In the past, there have been people who confused Freight Forwarder with NVOCC. They might seem similar, but actually there is quite a bit of difference between the two. It can be difficult to see the difference at first. In fact, there are quite a few similarities in the way they both operate. So to better understand them, let’s make sure to define both Freight Forwarder and NVOCC before we dive in. Highlighting their characteristics that make them different is very useful. Especially if you want to know what’s the right way to conduct your business. Here are their quick and easy definitions:
Freight Forwarder Explained
Freight Forwarder is a 3rd party company, representing their client. They provide a service that covers a large area of domestic and / or international transportation processes. This could include for example customs clearance, shipping, documentation, storing and delivery services. They will also be helpful and ready to make you an offer based on your specific and unique needs. This will benefit both them and you in the long-run. Freight Forwarder plays an important part in managing supply chain operations. In addition, they also manage third party logistics that are representing the client.
NVOCC - What is it and How Do They Work?
Non-Vessel Owning Common Couriers or NVOCCs are couriers who have certain kind of freedom. When it comes to operations for instance, they can issue their own house bills of lading. They can also produce tariff rates, or enter into agreements with steamship carriers. This can happen only if the Federal Maritime Commission (FMC) allows it. It is important to mention that you need to be a freight forwarder to also be a NVOCC. This is an important commitment which allows third party logistics providers to include ocean logistics services into their value proposition. The reason is because they make new business deals with their clients.
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What NVOCC Actually do - An Exact Description for Beginners
In a nutshell, Non-Vessel Owning Common Couriers offer storage space or freight aboard their mainline transport vessels to their clients. Most often, they rent these spaces on their ships. Later on, they help arrange and load the goods from the client’s facility onto the vessels. Then they transfer the goods all the way to the ready gateway ports at their final destinations.
What does a Typical NVOCC’s Client List Include?
On average, a typical Non-Vessel Owning Common Courier’s client list consists of the following:
- BCO – Beneficial Cargo Owner (Also known as Exporter or Importer BCO)
- Freight Forwarder
- Clearing Agent
- Freight Broker
NVOCC’s Activities – Things they Actually do
Depending on jurisdictions and markets, NVOCC’s activities may include the following:
- Making contracts of international carriage of goods with the shippers as couriers
- Receiving and distributing cargo as couriers
- Issuing bills of lading
- Collecting freight and other service charges
- Reserving space and arranging shipping with mainline carriers
- Covering transportation charges such as freight
- Using either own CFS (Container Freight Station) or 3rd party’s
The Big Question - Who is a Freight Forwarder Exactly?
A Freight Forwarder can either be a company or an individual. Their service includes the organization of the delivery of goods. They can deliver to people, companies or any sort of final destination as part of their work. It is important to mention that a Freight Forwarder only acts as a representative in the logistics aspect of the operation. The Freight forwarder is not responsible for moving the goods. They take fewer responsibilities in general. This is because they are overseeing fewer aspects of the general business process.
Differences Between Freight Forwarders and NVOCCs - What does a Freight Forwarder Actually do?
This question is worth investigating. As mentioned before, they are very similar, however, they do have some crucial differences. While both can be useful for you, it is very helpful to know more of what each of them does exactly. You need to know what you can expect from them and what they don’t take responsibility for. The explanations below will help understanding where the most important differences lie.
HONOUROCEAN AS NVOCCS
Freight Forwarders VS NVOCCs - Which One is Better?
The easiest difference to see is already stated in the name. Non-Vessel Owning Couriers do not own vessels. They rent them for the period of time necessary to conduct their business operations. They run the process according to the prior agreements they made with their clients.
A Freight Forwarder, on the other hand, works in a different, special way. The client receives a bill of lading from different forwarders. Then a main bill of distribution from the courier.
Another easy way to differentiate is by taking the bill of lading into consideration. It will not be direct with the courier when looking at an NVOCC. Yet, as for Freight Forwarders, the bill of lading directly connects to the couriers. Another aspect we can look at is how much responsibility each of them takes when doing business with you. They are the following:
How NVOCCs Operate – A Beginner’s Guide
An NVOCC usually takes more responsibility. This is because it oversees more aspects of the operations. These include loading the cargo, sales and tailoring to their client’s specific needs. For example, they will make agreements with shipping companies. Then they get transport specific cargo for the coming orders in the financial year. An NVOCC, thereby, does most things that are distribution related. Though It does not operate the vessels transporting goods, but hires ocean couriers. These are only some of the reasons why NVOCC is one of the most significant trade makers in the world.
How Freight Forwarders Operate – This is How They Work
A Freight Forwarder (or Forwarding Agent) represents other companies. It receives and ships products of different sorts on behalf of the client. Besides, it takes responsibility for the safe-handling of the products of its clients.
Also, they work with cargo as opposed to personnel. With doing that come up with an ideal solution for both the forwarder and the client. They make good consultants too. That’s because they help reserve the right space so it is available when needed for the client.
Besides, they make it a priority to find the most ideal route of delivery. That is important because it will make it the most cost and time effective option. Freight Forwarders are in charge of documentation and obtaining necessary permissions too. Freight Forwarders add extra charges regarding insurance and terminal costs as well.
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