NVOCC and Freight Forwarder are two of the many terms that are used interchangeably within the shipping and freight industry.. It maybe so because many people don’t understand or acknowledge the difference between these two entities especially when it comes to documentation and liabilities..

So let us look at the difference between a freight forwarder and NVOCC in detail..

FMC defines NVOCC – Non-Vessel-Operating Common Carrier as:

• a common carrier that holds itself out to the public to provide ocean transportation, issues its own house bill of lading or equivalent document, and does not operate the vessels by which ocean transportation is provided
• a shipper in its relationship with the vessel-operating common carrier involved in the movement of cargo

As there is no global regulatory body to register, control or regulate NVOCCs around the world, it is difficult to see how many NVOCCs are currently in operation around the world or where they are based..

It is widely believed that the US market has the largest number of NVOCC operators in the world.. USA may also be the one of the few countries where an NVOCC needs to be registered prior to offering services..

Before offering services in the US Trades, NVOCCs are required to follow certain protocols including

• securing a licence from the FMC ;
• submit proof of financial responsibility for the payment of any claims that may occur and ;
• publish a tariff of charges that will be applied to their clients

NVOCC registration is also required in China as per certain publications which says that the operator must be registered with Ministry of Transportation.. But there doesn’t seem to be quite clear a definition on whether the NVOCC operator needs to register their bill of lading or not..

Similarly the requirement or need for registration of an NVOCC in other major jurisdictions is clear as mud.. If any of you know of any jurisdiction where the registration of a NVOCC is strictly followed, please comment..

What is the function of a NVOCC..??

A NVOCC is often termed as a “carrier to shippers” and “shipper to carriers”.. What does this mean..??

At the most basic level, a NVOCC enters into volume based ocean freight arrangements with the various shipping lines operating across the various trade lanes.. A NVOCC then creates their own tariff based on which they sell space on these liner services to their various clients..

A NVOCC’s client list may include

• BCO – Beneficial Cargo Owner which is another term for Exporter or Importer
• Freight Forwarder
• Clearing Agent
• Freight Broker