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Non-Vessel Operating Common Carrier vs Freight Forwarder: What Are the Differences?

excelsior on August 19, 2024

The global transportation of goods in the business landscape continues to pave the way to the development of the economy. Whilst breakbulk and international shipping do have complex logistics processes, the global logistics market is still forecasted to skyrocket to $18.69 billion in 2026.

Moreover, international shipping involves various services for a single transaction, including the Non-Vessel Operating Common Carrier (NVOCC) and Freight Forwarder, which are commonly mistaken to be similar in functions.

What Are NVOCCs?

NVOCC is an ocean carrier that provides transportation services to shippers without operating ships or its own vessels. Instead, NVOCC purchases space from vessel-operating common carriers and resells it to shippers. Further, NVOCC serves as the middleman in logistic services, particularly in transferring cargo.

Roles of NVOCCs

NVOCCs, though offering cost-effective shipping and low freight rates, offer varying functions in shipping:
 Cargo Consolidation

NVOCC delivers and receives cargo as carriers. They collect shipments from various sources to optimize container space and produce cost-efficient loads and flexible shipping options.

Documents Facilitator

NVOCCs process documents. They prepare the house bill of lading and paperwork concerning booking space for shipping lines and regulations. NVOCCs follow regulatory measures to ensure the legality of goods transportation and streamline the movement of commodities.

Rate Management

NVOCC’s other role is arranging payments for essential charges. Their company has access to international shipping routes in the global market. They set freight rates and shipping costs for shippers.

What is a Freight Forwarder?

Meanwhile, freight forwarders are experts and multi-functional operators. They facilitate the seamless movement of cargo, whether through rail, road, air, or ocean transportation. However, freight forwarders are the agents to shippers, only functions to arrange the transaction, not the ones to move the cargo.

Functions of Freight Forwarder

With the task of arranging and planning the logistics, freight forwarders have their primary roles in transportation services:

Logistics Planning

A freight forwarder plans the most cost-efficient route for shipping goods. They arrange customs clearance and cargo movements for local and international destinations and prepare documents for shipment activities. They also manage cargo consolidation by applying freight forwarding trends.

Customs Processing

Freight forwarders handle the paperwork when dealing with customs. They act as jacks of all trades, ensuring compliance with regulations and seamless shipping of international trade through proper cargo insurance and inventory management.

Handling and Negotiating of Contracts

On behalf of the exporters, they are the ones negotiating contracts with the carriers to ensure cost-efficient shipping deals. Freight forwarders can also issue the house bill of lading and facilitate their freight contract.

Main Differences Between NVOCC and Freight Forwarder

As service providers for shipping logistics, there are differences between NVOCCs and Freight Forwarders:

Relationship With Shippers

NVOCC serves as an intermediary between the shipper and vessel operator to conduct transport services. Meanwhile, freight forwarders collaborate directly with shippers to make decisions and plan the logistics process.

Primary Purpose

The exporters or importers defined NVOCC as a carrier to the shipper that works independently through third-party companies to support them. Besides, freight forwarders act as agents to shippers; they may also function as NVOCC’s agents.

Mode of Transportation

NVOCCs are mainly assigned for ocean transportation, which differs from freight forwarders, as the latter can offer different modes of freight transportation, whether through air, land, or ocean, for the buyers to monitor and control the commodities.

NVOCCs vs. Freight Forwarder: Choosing the Best Service Provider

To select the best service provider for transporting goods, whether it is an NVOCC or international freight forwarding company, it is essential to consider the following:

Level Of Service

Selecting between NVOCC and freight forwarder depends on the shipper’s needed service. For instance, there is only a need to book the transfer of goods in an ocean vessel, so NVOCC is an excellent choice for cost efficiency. Therefore, if a shipper needs guidance to identify the best route and rate for shipment as well, it is better to select a freight forwarder.

Best Freight Rates

When it comes to freight rates, it is recommended to choose NVOCC when there is a money constraint, as a shipper could save more fees. Compared to a freight forwarder, this agent will assist with the entire logistics process and services, which could be costly.

Conclusion
 Understanding the concept of different logistics services like NVOCC and freight forwarders is vital, especially when a shipper looks forward to streamlined commodity shipping. Both services may differ in crucial aspects but can ensure smooth and cost-efficient customs brokerage service for a positive logistics experience.

If you are looking for relevant services that offer freight forwarding and worldwide logistics, visit Excelsior, a logistics corporation that offers reliable shipping services.

Read these informative articles to learn more:

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What is Breakbulk Shipping? Everything You Need to Know

excelsior on July 22, 2024

Many shippers are knowledgeable in traditional cargo transportation methods, such as container shipping and international freight forwarding. However, instances where cargo exceeds the container’s capacity or weight limit can make it more challenging to transfer goods to their destinations.

Breakbulk shipping serves as a practical solution to this dilemma. Understanding how breakbulk shipping works is fundamental to efficiently hauling oversized cargo and ensuring timely delivery.

What is Breakbulk Shipping?

Breakbulk shipping refers to a type of cargo transportation that includes handling and shipping large, heavy, and non-containerized items, including:

  • Barrels
  • Metal drums
  • Machinery
  • Vehicles
  • Crates
  • Boxes
  • Building materials

Unlike container shipping, breakbulk offers tailored handling and secure transport for oversized or irregularly shaped goods to fit into standard ISO (International Organization for Standardization) shipping containers.

Moreover, since breakbulk shipments are not containerized, they do not always necessitate a dock crane for unloading. This gives entities access to various port options, such as Roll-On/Roll-Off and Lift-on/Lift-off services.

Advantages and Disadvantages of Breakbulk Shipping

While breakbulk shipping is an excellent option to transport cargo efficiently, it has its set of advantages and disadvantages. These include:

Pros

  • Breakbulk shipping strengthens the security of goods with dedicated handling and stowage methods. This can be especially crucial for promotional products, which often need special care to prevent damage or breakage.
  • Due to its customized approach, breakbulk offers faster transport times. Container shipping often makes multiple stops at different ports for cargo goods to be loaded or unloaded, whereas breakbulk can proceed more directly. This prompt technique is helpful for urgent or time-sensitive shipments, allowing businesses to effectively meet critical project deadlines or customer demands.
  • Breakbulk shipping does not require cargo to be segregated individually. Rather, bulky or heavy items are loaded using specialized machinery. This streamlines the handling of large cargoes, making them easier to haul.

Cons

  • Project cargo is often highly valuable and, therefore, risky to transport. If this cargo gets impaired, it can be costly to repair or replace. Fortunately, many modern methods allow complete enclosure of more oversized items, thereby ensuring they remain secure from damage during transportation.  
  • Unlike standard-size shipping vessels, break bulk and multi-purpose vessels are not always available on specific schedules. This can complicate the process of finding the appropriate carrier at the right time and location needed. 

Preparing for Breakbulk Shipping

Preparing for break bulk shipping is imperative for successfully handling bulk cargo. This preparation reduces risks, lowers transportation costs, and ensures on-time delivery, making breakbulk shipping a dependable option for specialty deliveries. 

The following discusses key steps to effectively arrange breakbulk shipping:

  1. Determine the Type of Break Bulk Cargo – Understand the equipment or material needed to be transported.
  2. Choose Appropriate Break Bulk Packing – Different break bulk cargo necessitate varying packing methods. For example, packed cargoes are typically shipped in bags, boxes, or cartons. On the other hand, unpacked cargoes are either not packed or cannot be packed due to their nature. 
  3. Select the Right Handling Equipment – Use suitable equipment, such as cranes, forklifts, and conveyor systems, to efficiently load and unload breakbulk cargo.
  4. Choose a Breakbulk Fleet – This is crucial as it carries and handles cargo across seas to its destination port. These vessels differ in size, capacity, and specialization. Many outdated vessels have been replaced by modern alternatives that are equipped to manage diverse cargo needs efficiently.
  5. Determine the Break-of-bulk Point – Identify the break-of-bulk point to establish where cargo shifts between transportation modes to ensure smooth logistical transitions.

Leverage Reliable Breakbulk Shipping Solutions

Efficient transportation of goods is critical for businesses, particularly when meeting the demands of supply chain resilience. Breakbulk shipping plays a fundamental role in the global logistics ecosystem because it provides a secure and effective method for transporting large commodities. For businesses seeking breakbulk shipping solutions, Excelsior Worldwide Freight Logistics Corporation is a logistics company in the Philippines that offers reliable breakbulk services to accommodate oversized cargo. We are also committed to providing clients with time-conscious, client-oriented, and exceptional delivery service. Visit our website  https://excelsior.ph/  for more information.

What is Breakbulk Shipping? Everything You Need to Know! Infographic Image 0005

Excelsior Worldwide Logistics Corp.