Difference between NVOCC and Freight Forwarder

International logistics services have multiple counterparts with two frequently used terms: NVOCC and freight forwarder. While NVOCC keeps its services focused on ocean freight, a freight forwarder keeps its services open for multimodal transportation. While both provide cargo shipment across borders, their key differences lie in modes of transportation, means of business arrangement, contracts, and responsibilities with carriers. Let’s understand the key difference between NVOCC and freight forwarder.

What is an NVOCC?

An NVOCC, or Non-Vessel Operating Common Carrier, is a logistics provider that offers ocean freight services without owning a vessel or a ship. The services of an NVOCC are focused on ocean transportation only. An NVOCC works as a forwarding agent between the shipper and the vessel operating carrier. It bears the shipper’s liabilities, contracts vessel capacity from different ocean freight companies and then resells the contract to the customer or the shipper, issuing its own House Bill of Lading (HBL). NVOCC can consolidate cargo from multiple shipping lines, especially LCL (Less Container Load) shipments, to arrange transportation.

 How Does it Operate?

1. The shipper/ carreir books cargo with NVOCC

2. NVOCC arranges vessels as per required container capacity with an ocean carrier, consolidates shipments, while maintaining essential documents, operating ocean movements to the destination.

What is a Freight Forwarder?

A freight forwarder is a logistics intermediary that offers multimodal transportation on behalf of the shipper. Unlike an NVOCC, a freight forwarder coordinates shipments across road, rail, air, and ocean. It can coordinate with multiple parties involved in cargo shipments in different areas or states. Depending on the service chosen by the shipper, a freight forwarder can also manage additional responsibilities required at different stages of transportation, such as customs clearance, warehousing, cargo collection, shipping insurance, and the final delivery.

How Does it Operate?

1. The shipper provides cargo details, origin and destination, billing papers, and other documents

2. The freight forwarder addresses the suitable transportation modes at the best bargained rates while taking responsibility for additional logistics services till the destination. 

Difference Between NVOCC and Freight Forwarder: A Sneak Peek

With the details above explaining how NVOCC and freight forwarder are distinct, a summary of the Difference between NVOCC and freight forwarder is tabulated below. 

Are there Any Commonalities Between NVOCC and Freight Forwarder?

While the difference between NVOCC and freight forwarder offers much-needed clarity, they do share some common features as well. So, despite the differences in mode of operations, primary functions, and contracts, areas of overlap of these services are as follows

• Both of them arrange international cargo transportation

• Both coordinate with shipping and transportation carriers

• Both manage shipping documentation, while performing other logistics responsibilities

• Both consolidate cargo from different parties at different stages of transportation

• Both maintain 24x7 real-time shipping tracking, while managing customs operations

• Both arrange inland transportation through logistics partners

• Both help in improving overall efficiencies of international cargo movement

What to Choose Between NVOCC and Freight Forwarder and When?

Even after spotting the clear-cut difference between NVOCC and freight forwarder, some shippers get a little confused about which to choose the right one sometimes, especially if the transportation routes cover both land and water. To resolve this confusion, take forward of the following aspects.

Choose an NVOCC when the primary objective is ocean freight, cargo consolidation, and carrier-focused transportation. Check the following factors

• The major part of your shipment is dominated by sea.

• Your business requires FCL or LCL transportation.

• You want the best bargained ocean freight rates.

• You need cargo consolidation for smaller shipments.

• You frequently use established international shipping routes.

• You prefer carrier-like services without directly dealing with the vessel operators.

On the other hand, go for contracting a freight forwarder when the primary objective is to be supported by agile transportation coordination and supply chain management. Consider the following factors

• Your shipment is layered and involves air, sea, road, or rail transportation.

• You require multimodal or door-to-door delivery.

• You need warehousing or inland transportation.

• Your shipments vary across destinations and transportation modes.

• You like to hand over responsibilities to a single provider rather than coordinating with multiple partners at one time.

Can a Company Offer Both NVOCC and Freight Forwarder?

Yes. A logistics company can offer services both for NVOCC and freight forwarding. Take the example of Gulf Agency Services. Choosing between NVOCC and a freight forwarder is a business requirement. Therefore, it does not rely on a company’s title. After all, both are identified as different modes of service.

Choosing between NVOCC and freight forwarding completely depends upon the business requirement, following the areas of the transportation routes. While the key differences between NVOCC and freight forwarder provide much clarity above, choose the one as per the specific business needs.