NVOCC vs. Freight Forwarder: Major Differences

If you're in the market for freight services, you may be wondering about the differences between NVOCCs (Non-Vessel Operating Common Carriers) and forwarders. Both types of haulers provide similar services and constitute a significant part of global trade – especially when it comes to moving internationally.

However there are some significant differences between NVOCC and forwarders. In this article, we will discuss the key differences so that you can make an informed decision about which one is right for your needs.

What Are Freight Forwarders?

Forwarders are companies or individuals that specialize in arranging the hauling via air, land, or sea across different countries.

They act as a sort of travel agent for shipping in that they make all the arrangements necessary to move your goods, mediating between the shippers and various international carriers. This includes trucking companies, ocean carriers (an NVOCC or a line), as well as other services.

In most cases, a mover will negotiate with a network of ocean carriers and entities that operate warehouses to find the most efficient and cost-effective moving solution for shippers.

He may also provide other services such as finding warehouses for storage, arranging insurance, customs clearance, and filing other necessary paperwork.

What Is the Role of a Forwarder?

The role is to act as a middleman between the shipper and the ocean carrier.

Their activities may include, but are not limited to:

• Organizing movement from Point A to B using multiple modes, including sea, rail, and road. Points A and B may be inland or coastal locations
• Negotiating rates with carriers on behalf of the customer
• Booking with carriers under their contract
• Assisting in arranging the hauling of the shipment from/to the customers' premises and port
• Receiving in warehouses before onward delivery to customers' premises
• Buying and claiming insurance
• Assisting the (haul owners) with export declaration and import clearance
• Offering consultancy services to movers

Why Use a Forwarder?

Here are some key reasons to use forwarding:

Save time and money

A forwarder can save you time and money by organizing the entire process from start to finish.

This includes booking space, negotiating rates, and filing documentation.

Experience and expertise

They have the experience and expertise to ensure your shipment won't get lost in the shuffle.

He will make sure the carrier prioritizes your shipment and arrives at its destination on time.

What Are NVOCCs?

NVOCC stands for Non-Vessel Operating Common Carrier. These are carrier service providers that provide ocean services without owning their vessels.

Instead, operators usually have a fleet of load containers and contracts with VOCs (vessel operating carriers) or lines, which generally sell spaces on their vessels for shipping.

But even though they lack a vessel, operators are recognized as carriers and issue their own House Bill of Lading.

In doing so, they undertake the responsibilities of a carrier, subject to the terms, conditions, and liabilities of their bill of lading.

It is widely believed that the US market has the largest number of companies globally. The US may also be one of a few countries where it need to be registered before offering services, as they must secure a license from the FMC before they can operate.

Examples include:

• Eagle Ocean
• Interactive Shipping
• Kuehne + Nagel
• Mainfreight
• Nippon Express
• DHL Global Forwarding

What Is the Role?

The role of NVOCCs includes:

• Issuing their bill of lading or waybills to customers
• Holding cargo containers
• Booking cargo space with lines on behalf of their clients
• Tracking and tracing of shipments
• Arranging land hauling from/to the port
• Clearing customs at the destination
• Consolidation and deconsolidation of shipments using their containers

What Are the Differences?

Now that we have looked at the fundamental similarities of these two types of operators, let's turn our attention to the main differences:

Ownership of assets

One of the critical differences is that the former does not own any assets, while the latter does.

It holds load containers and contracts with various lines to haul its clients' loads.

Alternatively, a mover does not hold load containers. Instead, they rely on a network of carriers (VOCs or NVOCCs) to provide shipping solutions for their clients.

Contracts with Connections

Another difference between these two types of operators is the type of contracts they have with shipping lines.

It have a contract with vessel operating carriers (VOCC) to sell spaces on their vessels and haul their clients' shipments, as they handle a considerable amount of orders from clients.

Alternatively, a forwarder does not have any contracts with other lines.

They usually don't need one as they don't own any assets, and they work with a network of carriers.

However, some haulers may have service contracts with their respective lines to provide their clients with preferential treatment or rates.

Pricing

Another difference is how they price their services.

An NVOCC usually prices its services based on a per-container basis.

They will charge a certain amount to use their load containers regardless of the volume of the haul being shipped.

On the contrary, a transporter prices their services based on the volume of load being shipped. They charge extra for value-added services, such as storage, insurance, and customs, making them more expensive than NVOCCs.

Registration and Licensing Requirements

In most countries, NVOCCs must be registered with the relevant maritime authority and obtain a license before they can start operating.

However, this is not the case for forwarders.

In most countries, they are not required to be registered or licensed because they don't own any assets and don't have contracts with various lines.

However, there are some exceptions to this rule.

For example, in the United States, they must be licensed by the Federal Maritime Commission (FMC).

In the European Union, they must be registered with the local Chamber of Commerce.

Services They Offer

They typically offer a wider range of services.

They can offer services such as:

• Customs clearance
• Insurance
• Load tracking and tracing
• Land delivery from/to port
• Storage and warehousing
• Packing and crating

However, not all offer all of these services. It depends on the size and scope of their operation.

On the contrary, it typically only offers maritime services, not other services such as land transport, storage, or clearing customs.

Some companies act as NVOCCs and forwarders to satisfy their customers' needs.

Binding Regulations

Another key difference between them is that the latter is subject to more binding regulations than the former because NVOCCs own their assets and have contracts with lines. Therefore, they are considered to be part of the maritime chain.

Because of this, they are subject to various international conventions and regulations such as the Hague-Visby Rules and the Hamburg Rules.

They are not subject to these conventions and regulations.

However, they are subject to other regulations, such as the license requirements of the country they are operating in.

Major Differences in Roles and Responsibilities

Forwarders usually act as an intermediary between their clients and the various service providers they use. They will coordinate with different service providers to get their clients' shipments from point A to B.

NVOCCs, on the contrary, typically provide door-to-door services.

They take care of the entire process from start to finish -- picking up the shipment, hauling it to the port, loading it onto the ship, and delivering it to its destination.

Global reach

Another key difference is their global reach.

Transporters usually have a global network of agents and partners. This allows them to offer their services in different parts of the world, and monitor the goods of customers adequately.

NVOCCs, on the contrary, typically only operate in specific regions or countries. This is because they only have contracts with shipping operators in those regions or countries.

They only have a comparable reach when they act as both a forwarder and NVOCC.

Handling Documentation

One of the most important responsibilities of a mover is handling documentation. This includes preparing and processing all the documents required for the shipment of cargo.

These documents include commercial invoices, packing lists, bills of lading, and insurance certificates.

Forwarders also track and monitor the status of the shipment and keep their clients updated.

It also has to prepare and process all the necessary documents for the shipment of cargo. But most importantly, they issue their own bill of lading.

The bill of lading is a document that serves as an agreement between the carrier and the mover to haul from point A to Point B safely. This could be between 2 different ports, or from door to door.

Without the bill of lading, the cargo owner can't prove ownership or track and trace their shipment.

Filing Insurance

Another key responsibility is filing insurance on behalf of their clients. This is because they typically don't own the cargo they are shipping.

As such, they have to make sure that their clients' cargo is adequately insured in case of any damage or loss.

NVOCCs also have to file for insurance. But since they own the freight they are shipping, they typically have their own insurance policy which covers the liability in case of any damage or loss to the shipment.

How to Choose?

When it comes to choosing there is no one-size-fits-all answer.

It depends on your specific needs and requirements.

You can use an NVOCC if:

• You need door-to-door services
• You are moving from specific regions of the world where the vessel operator frequents
• You have a large shipment
• Your shipment isn't time-sensitive

You can use forwarders if:

• You need services from different parts of the world
• Your shipment is small and time-sensitive
• You require a wide range of services such as warehousing, assistance in documentation, etc.

What Is the Difference?

An OTI (Ocean Transportation Intermediary) is a company that provides international ocean service.

An OTI must have an active license from the Federal Maritime Commission (FMC) to offer such services.

What Is the Difference between a Forwarder and a Logistics Firm?

Forwarding is simply the coordination and shipment of goods from one place to another using multiple modes.

A logistics company, on the contrary, provides a complete range of supply chain solutions that manage the movement of goods throughout the entire lifecycle.

What Is the Difference between NVOCC and VOCC?

Both of them offer ocean services.

But, just as the name implies, while a VOCC has its ocean vessel, an NVOCC doesn't.

They own containers and are always booking space on VOCCs.

What's Next?

They are both essential players in the international industry. They offer different services and have their advantages and disadvantages.

It's important to choose the one that best suits your needs, is reputable, and can be relied upon.

If you're looking for a trustworthy hauler to move your car, freight, or heavy equipment, A-1 Auto Transport is here to help. Contact us now to learn about our competitive rates and comprehensive services.