A Non-Vessel Operating Common Carrier (NVOCC) is an individual or company that performs all the functions of an ocean carrier without actually owning the vehicles. While they do not operate any ships, NVOCCs provides provide goods, products or equipment delivery services to customers.
Functions performed by a NVOCC
Essentially, a NVOCC has volume based ocean freight arrangements with shipping companies around the world. These shipping companies own and operate various cargo ships, allowing them to physically transport goods across shipping lines. Since a NVOCC is not involved in the operation of the ships, it instead concerns itself with the following functions:
- Booking cargo
- Organizing cargo activities
- Negotiating freight rates with its partner shipping companies
- Consulting on transport and logistics plans
- Preparing relevant shipping documents
- Organizing shipments, thus ensuring that container shipping quotas are met
- Booking port berths
- Issuing bills of landing
- Paying port to port transportation fees
- Collecting freight and handing services fees
Difference from a freight forwarder
There are 2 important differences that separate a NVOCC from a freight forwarder.
Firstly, a NVOCC is able to issue a House Bill of Landing of its own. On the other hand, a freight forwarder must issue a bill of landing based upon the FIATA document standardization. The House Bill of Landing is a document that acknowledges the receipt of goods. Effectively, it is issued to the supplier of the goods once the goods have reached their final destination.
Secondly, a NVOCC is able to add profit on top of the price of goods shipped in addition to service and handling fees. In contrast, freight forwarders are only able to charge for services rendered and handling functions.