Over the years, many people have found it difficult to differentiate between a freight forwarder and NVOCC. Even though they are two completely different companies, they have a lot of similarities that confuse many people. NVOCC is sometimes mistaken for freight forwarders and clearers. NVOCC stands for Non-vessel owning common carrier. Procurement and logistics’ rules and regulations are also completely different. The easiest and most direct way to know if you are dealing with one of the two companies is by looking at the bill of landing.
Consequently, the master bill of landing will not be direct with the courier when it comes to the NVOCC. When it comes to freight forwarders, the master bill of landing is directly linked to the respective couriers. Another significant difference is that the non-vessel owning couriers do not have any vessels in the water. They lease proportional amounts of space from vessel owners and couriers and sell the space to their clients. However, freight forwarders have their own different way of conducting their operations that is very unique. The client will receive a house bill of landing from the several forwarders and a master bill of shipping from the courier.
Most importantly, the most important difference between a freight forwarder and an NVOCC is their overall responsibility. The NVOCC is considered to be the best between the two as far as responsibility is concerned. Both companies will effectively track the movement and security of your cargo throughout the supply chain. However, the NVOCC also acts as a courier hence providing more attention and responsibility for your shipment.
NVOCC also deals with sales and stuffing of cargo. They sign contracts with the main shipping lines to procure and transport specific units of cargo for them in a financial year. The NVOCC is reported to be the most significant trade maker for the container shipment business. The NVOCC performs all functions and services of an ocean carrier. However, they don’t operate the physical vessels that transport goods. In short, NVOCC buys services from official ocean couriers.
On the other hand, a freight forwarder is a company that receives and ships goods on behalf of other companies. They carry all the responsibility in the safety and maintenance of the quality of products until they reach their respective clients. A freight forwarder is also known as a forwarding agent. They work with travel agents but with cargo instead of people. The forwarding agents implement their knowledge in global freight rates to evaluate them to come up with a good package deal that benefits both the forwarder and the client respectively. They also handle import and export documentation and clearance activities.
Freight forwarders include insurance and port terminal charges to the overall bill charged to their clients. They may also be good consultants for procurements and logistics firms. They consult the forwarders at current market rates. This is a move that helps the companies bid effectively for international cargo and freight transactions. They also help in identifying the most efficient and cost-effective route for shipment of any type of cargo. They also continue to advise on export costs and any other additional costs that may have come up as the transaction is underway. Another critical task is to contract and reserve cargo spaces for the respective positioning of goods that will be on transit. They make sure that space is available in time, and the place is secure for the cargo.
Consequently, freight forwarders also contract and organize for insurance packages of all types of goods on behalf of the respective clients and the box they have agreed. Products face many risks while in transit, especially through the water. Insurance has significantly been regulated to ensure compensation in case of loss of goods. They also offer the services of loading, stuffing, and correctly packaging the specific products belonging to the clients.
Upon arrival in the destination country, the freight forwarders offer offloading and possible transport services to the clients’ premises. Due to legal constrictions, the freight forwarders prepare, consolidate and present all the required trade comments required for the transaction to be approved. Since clients are not very familiar with the international and global connections, the freight forwarders offer their services as intermediaries in separate custom negotiations to other countries. It ensures that the arrival of goods is punctual, and operations are going on as scheduled. However, both NVOCC and freight forwarders have been seen to apply and implement e-commerce and advanced technology in their activities.
It has helped build confidence in their clients and gradually increased its customer base. The security of goods is usually guaranteed as tracking devices are mounted on the cargo to track their movement until they reach their destination. Automated locks on containers containing cargo have also been a global trend in the transport and logistics sector. This move has beefed up the overall security of cargo hence prevent tampering by external parties.
In conclusion, my take on the two companies will go with the freight forwarders any day. In international transactions, companies should not only focus on the responsibility of the companies to their goods but the ease of the process and the smooth flow of operations. The freight forwarders do everything for their clients. Although sometimes their rates may be a bit high, they are definitely worth the extra cash. Freight forwarders ensure every single detail is in place. Before goods have left for their intended destination, the forwarding agents are already aware.
They have put strategies in place together with other countries that will ensure no delays in delivery of the goods has been reported. They also offer quality advice and consultations, guiding firms and clients on the best, cheapest, and most efficient shipment route for their products to go through. However, this depends on the nature, type, and specifications of different cargo. Clients can also get all the information they need on the best insurance packages to buy and the overall process of documentation. So, for any firms interested in shipping cargo around the world, they should go for the freight forwarding companies for an easy and efficient process.
Matt is a veteran of the moving industry, a recognized moving expert and is the founder of MoverFocus. Matt holds a Bachelor of Commerce (BCom) majoring in Finance and Marketing and Bachelor of Arts (BA) majoring in Economics and History. He also has completed the EiM (Essentials in International Moving) course from the FIDI Academy. His advice has been featured in Reader’s Digest, Yahoo Finance, MSN Money, Business News Daily and The SpareFoot Blog Go. Read more.