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

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.

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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.

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