.
NVOCCs typically do not have their own warehouses to store goods for their clients, while many freight forwarding companies do.
How to Choose Between an NVOCC and a Freight Forwarder
Listed below are some factors to consider when deciding to engage an NVOCC or a freight forwarding company.
NVOCCs typically offer cheaper services than freight forwarders due to their smaller scope of work.
- Need for warehousing
NVOCCs are suited for businesses that ship purchased goods regularly. Freight forwarders are good for manufacturers that produce large volumes of products and need to utilize storage facilities.
- Familiarity with shipping documents
NVOCCs are suitable for businesses that are able to manage shipping documents in-house. Freight forwarders are suitable for companies less familiar with trade paperwork.
Due to the overlapping nature of their work, freight forwarders and NVOCCs can double up, acting as both carriers and agents to clients. They are referred to as NVOCC freight forwarders.