NVOCCs play a very major role in the global logistics sector. Please read on to know more about NVOCCs and why they are important in Global Logistics.

What is an NVOCC?

NVOCC(Non-Vessel Operating Common Carrier) leases volume space across various trade routes with multiple shipping lines i.e. VOCCs (Vessel Operating Common Carrier) for the transportation of goods. They then lease out this space at their own rates to multiple kinds of clients like Exporters, Importers, Freight Forwarders, Customs Clearance Agents, etc.

NVOCC provides transportation of goods under its own House Bill of Lading (HBL) or equivalent documentation but does not own or operate any ocean vessels. The Bill of Lading that the NVOCC gets in turn from the ocean carrier for transportation of goods is known as the Master Bill of Lading. It is often said that an NVOCC is a “shipper to the carrier” and “carrier to the shipper”.

Main Functions of NVOCC

As mentioned above, NVOCCs lease or rent space onboard cargo or ships, and sell it to their clients.

Mostly, the NVOCCs are responsible for loading cargo from the customer facility and then transferring it to to the gateway of ports. In some cases, the NVOCCs also undertake the duty of the delivery of goods to the consignee at the destination. Their first key function, therefore, is to conclude contracts for the carriage of goods with the shippers.

Generally, NVOCCs do not own warehouses but some of them may have their own container fleet. They may also provide services such as cargo consolidation, deconsolidation at the destination, container cleaning, and repair, etc.

Since the maritime industry is vast, it comes with its fair share of challenges. The mechanisms and procedures are complex and can be difficult to understand, especially for newcomers to the shipping business. NVOCCs also help businesses clearing their goods through customs and other checks by guiding them on proper documentation and regulations.

Difference between Freight Forwarder and NVOCC

Often these two terms are used interchangeably within the shipping and freight industry. They are oftentimes interpreted as similar kind of service providers and Federal Maritime Commission(FMC) also recognize both as Ocean Transportation Intermediary(OTI), however, there are important differences between the two.

a) The biggest difference between the two is how they act with regard to the cargo. An NVOCC acts like the carrier to the shippers and shipper to the carriers, whereas the freight forwarder is an agent to the shipper.

b) The NVOCCs sometimes own and operate their own fleet of containers whereas Freight Forwarders use containers of shipping lines or NVOCCs only

c) It’s rare for an NVOCC to act as an agent for a Freight Forwarder but the Freight Forwarders often act as an agent for other NVOCCs

d) The liabilities of NVOCCs are generally similar to that of a Carrier line whereas the liability of a Freight Forwarder is as governed by the International Federation of Freight Forwarders Associations(FIATA)

Benefits of Using an NVOCC

a. Ease of doing business – With the availability of NVOCCs, businesses don’t need to worry about dealing with large shipping lines directly for transportation of their goods. The bargaining power of many businesses is limited and therefore and they may find it difficult to get desired rates from large shipping lines. It is easy to work with NVOCCs with no long-drawn processes or bureaucracy.

b. Lower Rates than Large Shipping Lines – NVOCCs often offer businesses a lower rate than a shipping line. Now, how does this happen? NVOCCs get better rates from shipping lines for booking or taking on lease a good amount of space and providing business to them. NVOCCs, then pass on some of these savings in the form of reduced rates to their clients. Obtaining such reduced rates would not be possible for individual business owners if they contact the shipping line directly.

c. Personalized Service – NVOCCs offer seamless and personalized service to their clients, unlike a large shipping company that usually has a vast customer base. They are able to advise several shipping options since they work with different ocean transport carriers. These days, NVOCCs also provide online tracking facilities that help businesses know where their cargo is during transit.

d. Efficient Network with Local Bodies – NVOCCs usually maintain good contacts with local bodies such as trade unions, the Customs, logistics companies, etc. An NVOCC with such a network can help to get the work done faster and with minimum interruption.

e. Ease of Documentation – NVOCCs issue the Bill of Lading themselves, known as the House Bill of Lading or HBL, as mentioned above. This makes the process of documentation much easier for the shipper/exporter.

Documentation Process while Using NVOCCs

As mentioned in earlier sections, a key feature of an NVOCC is that it issues House Bill of Lading to the shipper directly. On the other hand, a Master Bill of Lading (MBL) is issued by the ocean carrier to the NVOCC.

Now, while an HBL will show the actual importer or buyer as the consignee, the consignee in an MBL will be the destination NVOCC. Similarly, while in HBL the shipper would be the actual shipper or exporter, in MBL it would be the NVOCC. However, all other details regarding the goods remain the same. Therefore, both the documents will therefore be almost similar except the shipper, consignee, and notify party fields. Sometimes there could be multiple HBLs linked with the same MBL.

Conclusion

Transportation of goods from point A to B involves several stakeholders. And an NVOCC is a key stakeholder in this business, acting as a bridge between carriers and shippers.  If you would like to use global trade data intelligence to expand your export or import business,

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