What is an NVOCC

What is an NVOCC

Freight 360 By Freight 360

As a new freight broker, it’s important to understand the intricate web of professionals and organizations that make the world of shipping and logistics turn seamlessly. One key player you might come across is the Non-Vessel Operating Common Carrier (NVOCC). Let’s dive deep into understanding what an NVOCC is, what roles it performs, and how it compares and contrasts with a freight broker.

What is an NVOCC?

An NVOCC (Non-Vessel Operating Common Carrier) is a term often heard in shipping and freight forwarding circles. It is an entity that provides ocean freight transportation but does not own or operate the vessels used for shipping. They act as a carrier without owning any ships, essentially ‘carrying’ the responsibility of transportation. They purchase space from actual vessel-owning carriers and sell that space to shippers, often consolidating smaller shipments into full container loads.

What Does an NVOCC Do?

Shipping and Cargo Consolidation:

NVOCCs often deal with less-than-container-load (LCL) shipments, consolidating them into full container loads to optimize space and reduce shipping costs for small shippers.  They can also deal with full container loads, simply purchasing the space to transport then on the ship lines.

Documentation and Legal Compliance:

NVOCCs handle all documentation, ensuring that legal requirements and international shipping standards are met. This includes the Bill of Lading, which serves as a contract between the shipper and the carrier.

Customs Clearance and Navigation:

 NVOCCs are skilled at navigating the complexities of customs clearance and other regulatory hurdles, making international shipping smoother for their customers.

Logistics and Supply Chain Management:

They often offer additional logistics services, helping clients manage their supply chain efficiently from origin to destination.

NVOCC vs. Freight Broker

Ownership and Operation:

NVOCCs act as a carrier without owning vessels. They handle the goods, consolidate shipments, and take responsibility for the transportation.

Freight brokers on the other hand act as an intermediary between shippers and carriers. They don’t handle goods or provide transportation services directly.  They simply “broker” the transaction.

Legal Responsibilities

NVOCCs have significant legal obligations as they are considered carriers. They are responsible for the loss or damage to goods during transport.

Freight brokers have less legal responsibility compared to NVOCCs. They connect shippers with carriers but do not assume liability for goods. For this reason, the insurance requirements are vastly different.

Licensing and Bonding

NVOCCs need to be licensed and bonded, adhering to regulations imposed by maritime authorities.

Freight brokers also require licensing and bonding as well but is regulated by surface transportation authorities, specifically the Federal Motor Carrier Safety Administration (FMCSA) which is part of the Department of Transportation (DOT).

Services Offered

NVOCCs offer a range of services from consolidation, shipping, documentation, and customs clearance.

Freight brokers primarily focus on connecting shippers with carriers, negotiating rates, and ensuring efficient transportation.

Both NVOCCs and freight brokers are vital in the logistics and shipping industry but serve distinct roles. While NVOCCs focus on ocean freight services, taking on the responsibilities similar to carriers, freight brokers are the connecting bridges that bring shippers and carriers together for efficient, cost-effective transportation solutions. Understanding this is important for new freight brokers aiming to navigate and excel in the world of freight and logistics.

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