Do you know what does NVOCC mean?

The term NVOCC corresponds to the acronym (Non Vessel Operating Common Carrier), that is, an intermediary that undertakes to perform all the services of a shipping company but without iwning or operating ships.

It rents or buys space from shipping companies and rents it to its clients, in groupage mode, or in full container.

There are 2 types of NVOCC:

  • Neutral Consolidator – Provides services to logistics companies, such as freight forwarders. It does not work directly with final exporters or importers so as not to enter into competition with its natural clients.
  • Non-neutral Consolidator – Provides its services to direct clients and therefore benefits from higher margins.

The US market has probably the largest number of NVOCC operator in the world and the US Federal Maritime Commission (FMC) regulates their operation in the sector.

This agency defines the NVOCC as a common carrier that provides ocean transportation, issues its own bills of lading or required documentation, and does not operate ocean-going vessels.

These fares must be open to public inspection and show charges, classifications, rules, and practices between all points or ports on their service routes. The location where these rates are available online can be found on the FMC website. A non-US based NVOCC must also include in its rate submission and details of an agent for handling its services in the country.

The other big NVOCC market is China, where its Ministry of Transport (MOT) implemented the NVOCC cargo presentation rules in 2010, which required them to register with the MOT, and show proof of “insurance” or deposits cash security of up to 125.000 dolars.

There may be other major countries and jurisdictions that have specific regulations for the operation of NVOCCs, but at this time those requirements or the need for registration of an NVOCC in these locations is unclear.

The role of an NVOCC

At a more basic level, an NVOCC enters into volume-based shipping agreements with multiple shipping lines operating across multiple trade lanes. That is, an NVOCC buys space from one bulk space from one bulk ocean carrier (such as a wholesaler) and sells that space to multiple shippers or shipping lines at a higher rate (such as a retailer) on the same vessel/route.

An NVOCC may or may not offer owned or leased containers to customers and, in most cases, will use the shipping line’s containers.

Based on this agreement, an NVOCC can create its own rate based on which it sells space on these line services to its different customers. An NVOCC’s client list may include: BCOs, freight forwarders, clearing agents, and freight forwarders.

Depending on certain jurisdictions and markets, the activities of an NVOCC may include, but are not limited to: entering into contracts for the international transportation of goofs with shippers such as shipping lines; receive and deliver cargo like a shipping line; issue HBL or other transport documents; collect greight and other service charges; reserve space and organize transport with the main lines-; pay port-to-port transportation freight ot other transportation expenses; container consolidation and deconsolidation, either with your own CFS or with that of a third party.