What is an NVOCC And Why is It Important in Global Logistics?

June 15 , 2022 | CATEGORY : SERVICES

An NVOCC refers to a non-vessel operating common carrier. When opting for ocean transport to export or import materials, an NVOCC is an intermediary that helps small and medium businesses that may not require an entire container to ship their goods. NVOCCs lease or rent space in containers from large shippers or freight forwarders, and sell it to smaller shippers.

With the dynamic business environment and technology advancing changes, we have seen the global markets opening up. Global boundaries are no longer a barrier; they have opened new markets, allowing businesses to expand and grow. With many businesses going digital, e-commerce has helped businesses find newer markets. With this, their logistics and shipping needs have also changed. While large enterprises find it convenient to work directly with shipping companies and freight forwarders, small businesses may not need an entire container to ship their goods. Using an entire container will not only lead to unnecessary costs but also compromise market competitiveness in terms of product pricing.

This is where NVOCCs (Non-Vessel Operating Common Carriers) come into the picture. NVOCCs are the single point of contact between the customer and the shipping company, and take care of all aspects of importing or exporting cargo.

Some Tasks NVOCCs perform:

  • Issue Bill of Lading or House Bill of Lading (BL, BoL, HBL, or B/L is a legal document that outlines the details of the transaction with the NVOCC, such as the materials or goods, the destination of the goods, shipper, and buyer details, etc.)
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  • Responsible for transferring cargo from customers to the gateway of ports, ideally suited to cater to the needs of small and medium-sized organizations.
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  • Offer consultation, processing, and preparation of various shipping documents
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  • Handling warehouse and transporting activities
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  • Negotiating contracts and other shipping-related tariffs, such as customs, ports, etc
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  • Cargo handling and transportation activities
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  • Some of the advantages NVOCCs offer include:
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To compete and achieve success in global markets, businesses need every advantage they can get access to. And, NVOCCs play an important role in facilitating businesses. By signing a contract with shipping lines committing to ship a certain number of units each year, the NVOCC is able to secure favorable rates that they can offer small and medium enterprises, and drum up business for the shipper.

Some of the advantages of working with an NVOCC are: 

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  1. Connectivity and Connections:

Global markets can be tricky and complicated to navigate, and misunderstanding logistics rules and taxes can lead to misses or losses. With the association of NVOCCs, businesses can find it easier to enter these markets and minimize any loss due to misstep. Apart from this, NVOCCs have a personalized and well-developed network with trade unions, ports, transportation services in international markets and can connect businesses with the right fit for their requirement.

       2. Targeted Services:

Businesses may have a wide array of questions when venturing into or sustaining business in international markets. They need customized solutions, quick thinking, and efficient means of operations to resolve problems, solve queries and deliver to their stakeholders on time. NVOCCs have a personal connection with all their customers and can provide targeted problem-solving solutions, which is not possible with the larger shipping companies.

     3Simplification of Documents:

Global trade rules differ from country to country and port to port. It becomes extremely important to be cautious and diligent while submitting documents as any errors can cause shipments to be held up and lead to business losses. This is where NVOCCs can be of great assistance, as they are aware of the documentation process, and can help make the process faster and more importantly, accurate.

      4Minimizing Risks:

Changes in market conditions, dynamic shifts in the business environment or changes in the global trading policies can affect a business. If a business is under strict contractual obligation with larger shipping companies, then these changes may lead to higher operational costs. NVOCCs absorb this risk, by taking the commitments with the large shippers and offer businesses the flexibility they need to respond to business fluctuations.

      5An Insight into Future Trends

Due to the NVOCCs vast and diversified networks, they have data and information that can help predict future trends, volatility, and market changes. With the help of NVOCCs, businesses can be well-equipped to handle these changes as they have access to data that can help combat them.

 

Conclusion

To survive and thrive in international markets, managing logistics and shipping is a critical lever for competitiveness and profitability. It becomes important to have the access to right knowledge, expertise, and tools to facilitate the exchange of goods seamlessly and effortlessly. NVOCCs have all the right resources and tools to help small and medium-sized businesses achieve this goal. NVOCCs are becoming popular as the launch pad to international trade for small businesses, with their wide array of services and solutions for all shipping problems. 

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