Welcome to Daily Logistics. in this video we are going to talk about NVOCC.
Without Further Due Let's get started.
NVOCC is the short form for Non-Vessel Operating Common Carrier sometimes also called as co-loader.
Or Non-Vessel Own Common Carrier. Let's see who is NVOCC.
Non-Vessel Operating Common Carrier or Co Loader is the party who does not have
vessels on their own but does handle the shipments of other parties/ Cargo owners.
Normally what they do is reserve a slot from a vessel under an agreed rate from a shipping line.
Then collect cargo from different shippers to fill the space.
Since Non-Vessel Operating Common Carrier fills a large space of the vessel,
the shipping line offers low freight rates to the NVOCC where NVOCC is able to provide a low
rate to the freight forwarders/ customers. They will also identify as consolidators
as they console the small shipments from various customers.
These small shipments are named LCL cargo. LCL stands for the Less than container load.
This means shipment size is small and only fills a small part of a container from the shipment.
By collecting LCLs NVOCC can fill a container. This calls an FCL or Full container load.
In return NVOCC issue a Bill of Lading or BL to the shipper.
Normally this BL is a House Bill of lading. Normally NVOCC has a network of offices
around the world to facilitate the logistics requirements of the customers.
Shipping lines find it easy to have NVOCC between the shipping line and cargo owner.
The reason is, NVOCC does the cargo consolidation work.
So the shipping lines do not have to worry about consoling LCL shipments.
How Does NVOCC gain profit?
As we talked before Non-Vessel Operating Common Carriers reserve
a larger space from a vessel when compared to individual shippers.
The reason is NVOCC has a larger shipment than an individual as
NVOCC has shipments of several cargo owners.
NVOCC pays the line for the whole slot they have reserved.
Hence, shipping lines offer them low rates than what they offer to individuals.
This happens as NVOCC has bigger shipments.
Since NVOCC gets lower rates they can still offer low rates to freight forwarders than the rate,
small freight forwarders directly get from shipping lines.
Though Non Vessel own Common Carrier is unable to fill the reserved space,
they are still bound to pay the shipping line for the reserved space.
So, NVOCC is not a shipping line.
It does not own vessels. But take the responsibility as a carrier before the law.
What is the role of NVOCC in Shipping?
In the shipping industry, NVOCC plays the intermediary
role between the shipping lines and the shippers.
So we can say Co Loader is the party that connects the shipping line and the shipper
Is NVOCC a carrier? Yes, it is…
NVOCC act as the carrier to the shippers. We can explain this below.
For a shipper, NVOCC issue a Bill of Lading and take the responsibility
to ship the cargo of the shipper. At the moment NVOCC becomes the carrier
to a shipper. During a dispute, the shipper can seek protection before the law for the issues BL.
Is NVOCC a Shipper? Yes, it is…
Don’t worry, if you feel confused. I am here to explain…
NVOCC became the carrier to its shippers. Meanwhile, NVOCC is the customer of the
shipping line. Because NVOCC provides the cargo to shipping lines to ship.
Because of that, NVOCC becomes the shipper to the shipping line.
Do you think NVOCC and Freight Forwarder are the same?
I know… This is a bit confusing. At a glance, it looks like NVOCC
and freight forwarders are the same. But it’s not. Even they are two different parties,
they have a lot of similarities too. Those include caring for your cargo,
issuing Bills of Loading, intermediate parties in between the shipping line and cargo owner, etc.
For easy understanding, we can say, the main difference is
the responsibilities each party carries. NVOCC is more responsible for the cargo as
they act as the carrier to the cargo owner. The freight forwarder is mainly the agent
of the cargo owner who provides the ground logistics support to ship cargo.
During a dispute, it is easier to sue an NVOCC than a freight forwarder on their
fault as NVOCC carries more responsibilities than the freight forwarder before the law.
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