The shipping industry is in the midst of a dramatic transformation. Over the past few years, a new breed of carrier has emerged to challenge the traditional ocean carriers: The Non-Vessel Operating Common Carrier (NVOCC).
NVOCC companies in the USA provide ocean transportation services but do not own vessels. Instead, they contract with vessel-operating common carriers (VOCs) to provide space on their ships.
There are currently 200+ non-vessel operating common carriers (NVOCCs) registered with the Federal Maritime Commission.
NVOCC companies can help you with ocean transportation, documentation, advise which shipping method is best for your needs, and track your shipment from origin to destination.
Working with multiple carriers can offer more flexibility and choice regarding shipping routes and schedules. This can be a significant advantage for clients looking to deliver their products as quickly and efficiently as possible.
This article will explain everything you need to know about NVOCC companies, their role, tips, and benefits of hiring them.
What exactly is an NVOCC Licensed Company?
Container terminal with huge container cargo ship ready for unloading
An NVOCC, or Non-Vessel Operating Common Carrier, is a company that offers ocean shipping services without owning its fleet of vessels.
NVOCC freight forwarder differs from a traditional steamship line or freight forwarder in that they do not physically transport goods. Instead, they act as brokers between shippers and carriers. This allows them to offer competitive rates while still providing full-service door-to-door logistics.
An NVOCC issues its bills of lading and has direct control over the routing and scheduling of the shipments. It is also responsible for arranging for insurance, warehousing, and other services the shipper requires.
Functions of NVOCC
An NVOCC is responsible for issuing its own House Bill of Lading (HBL) or Waybill, a contract between the NVOCC and the shipper. It will indicate the NVOCC as the carrier, even though they will not physically transport the goods.
An NVOCC will also block space with the shipping lines, like making a reservation for transportation. They will then arrange for the shipping of the goods as per their agreements with the shipping lines.
NVOCCs may also offer additional services such as consolidation and deconsolidation of containers at the port or dry ports. This involves combining multiple smaller shipments into one container to save on costs or breaking down a large shipment into smaller ones. The NVOCC will collect the service charge and other duties owed and provide the receipts for the same. Here are some more functions of an NVOCC:
- Negotiating Freight Rates with Carriers: NVOCC companies in the USA will typically have contracts with several carriers. This allows them to negotiate rates on behalf of their clients and get the best possible price for shipping services.
- Providing Documentation and Tracking: NVOCCs provide shipment documentation, including bills of lading and tracking information. This ensures that all shipments are appropriately documented and tracked from start to finish.
- Handling Claims and Disputes: If there are any problems with a shipment, such as damage or delays, an NVOCC freight forwarder can help to resolve the issue by filing claims or disputes on behalf of their clients. They can also guide how to avoid such problems in the future.
- Offering Value-Added Services: In addition to arranging transportation services, many NVOCCs also provide value-added services such as packaging, warehousing, distribution, and cargo insurance.
Benefits of using an NVOCC
There are plenty of good reasons to use an NVOCC (Non-Vessel Operating Common Carrier). Here are just a few of them:
You get more carrier options when you work with a company providing NVOCC services, and you are not limited to the one or two carriers they have contracts with. You have access to the schedules of all the major carriers and smaller regional carriers that might better suit your needs.
- You get more competitive rates.
Since NVOCCs don’t own their vessels, they don’t have the exact high overhead costs as ocean carriers. This allows them to be more competitive on price.
NVOCC companies are typically large enough to have established relationships with multiple carriers, which means they can offer you better service than you could get on your own. In addition, an NVOCC will have a customer service team that can help resolve any issues that may arise with your shipment.
An NVOCC will typically have a sophisticated tracking system allowing you to track your shipment from origin to destination. This is valuable for keeping tabs on your shipments and ensuring timely delivery.
- Experienced Shipping Professionals
An NVOCC licensed shipping company is an expert in international shipping so that they can provide valuable guidance and support throughout the shipping process. For example, NVOCC companies can help you navigate the complexities of customs regulations.
Working with NVOCC companies allows you to receive personalized service and attention, which is not always possible when working with a large carrier. For example, they can provide you with a dedicated account manager who will get to know your shipping needs and preferences.
- One-Stop Shipping Solutions
When you use NVOCC companies, you have a single point of contact for all your shipping needs. This makes the shipping process more streamlined and efficient. They will take care of carrier quotes, schedule shipping dates and times, and manage paperwork and documentation.
What is an NVOCC License?
A business license allows a company to act as an intermediary between shippers and carriers. An NVOCC license is required to offer ocean transportation without owning or operating the vessels that provide that service.
The Food Machinery & Chemical Corporation issues Ocean Transportation Intermediary (OTI) licenses to NVOCCs freight forwarders.
What’s an OTI?
An OTI is a person or company that provides maritime transportation services in interstate or foreign commerce and uses licensed ocean transportation intermediaries to perform those services.
The forwarder portion of an OTI license allows the holder to act as an intermediary between shippers and carriers, arranging for cargo carriage and providing documentation on behalf of the shipper. A forwarder consolidates shipments from multiple shippers into larger units to achieve economies in handling, routing, documentation, weight breakage, volume utilization, and so on.
Forwarders also offer value-added logistics services such as warehousing and distribution, pick-and-pack assembly operations, and container loading/unloading supervision at origin or destination ports.
There are three separate OTI licenses.
The OTI-NVOCC license is a document that authorizes a company to perform certain shipping-related activities. These activities include issuing a bill of lading, setting shipment prices, and signing contracts with ocean carriers. The license is necessary to ensure that these activities are performed legally and regulated.
It allows a company to collect commissions from carriers for documentation and shipments. This type of license does not allow the company to perform the activities listed under the OTI-NVOCC license.
- OTI-NVOCC & Forwarder License
The OTI-NVOCC license allows a company to act as a non-vessel operating common carrier. The company can provide ocean transportation without owning or operating its vessels. On the other hand, the forwarder license allows a company to act as a freight forwarder. This type of company provides shipping services by arranging for the transport of goods on behalf of its clients. A company can’t act as an NVOCC and Forwarder for the same shipment.
Follow these steps before you apply.
Here’s a quick rundown of what you should prepare before applying for an NVOCC license.
- Build a credible business identity
The first step is to establish a credible business identity. You can set up a company website, create social media accounts, and register with business directories.
The next step is registering with the Federal Maritime Commission (FMC). You will need to fill out an application and pay a registration fee. Once you are registered, you will be given an NVOCC number.
After registering with the FMC, you can apply for an OTI license. This license allows you to act as a freight forwarder or non-vessel operating common carrier (NVOCC). To apply for this license, you must submit a completed application form, supporting documentation, and a filing fee.
Some More Steps
- Fill out and submit the FMC-18 form. The application fee is USD 250 ($1962 in case of offline form submissions).
- Submit proof of financial soundness by providing a surety bond. The amount required will depend on the type of business being conducted. For example, if you are applying for an OTI-NVOCC license in the US, you will need to pay a USD 10,000 fee per branch + USD 75-$150k. It may depend on whether your NVOCC is based in or outside the US.
- Lastly, check with other countries’ legislation as their procedures may vary from those in the US.
After completing these steps, your company will be qualified to receive an OTI license and conduct NVOCC operations within that country.
Tips for finding a reputable NVOCC
Engineer man with yellow crash helmet and worker west checking cargo freights in front of colorful cargo container stacks in shipping port
As a shipper, you must find reputable NVOCC companies that provide you with the best shipping experience. There are a few things that you can do to ensure that you find a reputable NVOCC:
1. Research the company: Do they have a website? Are they registered with the Federal Maritime Commission? Have they been in business for a long time? Also, check if they are a member of the International Federation of Freight Forwarders Associations (IFFA). Look for reviews on the better business Bureau’s (BBB) website. The BBB rates businesses on a scale of A+ to based on complaints filed against them; you can also see how long the BBB has accredited the company.
2. Check their references: Ask for a list of references from the company, and then contact those references to get their opinion of the company.
3. Verify their insurance: Verify that they have the proper insurance. This includes both cargo insurance and liability insurance. Make sure to get a copy of the insurance policy and verify that it is current and in force.
4. Ask about their processes: When you are talking to the company, ask about them. Please find out how they handle bookings, shipments, and paperwork. Also, ask about their tracking procedures and their customer service policies.
5. Get everything in writing: Finally, ensure you get everything in writing. This includes the contract, the quote, and insurance coverage, among other things.
Pros and cons of shipping your car with a Licensed NVOCC and Non-Licensed.
There are many reasons to ship your car. You may be moving, going on a long trip, or needing to get your vehicle from one place to another. Whatever the reason, you have two main options for shipping your car: using a Licensed NVOCC shipping company or a Non-Licensed NVOCC. Each option has pros and cons that you should consider before making a decision.
Licensed NVOCC
Pros
- Can offer shippers a one-stop-shop for all their transportation needs
- The company can optimize routes and schedules by consolidating multiple shipments into full container loads (FCLs)
- Many licensed NVOCC companies have tracking systems that can provide real-time updates to shippers on the status of their cargo.
Cons
- Must comply with regulations set by the Federal Maritime Commission (FMC)
- Requires substantial investment to become licensed and bonded
Non-licensed NVOCC
Pros
- More providers to choose from, giving you more options for finding the best price
- Some people feel that non-licensed providers are more flexible and easier to work with
- It May have an advantage over licensed NVOCCs in specific markets
Cons
- Non-licensed NVOCC companies are not regulated by the Federal Maritime Commission (FMC). If something goes wrong with your shipment, you may have no recourse.
- Because they are not regulated, non-licensed NVOCC companies may not have the same insurance coverage as licensed NVOCC companies. This could leave you on the hook financially if something happens to your shipment.
- Non-licensed NVOCC companies may also be less reliable than their licensed counterparts. Without regulation, there is no guarantee that they will follow through on their promises or deliver your goods on time and in good condition.
Ultimately, whether to use a licensed or non-licensed provider comes down to your personal preferences. Consider your needs and budget when making your choice.
Why work with AFL?
No matter where you are in the world, AFL, an NVOCC licensed company, will save you time and money by delivering your shipment to its final destination without delay. Our network of agents and partners means our reach is far greater than any other freight or shipping company. Thanks to our careful handling procedures, your goods will arrive at their destination on schedule and without damage to them or their packaging.
We offer a range of services, including:
- Less Than Container Load (LCL) – This service allows you to send small shipments of less than a container’s worth. The advantage of LCL is that your shipping costs are lower since you only pay for what you ship.
- Full Container Load (FCL) – If you need to send more than a container’s worth of cargo, FCL gives you economies of scale. With this kind of shipping method, we can arrange for all your goods to be shipped together in one large container.
- Consolidation Shipping – Consolidating several smaller shipments into one larger shipment saves you money and reduces transit times. A consolidated shipment may also allow us to find cheaper transport options that would not otherwise be available to you.
Our many years of experience with international shipping mean that we know how to avoid customs delays and duties charges. As well as providing you with a complete packing list, we provide you with a certificate of origin indicating the country of origin of your goods.
Some of our most popular services include:
- International Freight Services – We handle shipments from anywhere in Latin America, West, and South Africa to every major city in America.
- Ocean Freight – We specialize in transporting cargo overseas by sea.
Frequently Asked Questions
How do NVOCCs differ from freight forwarders?
The main difference between NVOCCs and freight forwarders is that NVOCCs don’t own their vessels, while freight forwarders typically do. This means that NVOCCs must partner with other carriers to provide shipping services, while freight forwarders can provide these services independently.
What is the difference between a VOCC and an NVOCC?
A VOCC (Vessel Operating Common Carrier) is an ocean carrier that owns the vessels that they operate. An NVOCC (Non-Vessel Operating Common Carrier) is an ocean carrier that does not hold the ship they operate but contracts with other carriers to provide shipping services.
What is a 3rd Party Shipper?
A third-party shipper is a company that provides shipping and logistics services to businesses on behalf of another company. In other words, the third-party shipper manages the entire shipping process for the company, from pick-up to delivery.
What services do NVOCCs provide?
NVOCCs offer shipping-related services, such as cargo tracking, documentation preparation, and cargo insurance. They also typically provide door-to-door service, which means they will pick up your cargo from your doorstep and deliver it to its destination.
How do I find an NVOCC?
You can ask your local freight forwarder if they have any recommendations, or you can search online. You can also check with the National Customs Brokers and Forwarders Association of America (NCBFAA) or the Federal Maritime Commission (FMC).
How do I choose an NVOCC?
When choosing an NVOCC, you should consider their experience, reputation, and the range of services they offer. It would help if you also got quotes from multiple NVOCCs to compare prices and services.
Conclusion
Choosing a non-licensed shipping company can be a risky business. These companies operate outside the FMC’s regulatory guidelines, which means they may not follow proper safety procedures when handling your cargo. In addition, non-licensed companies often lack transparency regarding their pricing structure – meaning you could end up paying more than you anticipated once all is said and done. So when it comes time to choose a shipping partner, be sure to go with an NVOCC licensed shipping company.