What's an NVOCC, and what is its value in maritime shipping?

An ocean carrier who performs all of a carrier's services but does not own their vessel(s). NVOCC companies play a crucial role in the shipping industry with their expertise in arranging containerized ocean freight. While they do not own or operate vessels like shipping lines, they lease shipping space on vessels from shipping lines on behalf of the shipper and consignee. This unique role has earned them the title of 'virtual shipowners.' They negotiate with shipping lines to secure specific spaces on vessels over a certain period, and each NVOCC can set its rates for shippers and consignees for the leased vessel space. An NVOCC is a containerized ocean carrier without the burden of owning or managing the vessels.

When dealing with an NVOCC company, the person responsible for your shipment on behalf of the company is the "NVOCC Agent." The functions of an NVOCC agent include:

• Providing critical information such as freight quotes and required documentation.

• Booking space on the vessel.

An NVOCC agent generally handles all the details related to your shipment, simplifying the transportation process and ensuring that all shipping needs are met.

An NVOCC license is a document that certifies the registration of an NVOCC company as an Ocean Transportation Intermediary (OTI). Any company operating as an NVOCC needs an OTI-NVOCC license from the Federal Maritime Commission (FMC) in the United States. Non-U.S. NVOCC companies do not require a license but must register with the FMC to transport goods across U.S. borders. Licensed NVOCC companies can enter into contracts with shipping lines. If you are dealing with an NVOCC company, ensure it is licensed or registered with the FMC according to U.S. regulations.

After understanding NVOCCs, you should differentiate between an NVOCC and a freight forwarder.

Specialization:

• NVOCCs: Specialize in ocean freight.

• Freight Forwarders: Work with all modes of transportation, including land, sea, and air freight.

Role:

• NVOCCs: Act as carriers to the shippers.

• Freight Forwarders: Act as intermediaries in their relationships with shippers, shipping lines, or NVOCCs.

Documentation:

• NVOCCs: Issue their own Bills of Lading, which serve the same functions as those of shipping lines, such as receipt of goods, proof of a transport contract, and cargo title.

• Freight Forwarders: Issue Bills of Lading, but they are sub-bills.

Responsibilities:

• NVOCCs: Hold legal responsibility for the cargo transported by sea.

• Freight Forwarders: Do not hold legal responsibility for the cargo transported by sea.

NVOCCs often work with freight forwarders rather than dealing directly with shippers and consignees. In other cases, the NVOCC may deal directly with shippers and consignees.

An NVOCC (Non-Vessel Operating Common Carrier) is an ocean freight company that coordinates the transport of shipments but does not own vessels. In contrast, a shipping line (vessel owner or operator) is an ocean freight company that owns and operates vessels transporting containerized goods.

• NVOCC: sells vessel space to shippers or freight forwarders.

• Shipping Line: sells vessel space directly to intermediaries like NVOCCs, freight forwarders, or shippers.

• NVOCC: may offer additional logistical services like customs clearance, inland transport, land transportation, and documentation.

• Shipping Line: can provide additional logistical services alongside ocean freight services.

• NVOCC: is allowed to use a sub-bill of lading (HBL) as the primary shipping document for shippers.

• Shipping Line: issues the main Bill of Lading (MBL) to shippers.

• NVOCC: has less control over vessel capacity.

• Shipping Line: has complete control over vessel space and shipping routes.

• Efficiency and Effectiveness: Although NVOCCs are smaller than shipping lines, they offer greater flexibility by providing containers and access to destinations that shipping lines may not reach. This was particularly evident during the COVID-19 pandemic or the Red Sea crisis.

• Competitive Prices: Since NVOCCs do not bear the capital costs of owning vessels compared to shipping lines, they can offer lower ocean freight rates. However, you should carefully review the overall costs to avoid hidden fees.

Hidden Costs: It is often said in the maritime industry that dealing with NVOCCs is cost-effective and cheaper than dealing with traditional shipping lines, which is one of the main advantages of NVOCCs. However, sometimes, shippers encounter additional costs and fees when dealing with NVOCCs. The additional fees may not be included in the initial freight quote. These fees usually fall under (documentation fees, container handling charges, and fuel surcharges).

Flexibility: You may find an issue when dealing with NVOCCs, which is the inability to track your shipments, unlike shipping lines, which offer direct access and real-time tracking of your shipments during their journey.

Type of cargo: Sometimes, the agreement between NVOCCs and the shipping line may prohibit loading dangerous cargo or IMO goods.

Nowlun is a leading company in the field of shipping, working as a freight forwarder. We have agreements with shipping lines and NVOCC companies, enabling us to provide flexible and comprehensive shipping solutions that cater to the diverse needs of our clients.

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