Big companies that move lots of goods often talk directly to shipping companies for their transport needs. These shipping companies have their own big ships and can handle large deliveries easily.
For these big deliveries, the whole container or even multiple containers are usually needed. So, there’s no need to share space with other companies’ stuff.
But not all shipments are that big. Some smaller or medium-sized companies, especially ones that export goods, don’t need as much space. They might not have the power to bargain directly with shipping companies.
That’s where NVOCCs come in. They help smaller companies by organizing shipments and negotiating with shipping companies on their behalf. NVOCCs make it easier for these companies to get their goods where they need to go without having to deal with big shipping companies directly.
What does an NVOCC Mean?
An NVOCC, or Non-Vessel Operating Common Carrier, is a company that helps small businesses ship their goods around the world. They don’t own the actual ships but instead, they buy space in bulk from big shipping companies. Then, they sell this space to smaller shippers at a slightly higher price.
Even though they don’t own ships, NVOCCs do a lot of other things. They issue their own bills of lading, which is like a receipt for shipping goods. They also handle tasks like loading containers onto ships and moving them to different ports.
NVOCCs sign contracts with shipping lines, which lets them offer shipping services to smaller businesses. This arrangement works well for everyone. The shipping lines don’t have to deal with lots of small orders, and the smaller companies get a cost-effective way to ship their goods. It’s a win-win situation!
Role of an NVOCC
The role of an NVOCC, or Non-Vessel Operating Common Carrier, is to make shipping easier for smaller businesses. Here’s how they do it:
Space Procurement: NVOCCs buy space in bulk from big shipping companies, known as VOCCs (Vessel Operating Common Carriers).
Selling Space: They sell this space to smaller businesses, known as shippers, at a slightly higher price. This helps smaller shippers who may not be able to negotiate directly with shipping lines.
Documentation: NVOCCs handle paperwork, like issuing their own bills of lading (shipping receipts), making the shipping process smoother for shippers.
Container Services: They offer services like loading containers onto ships and transporting them to different ports.
Contracts with Shipping Lines: NVOCCs sign contracts with shipping lines, allowing them to provide shipping services to smaller businesses.
Overall, the role of an NVOCC is to simplify shipping for smaller companies by handling logistics, paperwork, and negotiations with shipping lines.
Functions of NVOCC
NVOCCs play a vital role in the logistics chain, offering a range of services to facilitate smooth cargo transportation. Here’s an overview of their functions:
Issuance of House Bill of Lading: NVOCCs issue a House Bill of Lading (HBL) along with other essential transportation documents for the shipment. The HBL serves as a contract of carriage between the NVOCC and the shipper, detailing the terms and conditions of transportation.
Also Read: House Bill Of Lading vs. Master Bill Of Lading
Space Allocation and Booking: NVOCCs secure space for shipments within containers and make bookings with shipping lines based on agreements and contracts in place. This ensures that cargo is allocated space efficiently and in line with the agreed-upon terms.
Container Consolidation and Deconsolidation: NVOCCs handle the consolidation and deconsolidation of containers at ports or dry ports. This involves combining multiple smaller shipments into a single container for efficient transportation and then separating them upon arrival at the destination port.
Collection of Charges and Duties: NVOCCs collect service charges and other duties related to the transportation of goods. These charges may include freight charges, terminal handling charges, and customs duties, among others. They provide receipts for these payments, ensuring transparency in financial transactions.
Why Choose an NVOCC?
Here are the reasons to choose an NVOCC:
Affordable Shipping: With an NVOCC, merchants can save big on shipping costs. Instead of paying high rates directly to shipping lines for space they might not need, NVOCCs bundle smaller shipments together, offering more budget-friendly transportation options. Plus, since NVOCCs bring lots of business to shipping companies, they often secure discounted rates.
Variety of Options: NVOCCs offer a wide range of transport choices for cargo. By partnering with multiple shipping lines, they provide flexibility and cater to diverse needs. Whether you want cargo tracking or need to stick to a tight budget, NVOCCs can tailor solutions to fit your requirements. Unlike dealing directly with shipping lines, which have limited services, NVOCCs ensure you get the best options available.
Seamless End-to-End Solutions: While NVOCCs typically handle shipping, they often team up with local transport companies for door-to-door delivery. This means customers enjoy hassle-free transportation from start to finish, without the need for additional agencies.
Simplified Transportation: NVOCCs streamline the shipping process, acting as a one-stop-shop for importers and exporters. From consolidation and packaging to handling paperwork and navigating confusing Incoterms, they provide guidance and support every step of the way. This simplifies logistics for businesses, eliminating the need to juggle multiple providers and ensuring smooth cargo transportation.
Example of an NVOCC
Let’s consider a hypothetical scenario involving an NVOCC named “Global Logistics Solutions” (GLS):
Global Logistics Solutions (GLS) is an NVOCC that specializes in providing comprehensive shipping services to small and medium-sized businesses (SMBs) looking to export goods internationally.
Example Scenario:
Company: XYZ Electronics
XYZ Electronics is a medium-sized electronics manufacturer based in the United States. They have recently secured a contract to supply electronic components to a retailer in Europe. However, XYZ Electronics is unfamiliar with the complexities of international shipping and seeks assistance from Global Logistics Solutions (GLS).
Functions of GLS:
Documentation: GLS assists XYZ Electronics in preparing all necessary shipping documentation, including the House Bill of Lading (HBL) and other transportation documents required for the shipment.
Space Allocation: GLS blocks space for XYZ Electronics’ cargo in shipping containers, ensuring that their goods are allocated sufficient space for transportation.
Consolidation: GLS consolidates XYZ Electronics’ electronic components with shipments from other SMBs to optimize container space and minimize shipping costs.
Deconsolidation: Upon arrival at the destination port in Europe, GLS handles the deconsolidation of XYZ Electronics’ cargo from the shipping container, allowing for efficient retrieval and distribution of the goods.
Customs Clearance: GLS manages customs clearance procedures, ensuring that XYZ Electronics’ shipment complies with all relevant customs regulations and documentation requirements.
Transportation: GLS arranges for the transportation of XYZ Electronics’ cargo from the origin facility in the United States to the destination port in Europe, coordinating trucking services for inland transportation as needed.
Simplified Step-by-Step Guide on How to Apply for an NVOCC License
Here’s a simplified step-by-step guide on how to apply for an NVOCC license within the US:
Step 1: Establish Your Business Identity
First, make sure your business is credible and trustworthy. You’ll need to submit important documents about your business, along with any permits and certifications you’ve received.
Step 2: Appoint a Qualifying Individual (QI)
Next, choose someone from your company to handle all the legal stuff. This person, known as the Qualifying Individual (QI), must be an officer or partner/sole proprietor of your company. They also need at least three years of experience in the industry, along with references who can confirm their experience.
Step 3: Fill Out Form FMC-18
Now, you’ll need to fill out Form FMC-18. You can do this online or by filling out a physical copy. There’s a fee of $250 for the online application and $1962 for the physical one.
Step 4: Provide a Surety Bond
Finally, you’ll need to show that your business is financially stable by providing a surety bond. The amount required will depend on the nature of your business. If you’re applying for an NVOCC license, you’ll also need to pay an additional $10,000 per branch.
Here are the fee details:
- For a non-US based NVOCC without an OTI license: $150,000
- For a US-based NVOCC: $75,000
Once you’ve completed these steps and submitted all the necessary documents, you’ll be eligible to receive your OTI license, allowing you to operate as an NVOCC within the US.
Note: This process is specifically for applying for an NVOCC license in the US. If you’re operating in other countries, make sure to check their specific regulations.
NVOCC Charges
VOCC charges can differ based on the port and the shipping line. These charges cover various services such as terminal handling, seal charges, BL (Bill of Lading) charges, delivery order charges, survey charges, as well as cleaning and washing charges.
What is NVOCC in the Shipping Line?
An NVOCC, or Non-Vessel Operating Common Carrier, is like a middleman between shipping lines and smaller businesses. Shipping lines own big ships that carry cargo containers by sea. They make deals with NVOCCs, who promise to bring them a certain amount of business each year in exchange for lower rates. NVOCCs then pass on these savings to their customers, who are often smaller businesses. So, NVOCCs help smaller companies ship their goods worldwide at more affordable prices by leveraging their agreements with shipping lines.
NVOCC in Bill of Lading
NVOCCs, or Non-Vessel Operating Common Carriers, issue a document called a House Bill of Lading, which is a legal proof of receipt for the goods they transport. Conversely, shipping lines issue a Master Bill of Lading, which covers the entire shipment, including goods from multiple NVOCCs, for transportation purposes.
In conclusion, NVOCCs play a major role in the global logistics chain, offering cost-effective shipping solutions and simplifying the transportation process for businesses of all sizes. By leveraging their agreements with shipping lines, NVOCCs provide a variety of services, including documentation, space allocation, and transportation, ultimately facilitating smoother and more efficient cargo movement worldwide. With their expertise and support, businesses can navigate the complexities of international shipping with ease, ensuring timely delivery of goods to their destinations.
