Choosing A NVOCC Or A Freight Forwarder
For businesses seeking a third-party logistics provider, there are two main options – NVOCC or freight forwarders. While both work in the same sector and can provide similar services, it pays to understand which is the best option for your needs. This gives you, not only peace of mind and the knowledge to decide what’s best as your business scales, but also means you can best manage your investments. In this guide, we’ll look at what each one is, what roles they cover and how to decipher whether you need an NVOCC or freight forwarder.
What Is A Freight Forwarder?
Also known as a forwarding agent or forwarder, freight forwarders are businesses or individuals that support businesses in international shipping. They organise everything needed to get goods from point A to point B. While they don’t physically move the goods, they build up a full and detailed database of contacts within the industry to get their customers the best rates and shipping times.
Essentially, a freight forwarder is your expert within the international trade market. They offer a varied array of packages, from simply helping source the right shipping space to taking care of all documentation and legal requirements. Freight forwarders can organise the transportation needed to collect goods from your warehouse and deliver it to the carrier. And, many larger-scale forwarders operate warehouses where goods can be securely stored until the required transportation dates. They are industry experts who belong to the International Federation of Freight Forwarders Association (FIATA), there to help your business as it scales to new levels.
We have a detailed blog post entitled, ‘Freight Forwarding – Everything You Need To Know For International Shipments’, on our website which provides more information about their services.
Benefits Of Working With A Freight Forwarder
There are a whole host of reasons why you may choose to enlist the support of a freight forwarder into your business, including:
- Having the assurance and backing of the International Federation of Freight Forwarders Association (DIATA) to provide industry standards
- Many own and operate their warehouses so can provide their storage, both long and short term
- Cooperate with others to reduce costs and provide timely delivery options for clients
- Save you time and money when organising international logistics, allowing you to focus on other aspects of the business
- Have a wealth of logistical industry knowledge to fall back on
- Have access to a global network of agents
- Have leverage volume to help reduce individual shipment costs
Disadvantages Of Using A Freight Forwarder
Due to their flexibility and in-depth industry knowledge, there are very few negatives when it comes to working with a freight forwarder. In fact, the only one that may pose challenges for your business is:
- Some unregulated freight forwarders may be restricted to support your business in certain countries.
What is an NVOCC?
An acronym for Non-Vessel Operating Common Carrier, an NVOCC organises shipments for businesses and individuals. They are there to make the process more straightforward and cost-effective for the client, suiting the needs of small to medium-sized businesses specifically. These businesses do not own any of their own vehicles. They simply have arrangements in place to utilise shipping vessels with leading owners/charterers and shipping lines under their own Bill of Lading.
NVOCC’s also tend to manage and hold their own cargo containers. To do this, they will either buy or lease the available space in containers with the goal of filling them and passing on the savings to their end client. They are independent parties, making use of various external agents or third-party companies to support their needs. NVOCC’s largely accept responsibility for cargo during movement. However, because they aren’t affiliated with the FIATA, they have no requirements to submit paperwork that fits within the association’s standards, therefore there is more leniency in terms of quality.
Benefits Of Working With An NVOCC
As we mentioned above, small-to-medium sized businesses tend to gravitate towards NVOCC. Some of the key benefits of working with these businesses include:
- Price stability
- Good capacity for shipments
- Diverse carrier base for client flexibility
Downsides Of Working With An NVOCC
- Tracking information is generally slower to reach the end client
- Prices based on contracts that expire
- Don’t own warehouses to store cargo in the interim
Should You Choose NVOCC Or Freight Forwarder?
While both NVOCCs and freight forwarders are classed as OTI’s, the choice between them comes down to each individual business. It pays, with any large investment, to research your options. Consider questions/factors such as:
- How often will I need to ship goods internationally?
- Will I be shipping along the same transport route each time or will this differ?
- Am I shipping large or small loads?
- Do I need the goods to be collected from my warehouse or can I organise this internally?
- Do I need my goods to be stored securely, prior to them being shipped via my chosen transport vessel?
How Can Radius Warehouse & Logistic Services Support Your Business?
With over 25 years of experience, our team of specialist freight forwarders provide tailored logistic solutions for worldwide cargo movements. We specialise in USA and Far East inbound and outbound movements and, as members of the BIFA, we provide a high-quality service that meets industry standards.
Alongside our ability to get you the best rates, quickest shipping timescales and logistical support, we are also able to provide full eCommerce fulfilment services. From our warehouse facility in South West UK, we are able to offer pick-and-pack services as well as secure storage and distribution to support your business scaling. With commercial palletised storage space for any period of time, we can offer next day UK delivery and worldwide distribution through our trusted global network of logistic partners.