The activities of a Non-Vessel Operating Common Carrier (NVOCC) and a Freight Forwarder (FF) are similar to each other except for a few distinct differences; the biggest difference being how they act in relation to cargo. An NVOCC acts as the carrier of the cargo being sent, whilst the FF does not; The FF only acts on behalf of the owner of the cargo, facilitating the passage of the cargo from its point of origin to its final destination.

FFs do not issue a bill of lading whilst NVOCCs do. A bill of lading is also known as a contract of carriage; this is a legal document that binds both parties to the terms of carriage that were originally agreed upon. A bill of lading holds the NVOCC liable should the cargo become lost or damaged whilst in transit, where compensation is necessary.

As the FF doesn’t issue a bill of lading, they aren’t liable to provide compensation for any damage or loss suffered whilst cargo is in transit. However, it is the FF’s job to obtain the bill of lading from the carriers that it contracts. The liabilities of the FF only extend over any possible errors that they may have been made on their part, for example, incorrect or incomplete paperwork.
Many of the larger shipping lines act as both NVOCCs and FFs in full, or at least to some degree. In such cases, these companies take responsibility as a freight forwarder and as the shipping carrier. It is also very common for smaller NVOCCs and FFs to have long-standing contracts or agreements with each other as it is often mutually beneficial for both parties to work together in this way.
It is the duty of an FF to have considerable expertise in Supply Chain Management as they must book large numbers of containers and sell to shippers at competitive rates. When it comes to overseas shipments, FFs usually have overseas partners that can handle international freight transit. This facilitates the shipper and consignee for the end to end handling of their clients consignments compared to the service of an NVOCC or direct shipping carriers. FFs also undertake the inland movements, arrange insurance on behalf of their clients, and deal with the activities of customs clearance etc. The FF is expected to take care of all business activities between a buyer and seller.
Here are some of the main differences in summary:

• The NVOCC acts as the carrier while the FF does not
• The NVOCC issues a bill of lading while the FF does not
• The NVOCC is responsible for loss or damage while the FF isn’t
• The NVOCC can own and operate their own or leased containers
• The NVOCC acts as a virtual carrier and accepts all liabilities of a carrier legally, in certain areas of operation
• The NVOCC need not be an agent or partner of the FF, whereas an FF can act as a partner or agent for an NVOCC.
• The NVOCC is a cargo consolidator who does not own any vessel, but acts as a carrier legally by accepting the required responsibilities of a carrier who issues their own bill of lading (or airway bill), which is called House bill of lading under sea shipment and House airway bill under air shipment.
• The NVOCC books large quantities of space with shipping lines and sells the space to shippers in smaller amounts.
• The NVOCC consolidate small shipments of LCL (less container load) and issues HBL (House Bill of Lading)
• The NVOCC can also undertake the services provided by an FF

At Navigator Solutions we can help YOU decide whether an NVOCC or FF is the best choice for YOUR shipments, once we have an understanding of your supply chain and your customer proposition.

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