While most exporters can happily get by without knowing the difference between an NVOCC and a freight forwarder, there are some important distinctions between the two. In this article, I’ll discuss the specific functions of each and how to identify the right partner for your needs.
A Non-Vessel Operating Common Carrier (NVOCC) performs the functions of an ocean carrier but does not operate the ships. Instead, an NVOCC buys space from carriers and sells this space to shippers. The NVOCC takes on some of the responsibilities and liabilities of the carrier, including issuing a house bill of lading.
Freight forwarders are experts within the supply chain who concentrate on the logistics and physical transportation of cargo. They work with any carrier in the international transportation process who handles moving goods via truck, boat, plane or a combination thereof. Think of them as a travel agent for your products who will not only arrange shipping from various points in the journey but will also help facilitate that transport. They are your conduit with domestic and international carriers.
| Feature | Freight Forwarder | NVOCC |
|---|---|---|
| Type of Service | Coordinates cargo movement with carriers | Performs functions of ocean carrier but does not operate vessels |
| Bills of Lading and Other Documents | Will generate export documents for an extra cost | Issues own bills of lading |
| Modes of Transport | Ocean, air and inland transportation | Ocean freight only |
| Profit on Freight Charges | Can only add operational fees | Can mark up freight rates for profit |
| Regulatory Authority | Licensed as Ocean Transportation Intermediary (OTI) by FMC | Also licensed as OTI by FMC, with different requirements |
| Ideal For | Exporters seeking end-to-end logistics support | Experienced shippers booking ocean space |
Before hiring an ocean freight forwarder or NVOCC, exporters should verify the provider’s FMC status. The FMC maintains resources for licensed and bonded OTIs, tariff information, OTI license changes and non-compliant NVOCCs. NVOCCs operating in U.S. trades must also publish tariffs that are open for public inspection and show rates, charges, classifications, rules and practices.
Before you choose a provider, confirm:
FMC license or registration status
Bond/financial responsibility
Whether they are acting as agent or carrier
Who issues the bill of lading
Who files EEI through AES
What documentation/compliance tasks remain your responsibility
The right choice depends on how much support you need and what role you want your logistics partner to play.
You need help planning the shipment, comparing modes, preparing documents, coordinating multiple carriers, handling air/inland/ocean legs, managing routed export complications or filing EEI through AES.
You are primarily booking ocean freight, understand the documentation and compliance requirements, want the NVOCC’s house bill of lading, or are looking for ocean capacity through a provider acting as carrier.
You want broader logistics support but also need the provider to issue its own bill of lading for ocean shipments.
As your export volume grows, it’s worth periodically reviewing the services your logistics partners provide. Ask whether they are acting as your agent, as a carrier, or both; who will issue the bill of lading; who will file through AES; and which compliance responsibilities remain with your company.
No matter which partner you choose, remember that you cannot hand off all responsibility for your export transaction. Your freight forwarder or NVOCC can help, but your company is still responsible for providing accurate shipment information and maintaining proper export compliance procedures.
You can read more about choosing and working with the right logistics partners in these articles:
Whether you’re working with a freight forwarder or an NVOCC that is part of a freight forwarding business, you can’t recuse yourself from your documentation and compliance responsibilities. Remember: You can outsource responsibility, but you can’t outsource liability.
Whether you do your own AES filing or a forwarder files for you, whether you’re doing a standard export or routed export transaction, you're still responsible and ultimately liable for your shipments. Shipping Solutions export documentation software can help you make sure your paperwork is shipshape in every situation. Get a free demo right here!
Like what you read? Subscribe today to the International Trade Blog to get the latest news and tips for exporters and importers delivered to your inbox.
This article was first published in August 2021 and has been updated to include current information, links and formatting.