Internation freight shipping can be a complex process. For small shippers or those businesses new to importing or exporting goods partnering with a service provider to help facilitate the movement of their goods can be a good business decision.
When evaluating international shipping partners, shippers have several routes to consider. In this article we highlight the three most common options: a freight forwarder, non-vessel operating common carrier (NVOCC) or independent carrier.
Freight Forwarder
A freight forwarder is a third-party logistics (3PL) provider that acts as an intermediary between shippers (the businesses shipping goods) and carriers (the service providers transporting the goods) to coordinate movement of freight around the world.
Shippers who seek freight forwarding services grant the forwarder permission to make decisions on their behalf for their shipment. This includes arranging the mode of transportation – such as ocean freight, air freight and over-the-road trucking – as well as services such as Customs clearance, related documentation and more. The freight forwarder provides tracking and tracing ensuring the shipper has visibility into their freight transit for the life of the load.
It is important to note that freight forwarders do not own their own equipment but have the proper licensing to book freight via ship, plane, rail or truck. Ocean freight forwarders must have an Ocean Transportation Intermediary (OTI) license from the Federal Maritime Commission (FMC) and air forwarders must be certified as Indirect Air Carriers (IAC) through the Transportation and Security Administration (TSA).
Learn more about international shipping with a freight forwarder in this guide that outlines all you need to know including tips for finding a reliable international freight forwarder.
NVOCC
An NVOCC (Non-Vessel Operating Common Carrier) is a transportation intermediary with the same capabilities as an ocean carrier but does not own their own ship. Instead, they lease or buy space from ocean carriers and then contract that space with shippers under their own Bill of Lading (BOL).
NVOCCs often ship large amounts of cargo and receive volume discounts from carriers. This results in more favorable rates for shippers than if you had booked directly with the carrier yourself. NVOCCs also work with more than one carrier which gives you a larger selection of trade lanes to choose from.
Since freight forwarders and NVOCCs are both 3PL providers and classified as Ocean Transportation Intermediaries, it is common for the two to be confused or used interchangeably. While NVOCCs and freight forwards often work together, and one company can be both an NVOCC and a freight forwarder, there are some key differences.
- Transport Options: NVOCCs work exclusively with ocean carriers, while freight forwarders can use their network of service providers to transport via ship, plain, rail or truck.
- Documentation: NVOCCs issue their own BOL, while your cargo is shipped under the carrier’s BOL when using a freight forwarder.
- Service Capabilities: NVOCCs are hired as a service provider to transport goods from one point to another via ocean vessel, while freight forwarders act as an agent on behalf of the client to coordinate their entire shipping process from start to finish.
Independent Carriers
Independent carriers own and operate the ship or plane that is transporting your freight internationally. While it is possible for you to book transportation for your freight directly with a carrier, it is usually not beneficial or convenient for smaller shippers to do so.
Carriers prefer working with volume shippers because it makes it easier for them to fill the space on the ship or plane. Because of this, it can be hard for small shippers to get space. And even if you do, you will be charged a higher rate than larger shippers who receive a volume discount.
Finally, carriers usually do not accept less-than container load (LCL) shipments that require consolidation. So, if you are shipping with a carrier, you would need to pay for space for a full container load (FCL) even if it isn’t needed.
