The logistics industry has a language all its own—and keeping your terms straight could help you secure better rates when shipping cargo.
We’ll show you how by breaking down exactly what it means to work with an NVOCC (non-vessel operating common carrier). Although working with an NVOCC might seem similar to working with a freight forwarder, there are a few key differences that can have a big impact on your bottom line.
We’ll also explain why working with an NVOCC can mean better customer service, more options for moving cargo, and more ease in your future freight projects rather than shipping direct with a VOCC.
First, let’s start with a few definitions.
What Is the Role of an NVOCC in Shipping?
In short, an NVOCC works with VOCCs by buying a certain volume of space within certain shipping lanes. Then, the NVOCC sells that space to its customers.
Here’s an example of how that arrangement might work: In the Hawaii lanes in which Approved operates frequently, we, as an NVOCC, might establish a relationship with the steamship line Pasha Hawaii (a VOCC) to ship a certain number of containers each week. We purchase that space directly from Pasha. Then, we turn to our clients who want to ship items to Hawaii, and we sell them some of the space we’ve purchased.
Because NVOCCs essentially guarantee a VOCC a certain volume of cargo, they’re able to negotiate more favorable rates. Based on those rates, they create tariffs that ultimately determine the price a customer will pay to move cargo.
A publication containing the actual rates, charges, classifications, rules, regulations, and practices of a common carrier or a conference of common carriers. (46 CFR § 520.2)
What’s the Difference Between an NVOCC and a Freight Forwarder?
In contrast to NVOCCs, freight forwarders do not buy space on ocean vessels for themselves. Rather, they book the freight on behalf of their customers.
Because of this key difference, the relationships between the different parties are different when shipping with a freight forwarder vs. an NVOCC vs. booking directly with a VOCC:
When Shipping Cargo Using an NVOCC
The NVOCC is acting as the carrier for its customer—the person who needs to move cargo. In this arrangement, the NVOCC is considered the shipper
When Shipping Cargo Using a Freight Forwarder
The freight forwarder is acting as an agent on behalf of their customer, the person moving cargo. In this arrangement, the customer working with the freight forwarder is considered the shipper
When Shipping Cargo Directly with a VOCC
There’s no agent, and the VOCC acts as the carrier. The customer booking the cargo is the shipper
Why do these terms matter? Carriers and freight forwarders are subject to different liability. In other words, if something happens to your cargo in transit, these terms will become important when you’re sorting out who’s responsible.
And while we’re on this topic, if you’re not already familiar with marine cargo insurance, it might be time for a brush-up! Check out our article to learn more about protecting your cargo in transit: A Simple Guide to Understanding Marine Cargo Insurance.