What is a Non-Vessel Operating Common Carrier (NVOCC)?

An ocean carrier who performs all the services of a carrier, but who does not own their own vessel(s). They
operate by leasing or buying available space in containers and using their own House Bill of Lading to
contract with customers.

WHAT ARE THE DIFFERENCES BETWEEN A NON-VESSEL OPERATING COMMON

CARRIER AND A FREIGHT FORWARDER?

An NVOCC is a transportation intermediary, like a Freight Forwarder, except that an NVOCC contracts
directly with the shipper to transport containers but does not usually own warehouse space.

NVOCCs are not controlled or regulated, but they usually must register for a license in the country where
they operate.

NVOCC ON CMTA DEFINITION OF TERMS

Non-Vessel Operating Common Carrier (NVOCC) — shall refer to an entity, which does not own or
operate a vessel, that provides a point-to-point service which may include several modes of transport of full
container load and less container load (LCL) shipments and issues corresponding transport document.

What is a full container load?

FCL refers to a full container load, where the shipment or cargo requires the full space of the container. In
this case, the complete cargo of the container is owned by the shipper, and the container space is not
shared by any other cargo.

LCL (Less than Container Load) or grouped shipment : the client' goods are not numerous enough to fill a
container, the goods of several clients are put into one container.

CONSOLIDATED VS. DECONSOLIDATED GOODS/SHIPMENTS

WHAT IS CONSOLIDATION?

Consolidation is the logistics technique in which shipments from various manufacturers are combined onto
one truck.

Consolidating shipments is ideal for those that have smaller shipments and would like to benefit from
reduced costs and greater efficiency in the shipping process.

WHAT IS DECONSOLIDATION?

Deconsolidation is essentially the opposite of consolidation. It is the logistics technique of breaking down
an inbound shipment into multiple shipments so that they can be distributed to a retailer through the
outbound vehicle.

Deconsolidating shipments are perfect for manufacturers that require quicker speed to market.
 An Introduction to NVOCCs and Their Main Functions

 Often the terms NVOCC and Freight Forwarder are used to mean the same entity though there are
certain differences between the two.

Non-Vessel Operating Common Carriers (NVOCC) does not own or operate ocean transport vessels.
Instead, they make arrangements with ship owners, charterers, or shipping lines for transportation of
cargo under their own Bill of Lading known as the House Bill of Lading (HBL).

DIFFERENCES BETWEEN MBL AND HBL:

MASTER BILL OF LADING HOUSE BILL OF LADING

- Issued by Shipping lines - Issued by freight forwarders as carrier

- Issued by shipping line upon - Shipper/consignee are the actual
receipt of goods from freight exporter/importer
forwarders. - Issued by the freight forwarder upon receipt of
goods from actual shipper/exporter.

In most cases, they arrange loading of cargo from the customer facility and the transfer of such loaded
cargo to the gateway ports. They also undertake the delivery of goods to the consignee at the destination.

NVOCCs sell cargo or container space onboard mainline transport vessels, to their customers. They
lease or rent this space onboard ships and sell it to their clients.

WHAT IS A VOCC?

 This is the main feature that differentiates it from the VOCCs or the Vessel Operating Common
Carriers.

EXAMPLE OF VOCC’s

 MAERSK
 APL
 CMA CGM
 WAN HAI LINES
 EVERGREEN

NVOCCs deal mostly with Freight Forwarders directly to maintain unbiased rates.

NVOCCs do not generally own warehouses but some of them may have their own container fleet.
Depending on the size of their operations, some of them may even own warehouses or other storage
sites. They may also offer services such as cargo consolidation, deconsolidation, and using out-sourced
services such as container cleaning, and repair.

How a Non-Vessel Operating Common Carrier (NVOCC) differs from a Freight Forwarder?

An NVOCC is an intermediary between the shipper and the vessel operator and issues their own bills of
lading.
A FREIGHT FORWARDER is an authorized agent acting on behalf of the shipper.

NVOCC

 NVOCC (Non-vessel Operating Common Carrier) is a common carrier that holds itself out to the
public to provide ocean transportation issues its bills of lading or equivalent documents but does not
operate the vessels that transport cargo.
 An NVOCC can act as a carrier.
 It enters a contract of carriage with the cargo shipper.
 It undertakes responsibility for the carriage like a shipowner that owns a vessel.
 NVOCC is a carrier that does not own or operate the vessel used to perform the carriage.

FREIGHT FORWARDER

 A freight forwarder is a person or a company that arranges carriage of goods and associated
formalities on behalf of a shipper.
 A forwarding agent's duties include booking space on a ship, providing all the necessary
documentation, and arranging Export Customs clearance.

EXAMPLE OF FREIGHT FORWARDERS

 DHL Supply Chain & Global Forwarding

 UPS Supply Chain Solutions

A Freight Forwarder is a firm specializing in the arrangement of cargo on behalf of shippers. In most
cases, freight forwarders provide a variety of supply chain services, including:

DUTIES OF FREIGHT FORWARDERS

 Freight forwarders are third party logistics providers who act in place of the service providers
themselves

 Their primary responsibilities include conducting research on freight rates and organizing
shipments between locations through asset-based transport companies
FREIGHT RATE

 A freight rate is a price at which a certain cargo is delivered from one point to another.

DUTIES OF FREIGHT FORWARDERS

 They keep a track of all shipments from the point they were picked up to the point that they are
delivered to the right location

 Some freight forwarders provide their personal services while shipping freight using multiple
transport modes. They must look after each parcel that falls under their purview and see to it that it
reaches the destination on time.
OTHER RESPONSIBILITIES OF FREIGHT FORWARDERS

 Some other duties of freight forwarders include contacting and connecting transportation services to
different shippers.

 During transit, they come in contact with the shipments and see to it that they are handled properly.

 Freight forwarders are well versed with all the paperwork required to move shipments to different
countries.

 They are aware of all rules and regulations.

RISK AND LIABILITIES OF A FREIGHT FORWARDER

1. Total loss of cargo – may happen either due to physical cargo damage or theft while in the
custody of the freight forwarder.

2. Loss of monies – may happen if the customer does not pay them after the performance of part
or all the activities.

3. Damage of cargo – may happen either due to incorrect or improper packaging of the cargo,
incorrect or improper handling of the cargo while in the custody of the freight forwarder.

4. Rerouting of cargo – may happen if the documentation submitted to the carrier by the freight
forwarder was incorrect and cargo ended up in another continent.

5. Abandonment of cargo – may happen if the consignee who was supposed to receive the cargo
suddenly surrenders it due to lack of funds, cancellation of the order etc.

6. Non-collection of documents – may happen when there is HBL involved, and the freight
forwarder releases cargo to the consignee while the shipper is still holding the original HBL because
he has not yet been paid by the consignee.

7. Incorrect release of cargo – may happen if the cargo was released by the freight forwarder to
the incorrect party based on the type of bill of lading issued.. For example, if the cargo was released
to the consignee on a negotiable bill without proper endorsements on the bill of lading.

8. Delays due to improper documentation – receipt of cargo at the destination was delayed due
to incorrect documentation submitted by the freight forwarder to the carrier or incorrect cargo
declarations were filed with customs or any other types of cargo documentation done by the freight
forwarder which caused this delay.

Depending on the jurisdiction, it may be possible that the freight forwarder shall be exempted from all
liability if it could be proved that the freight forwarder took all possible steps and exercised due
diligence/care in respect of:

 receiving and storing the goods

 selecting the most suitable carrier for the carriage
 delivering the goods to the receiver
 and all other matters en-route

The Secrets too Successful Freight Forwarding

1. Knowledgeable staff
2. Flexible operations
3. Competitive pricing
4. Global connections
5. Truth in service offering
 CATEGORIES OF FREIGHT FORWARDERS

INTERNATIONAL FREIGHT FORWARDERS

An international freight forwarder is like a travel agent for cargo. Forwarders coordinate transportation
details between international sellers and buyers so that goods get to where they need to go.

DOMESTIC FREIGHT FORWARDERS

A domestic freight forwarder is a logistics provider that moves goods and cargo to different areas within
the country.

EXAMPLE OF INTERNATIONAL FREIGHT FORWARDERS

DHL Supply Chain & Global Forwarding

DHL is a world-leading freight forwarding company founded in 1969. The San Francisco company employs
over 400,000 people across 220 countries and territories. DHL helps companies expand their operations
and deliver freight across borders.

Expeditors International

Expeditors International is a Seattle-based freight forwarding company. The global logistics company has
delivered freight to customers for over 40 years. They help shippers keep up with the fast-paced nature of
the supply chain.

UPS Supply Chain Solutions

UPS is one of the most recognizable American brands with over 100 years of experience. The UPS is one
of the world’s largest shipping carriers. The company was founded in Atlanta in 1907.

Maersk

Maersk is a Danish company with a strong US presence. The integrated container logistics company has
over 80,000 employees spread across 130 countries. They strive to digitize, democratize, and decarbonize
supply chains using new business models and technologies.

EXAMPLE OF DOMESTIC FREIGHT FORWARDERS

Royal Cargo

Royal Cargo provides high quality and cost-efficient specialized logistics in the fields of international and
domestic freight forwarding, warehousing and distribution, projects and heavy lifting, cranes and erection,
business process outsourcing, customs brokerage, liquid transportation, chartering and shipping agency
and trucking services, and logistics solutions for clinical research and development — with its own
equipment and facilities.
Entrego

Ėntrego is a technology driven business solutions provider for the fulfillment and logistics needs of
enterprises.

Entrego's courier and express parcel management is operated by Entrego Express Corporation. Entrego
Express Corporation is an affiliate of Entrego Fulfillment Solutions Inc.

KB1 Logistics

KB-I Logistics is a freight forwarder that gives importance to the satisfaction of its customers. The company
offers air, sea, and land transportation services. It also provides customs brokerage and other value-added
services. KB-I has been in the business for more than 20 years now.

Freight Forwarder

 Freight Forwarder is a party engaged in all modes of the domestic or international transportation
process by means of arranging to ship, preparing documentation, customs clearance, warehousing,
and delivery.
 A freight forwarder is a specialist who follows up for the benefit of importers, exporters, or different
organizations to ensure the safe and secure transportation of products.
 Freight forwarders are defined as the experts in the field of logistics and who manage the physical
movement of the goods and products for exporters and importers.

Expertise

Freight Forwarders provide third-party logistics and supply chain services on behalf of a client.

They have expertise in:

o Managing freight costs

o Port charges
o Costs of a special document
o Insurance costs
o Terminal fees handling

What Does a Freight Forwarder do?

Freight forwarders decrease the pressure of worldwide shipping. The entire job of a freight forwarder is
basically office-based and most of the time the offices are in the industrial areas for convenience. The job
of a freight forwarder can get stressful as a great part of the work is based on planning and coordination.

Prepare and Organize Means of Transportation:

The freight forwarder arranges the best means of transportation for their customers in accordance with the
customers’ requirements and the types of goods they want to transport. For that he/she can choose:

o Shipping lines
o Airlines
o Road transportation
o Rail transportation
 Responsibilities of Freight Forwarder

The freight forwarders are also responsible for the arrangement and compilation of the various
documentation related to the freight forwarding and logistics. These experts manage various tasks of

 Managing transportation by air or sea despite the number of countries and manage multimodal
transportation too

 Stand for customer’s interest while negotiating logistics agreement rates with carriers that can be
NVOCC or and Ocean carrier

 Billing

 Offer distribution facilities

 Arrange inland transportation of the goods

 Completion and processing of the documentation required for the movement of goods such as Bill
of Lading, custom related documents, port documents, etc.

 Booking or the confirmation the space on the ocean vessel

 Issuing approved HBL