Oceangoing Cargo Ships Safety & Operational Matters
containerships operational matters
Oil Tanker Safety Guide
Home || Tanker Safety || Container Ship Handling || Commercial Management || EMS ||

How a Non Vessel Operating Common Carrier ( NVOCC) differs from a freight forwarder?

Advertisement

An NVOCC (Non-vessel Operating Common Carrier) is a common carrier that holds itself out to the public to provide ocean transportation issues its bills of lading or equivalent documents, but does not operate the vessels that transport cargo. An NVOCC can act as a carrier. It enters into a contract of carriage with the cargo shipper. It undertakes responsibility for the carriage like a shipowner that owns a vessel. However, the NVOCC is a carrier that does not own or operate the vessel used to perform the carriage.

On the other hand, a freight forwarder is a person or a company that arranges carriage of goods and associated formalities on behalf of a shipper. A forwarding agent's duties include booking space on a ship, providing all the necessary documentation, and arranging Export Customs clearance. Both a freight forwarder and an NVOCC licensed by the Federal Maritime Commission (F.M.C.) A company may obtain both F.M.C. licenses (for a freight forwarder and an NVOCC). They may act in both capacities. However, there are differences in the services performed when acting as an NVOCC.

Typically, the NVOCC consolidates less-than-container load (L.C. L) shipments into full container loads (F.C.L.), which are then tendered to the ocean carrier. The NVOCC issues bills of lading to its shippers and is liable to the shipper for loss or damage in transit. The NVOCC purchases large blocks of space at a discounted rate from shipping lines and resells them in smaller blocks to other shippers. The NVOCC consolidates and transports shipments under a single bill of lading.

People sometimes describe the NVOCC as buying transport space wholesale and reselling that space on a retail basis. The NVOCC is a shipper in its relationship with the vessel-operating common carrier involved in the carriage of cargo. The NVOCC acts as the carrier in its relationship with its customer.

The NVOCC, not an agent. The NVOCC is a carrier. It is a crucial difference between an NVOCC and a freight forwarder. Companies acting strictly as a freight forwarder typically do not issue their own contract of carriage (bill of lading) and as an agent is generally not liable for physical loss or damage to cargo during transport. However, the NVOCC acts as an ocean carrier issue its contract of carriage and is legally responsible for physical loss or damage following the terms and conditions of their bill of lading and the law.

Second, the NVOCC (unlike a freight forwarder) has no obligation to disclose to its customer the price paid for the transportation. The NVOCC can mark-up the cost of that service when reselling the space to its customers. Third, the NVOCC has no fiduciary responsibility. They are not agents. They are carriers. However, as a carrier, they have more potential liability because they issue contracts of carriage. They must decide that the benefit of marking-up the cost of the transport services is worth the additional risk imposed by the issuance of a bill of lading.

Those who work as an NVOCC provide valuable services to shippers of cargo for small quantities. For example, the NVOCC may offer space onboard a vessel that smaller/ less than container load (L.C. L) shippers would not otherwise have access to. Smaller shippers that cannot get a good rate, from a vessel carrier, consign their loads to the NVOCC. The NVOCC consolidates smaller L.C.L. shipments into one container shipment and presents the full container load(F.C.L.) to the actual ocean carrier.

The web site for the Federal Maritime Commission describes the licensing, bonding, and related information for freight forwarders and NVOCCs. There is also a comprehensive list of licensed freight forwarders and NVOCCs available for reference.





Related articles
  1. General Average & The York Antwerp Rules
    The law of General Average is a principle of maritime law whereby all stakeholders in a sea venture proportionally share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency. It is a unique maritime concept. One of the most ancient aspects of shipping is the general average. When an intentional sacrifice of property is made to avoid a common peril on board a ship, the law of general average requires all of the parties to the maritime adventure that benefited by the intentional sacrifice to contribute money on a pro-rata basis.

  2. P&I Clubs guideline
    The P&I Clubs are correctly called Protection and Indemnity Associations and number around 20 worldwide, with the majority being United Kingdom-based. The shipowner in taking out insurance with a particular association becomes a member of that Club. The Clubs are mutual, which means that all costs involved in providing cover or paying out a claim to any member are shared by all members. It is achieved by setting a rating or premium for the OwnerOwner, known as an "advance call, " based on the Owner'sOwner's history and exposure to risk.

  3. Marine cargo insurance underwriters
    Ships operate in a difficult environment, and cargo may be lost or damaged during domestic and international transit. However, ocean carriers are well protected under the law against responsibility for loss or damage to cargo that might arise during the transportation of goods.

  4. Hull & Machinery underwriters
    A hull and machinery underwriter provides insurance coverage for boats, ships, and other naval assets. It gives protection to shipowners against the hull, machinery, and onboard equipment damages in the event of any perils encountered while on the water, including collision with another vessel, natural obstacles, and other structures, and storms and other natural disasters.

  5. Procedure for insurance claim
    A ship is insured against various risks by the OwnerOwner taking out different insurance policies. However, for many reasons, insurance claims often being denied by marine insurance providers. A shipowner can prosecute a claim accurately and successfully. The Master needs to send full details and documentation relating to any accidents or incidents resulting in damage to the ship, property, cargo, or personal injury. Nautical Institute publication, "The Mariner's Role in Collecting Evidence," is a good source of guidance to shipmasters.

  6. The role of a insurance broker
    Marine insurance brokers play a significant role in helping companies and individuals procure marine cargo insurance, hull and machinery insurance, P and I cover, and other forms of insurance as the case may be. They can canvas the worldwide marine insurance market. The goal is to assist in getting the best terms of insurance cover at the most competitive premium rates.

  7. Marine salvage procedures
    Marine salvage contracts fall into two main categories. First, those which enable salvage services to be rendered on the basis that the compensation to be paid to the salvors will be determined after the completion of the services, either by settlement or if the parties cannot agree, then by a court or by an arbitrator

  8. Role of a freight forwarder
    A freight forwarder, forwarder, or forwarding agent, is a person or a business entity that organizes shipments for individuals or corporations to get the goods from the point of origin to the desired market or from a producer directly to the customer or a distribution center. A freight forwarder dispatches shipments via a common carrier and books or arranges space for those shipments on behalf of shippers.

  9. How a Non-Vessel Operating Common Carrier ( NVOCC) differs from a freight forwarder?
    A NVOCC (Non-vessel Operating Common Carrier) is "a common carrier that holds itself out to the public to provide ocean transportation, issues its bills of lading or equivalent documents, but does not operate the vessels that transport cargo." An NVOCC is a carrier. It enters into a contract of carriage with the cargo shipper. It undertakes responsibility for the carriage like a shipowner that owns a vessel. However, the NVOCC is a carrier that does not own or operate the vessel used to perform the carriage.

  10. P & I Insurance cover and Members of IG club
    At the heart of P and I is the concept of "mutuality." Shipowners form a nonprofit association to protect and indemnify one another against third party liabilities. Unlike commercial insurance, the insured ship owners, meaning the "members" of the Club, are both the insurer and the insured. Each P and I Club is controlled by its members.

  11. Role of shipbrokers
    London and New York have always been viewed as major shipbroking centers. In recent years, many U.S. ship brokerage firms have relocated to offices in Stamford and Greenwich, Connecticut, and nearby communities. Of course, there is a large shipbroking presence in Singapore, Hamburg, and other cities.

  12. Sale & purchase brokers
    Sale and Purchase Brokers (S and P Brokers) are highly specialized shipbrokers. Their clients are typically ship owners. S and P Brokers serve as intermediaries in the business of selling and buying ships. They assist in the sale and purchase of second-hand tonnage and newbuilding. Their compensation is normally in the form of a commission.

  13. Ship agency services
    A ship's agent works on the front lines, and there might involve an unlimited number of issues in port. The agent must work towards solving these problems. An agent needs to learn a lot fast about ships and cargo.

  14. Role of a ship management company
    Ship management companies are located in the world's maritime centers. Many companies manage large fleets on behalf of numerous ship owners. Many of the larger management companies also own vessels. Essentially, the decision to outsource a ship management function is a financially driven one. In most cases, outsourcing of ship management services means that the shipowner can conduct business at a reduced cost, primarily due to reduced in-house staff and resources.

  15. Ship finance considerations
    Ship finance is somewhat different from other asset-based lendings such as real estate finance. After all, shipping business earnings can be quite volatile and, therefore, less predictable. Additionally, the collateralized asset (the ship) is extremely mobile. The traditional method for ship finance was private resources.

  16. Ship recycling industry
    Scrapping ships (also known as ship breaking or ship demolition) is a dangerous and controversial part of the shipping business. Ships have a life span of 20 – 30 years – sometimes a little more -sometimes a little less. Ships wear out and/, or there may be a lack of spare parts. After a while, they no longer make sense economically. The shipowner needs to make a decision – continue to repair or scrap.

  17. Ship registry procedure
    To trade internationally, a ship must have a nationality. Without being registered under certain flag states, a ship cannot enter another state's geographic limit. Once registered, a ship becomes subject to the laws of a registering nation. Registration makes the ship entitled to military protection, and therefore it is an extension of that nation anywhere in the world.

  18. Maritime security concerns
    Maritime security issues affect how ship owners, charterers, cargo interests, ports and terminals, and their insurers do business. There is the added expense to deal with. There has also been an increase in the number of international conventions and domestic legislation geared towards furthering maritime security.

  19. How maritime law works in the United States?
    Maritime law used to apply only to American waters within the ebb and flow of the tide. However, it now covers any waters navigable within the United States for interstate or foreign commerce. Admiralty jurisdiction also includes some maritime matters not involving interstate commerce, for example, recreational boating.

  20. The Master’s Responsibility during Salvage Operation
    Request for Salvage - The Master shall normally request salvage after consultation with the Company. However, he has complete authority to seek salvage assistance without referencing the Company if he considers this necessary.

  21. Requirement of towing arrangement in oil tankers, readyness, & training onboard
    All Oil, Chemical and Gas Tankers above 20000 DWT, constructed on or after 1st July, 2002, are equipped with an “Emergency Towing Arrangement (E.T.A.) both Forward And aft to provide the ship with a rapidly deployed towage capacity in an emergency.




Other info pages !

Ships Charterparties Related terms & guideline
Stevedores injury How to prevent injury onboard
Environmental issues How to prevent marine pollution
Cargo & Ballast Handling Safety Guideline
Reefer cargo handling Troubleshoot and countermeasures
DG cargo handling Procedures & Guidelines
Safety in engine room Standard procedures
Questions from user and feedback Read our knowledgebase
Home page




ShipsBusiness.com is merely an informational site about various aspects of ships operation,maintenance procedure, prevention of pollution and many safety guideline. The procedures explained here are only indicative, not exhaustive in nature and one must always be guided by practices of good seamanship.

User feedback is important to update our database. For any comment or suggestions please Contact us
Site Use and Privacy - Read our privacy policy and site use information.
//Home //Terms and conditions of use

Copyright © www.shipsbusiness.com All rights reserved.