How to Choose Between NVOCC vs Freight Forwarder : An Overview of the Differences
There are many different types of service providers in logistics. Freight forwarders and NVOCCs are two examples of these groups that are frequently confused for one another. Learn about their distinctions as well as much more by reading this site.
This blog will teach you:
- As an ocean carrier, NVOCC moves cargo without using any boats.
- An operator of the supply chain with many functions is a freight forwarder.
- The roles that freight forwarders play
- Important distinctions between freight forwarders and NVOCC
- NVOCC is less expensive than a freight forwarder.
- SOC containers are used by freight forwarders to circumvent carrier surcharges.
- On xChange, freight forwarders and NVOCC may quickly locate SOC containers.
It is true that freight forwarders and NVOCC assist with the shipping of your goods. It is also true that they are able to issue their own House Bill of Lading (HBL). However, in spite of these obvious parallels, the two players are very different from one another.
Let’s examine one more commonality between the two before talking about their differences. Have you ever wondered where freight forwarders and NVOCC obtain the containers they need to carry your goods as an exporter?
Now, a lot of freight forwarders and NVOCCs are using xChange to locate containers. Like the two players, you may simply buy and rent containers on our internet marketplace. On more than 2500 sites worldwide, Ex Change brings together container suppliers and consumers to conduct hassle-free transactions.
Table of Contents
- What is NVOCC in shipping?
- What is the function of an NVOCC?
- Who is a freight forwarder?
- What is the function of a freight forwarder?
- NVOCC vs. Freight Forwarder: Key Differences
- NVOCC vs. freight forwarder: how to choose NVOCC and a freight forwarder Avoid surcharges with SOC containers.
- Find SOC containers at xChange.
- What distinguishes an NVOCC from a freight forwarder?
- What does NVOCC mean in shipping?
- What is the role of NVOCC?
NVOCC in shipping: what is it?
A non-vessel operating common carrier is referred to as an NVOCC. An NVOCC is an ocean carrier that moves your cargo without using any vessels, as the name implies. Since they don’t possess any ships, how can they accomplish that?
In actuality, NVOCC resells space to shippers after purchasing it from vessel-operating common carriers (VOCC). They get into a contract with ocean ships to supply them with freight. So they create their own tariff and charge you for the space on the shipping lines.
Consequently, whoever purchases the space becomes the shipper, and NVOCC becomes the “carrier.” They obediently take on the obligations and liabilities of carriers, which include issuing HBL.
NVOCC agents: who are they?
A member of an NVOCC, or an agent representing that NVOCC, In most cases, they are your first point of contact when approaching an NVOCC. The NVOCC agent often works as a liaison between shippers and the NVOCC, booking the slots on their behalf.
Simply put, they will answer any questions you may have. You can specify your needs, seek freight estimates, and request a variety of other information, including container capacities, packing dimensions, and much more.
What role does an NVOCC play?
You must be curious as to why people choose NVOCC. Why don’t they speak with the shipping lines directly? The likelihood of hearing back from NVOCC is, in all honesty, far higher than that of a shipping line.
The NVOCC is far more adaptable and mindful of the needs of small enterprises. They may even offer you the most affordable shipment with low freight costs. Nobody wants to give up that advantage, am I right?
But before you choose to look for NVOCC, it’s important to understand the range of activities they engage in. The duties of NVOCC include:
- concluding agreements between shippers and foreign goods transporters.
- Transferring and receiving freight via carriers
- issuing the House Bill of Lading as well as other transport documents.
- managing both space reservations and shipping via mainline carriers.
- arranging payments for port-to-port transit and other necessary expenses
- Container consolidation and deconsolidation via third-party services or the Container Freight Station (CFS)
Who are freight brokers?
A professional in the supply chain who coordinates the smooth transfer of cargo is a freight forwarder. And they accomplish this by planning and enabling the shipment of your goods by various means, including rail, road, air, and ocean. The single unbreakable law regarding freight forwarders is that they do not really move your cargo; rather, they merely make arrangements for it.
Exporting products is difficult because there are a lot of stages, paperwork, and certifications to go through. It’s quite impossible for new exporters to be completely knowledgeable about these. Therefore, when you hire a freight forwarder, you are essentially paying for them to arrange for all of these. As a result, when speaking of maritime carriers, freight forwarders are frequently referred to as shippers.
Freight forwarders can be compared to multi-talented workers who are masters of all trades.
Let’s attempt to comprehend the actual work that freight forwarders do.
What exactly does a freight forwarder do?
One of the most well-liked participants in logistics is the freight forwarder. Simply put, they serve as a travel representative for your goods. Let’s use an example to illustrate this.
For example, you need to transport your shipment of seafood from Shanghai to Hamburg. A freight forwarder will organize the distribution center’s delivery in Germany, as well as the inspection and customs clearance in Hamburg, as well as all the required paperwork, reefer containers, trucking, and scheduling a reefer carrier.
even though it’s not as easy as it seems.
A freight forwarder performs the following services using their existing networks with all the other participants in the supply chain:
- They coordinate the transportation of merchandise to both domestic and foreign locations.
- arranges for the cargo’s storage.
- On behalf of the exporter, haggle about freight prices.
- accept accountability for sending out shipments covered by their own freight contract.
- They prepare and process all shipping-related documentation.
- their own House Bill of Lading on their own.
- They can set up customs clearance.
- Offer other trade-related services, including inventory management, freight insurance, and bank paperwork.
However, there are various methods by which freight forwarders operate. In recent years, the number of digital freight forwarders has increased, revolutionizing the industry.
Key Distinctions Between Freight Forwarders and NVOCCs
You are already familiar with what an NVOCC and a freight forwarder are. Although many of their responsibilities are undoubtedly similar, they are nevertheless two distinct entities. Confused? Let’s examine the fundamental distinctions between freight forwarders and NVOCCs.
Just keep in mind that the way the two interact with shippers and other players is where the differences lie between them. An NVOCC provides its own bills of lading and serves as a go-between for the shipper and the vessel operator. Alternatively, a shipper may give permission to a freight forwarder to act and make choices on their behalf.
The fact that you always appoint the freight forwarder to operate as your agent, as opposed to using NVOCC as a carrier, is another significant distinction between NVOCC and freight forwarders.
For your convenience, we have compiled a table outlining the main distinctions between NVOCC and freight forwarders.
|They are associated with the International Federation of Freight Forwarders Association (FIATA), following procedures according to FIATA standards.||They are not linked with any international associations and, thus, do not follow any standard procedures.|
|Freight forwarders are agents for shippers.||NVOCCs are carriers for shippers.|
|Freight forwarders do not operate or own containers.||NVOCCs manage or hold cargo containers.|
|Freight forwarders typically own and operate the warehouses they use for the cargo they load to and from airports and seaports.||NVOCCs do not own and operate warehouses. Only large NVOCCs that take on nearly all functions of freight forwarders own warehouses.|
|Freight forwarders around the world cooperate in their operations to reduce costs and improve timely deliveries.||NVOCCs work independently, using agents or third-party companies to support them.|
|Freight forwarders may function as agents of NVOCCs.||NVOCCs work independently.|
Both face container woes.
One point of similarity between NVOCC and freight forwarders is that they’re always looking for containers. Both shipping players primarily lease their containers to ensure a constant supply of equipment for their clients. And xChange is emerging as their trusted partner to solve container woes.
Some of the key players are using our online platform to lease or buy SOC containers. By connecting with suppliers on xChange, they are able to timely provide containers to their clients.
Some of the NVOCCs are also using xChange to get their containers repositioned. By making their containers available for one-way leasing, they find users for their desired location. These users then reposition their containers while using them for shipping cargo. Read on to find out how Indus Container Lines saved on repositioning costs using xChange.
Both struggle with containers.
NVOCCs and freight forwarders share the trait of constantly searching for containers. Both shipping companies generally lease their containers in order to offer their customers equipment on a consistent basis. And xChange is becoming their go-to partner for resolving container-related issues.
Our web store is used by some of the major businesses to rent or acquire SOC containers. They can punctually supply containers to their customers thanks to their connections with vendors on xChange.
Some NVOCCs are also employing xChange to relocate their containers. They acquire customers for their intended site by making their containers available for one-way rental. Then, when they are being used to convey cargo, these users move the containers.
Choosing between a freight forwarder and an NVOCC
It’s time to decide which service best suits your needs now that you are aware of the differences between the two players. Basically, there are just three variables that matter:
- Services provided
- Cost and accessibility
- What level of service
Your requirements must be decided upon first. NVOCC will save you a lot of money if you are knowledgeable and only need a ship’s passage.
A freight forwarder, on the other hand, will pay attention to your needs, help you locate the best shipping route for your products, organize the containers and transportation, find the best freight rates, and offer other services at a greater cost. If you know little to nothing about shipping procedures, it will be worthwhile to hire a freight forwarder.
However, if money is a concern, you can be sure that NVOCC will help you save money. You can avoid paying a forwarder’s intermediary fee by dealing directly with NVOCC, but you will forgo additional services in the process.
With SOC containers, NVOCC and freight forwarders can avoid surcharges.
The shipping sector is actually very volatile; that much is true. You’ve probably noticed how the COVID-19 outbreak caused freight costs to soar in practically every region of the world. Additionally, the slowdown in international trade caused depots to overflow with carrier-owned containers (COC). Ocean carriers constantly assess detention and demurrage fees on NVOCC and freight forwarders in an effort to recoup their losses.
Anyone who is familiar with these fees is aware that both NVOCCs and freight forwarders find them to be major pain points. When COCs are not returned within the permitted free days, ocean carriers impose these fees. The demurrage and detention fees add up to significant fines over time when calculated each day.
Fortunately, if NVOCCs and freight forwarders bring shipper-owned containers (SOC), they can avoid these fees. In essence, if they use their own containers, they are no longer required to pay carriers demurrage and detention fees. Read this blog for more thorough information on how SOCs function.
NVOCCs and freight forwarders are currently actively adopting SOC boxes in their services due to this significant advantage. Our most recent SOC Mystery Shopping Survey revealed that since 2019, utilization of SOCs has increased by 18%.