Freight Forwarder and NVOCC International Cost and Companies Guide
Freight forwarders and non-vessel operating common carriers (NVOCC) make up a vital part of the international shipping industry. Their most basic function is to help individuals and companies import/export goods.
However, if you’re like most people, you might be a little confused as to exactly what services they each offer, how much they cost and even where to find companies.
If you’re simply looking to move some goods, you can use the form above to start comparing companies.
To learn more about freight forwarders & NVOCCs keep reading.
What is a freight forwarder…?
A freight forwarder is an individual (often referred to as a forwarder and/or forwarding agent) and/or company that helps with the logistics of international shipping. However, they do not ship the goods themselves, instead they contract with international shipping companies to actually move your goods from point A to B.
So if they aren’t shipping your goods, what do they do and why would you need one?
Depending on your needs they can offer a full range of services including:
- Prepare and file customs documents
- Prepare cargo manifests
- Find and book cargo space
- Deal with cargo insurance
- Handle freight charges and import/export duties
- Help with Incoterms rules
- Find warehouse space
- Make intermodal transport arrangements including pick-up and delivery
What is a NVOCC?
A non-vessel operating common carrier (NVOCC) is quite similar to a freight forwarder in many ways. NVOCCs, like freight forwarders, do not have ownership of their own vessels. Instead they contract with cargo and shipping companies to perform the actual shipment.
They will issue a bill of landing (B/L or BOL) for goods arriving by ship. These are documents that show that the goods have been received for transportation along with their point of origin and destination. NVOCCs focus almost exclusively on ocean based international container shipping, although many will offer services either side of the ocean portion of the shipment
What is the difference between a freight forwarder and a NVOCC?
While freight forwarder and NVOCC are often used interchangeably because they offer so many similar services they do offer a few important differences.
- A NVOCC assumes responsibility for the shipment, something not all forwarders do.
- US based NVOCCs & Ocean Freight Forwarders (OFF) must get an Ocean Transportation Intermediaries (OTI) license from the United States Federal Maritime Commission. To get one NVOCCs must proof of financial responsibility to be issued one.
- Foreign NVOCCs do not need an OTI license, but can still apply for one if they wish.
- NVOCCs can own their own containers.
Freight Forwarder Costs
In this section we outline typical costs associated with freight forwarders. However, please keep in mind that the focus here is on the types of costs you can expect, not the actual amount you will spend since that depends on what you’re shipping, how far, etc.
You may also want to visit our international shipping costs page to get an idea typical rates for 20ft and 40ft FCL and LCL container loads.
Freight forwarders can help with some or all of the following costs:
Freight Costs: This is the cost of actually moving your goods from their origin point to their destination. The cost will vary depending on the route, distance and mode of transpiration. Generally speaking more common routes and shorter distances tend to be cheaper and less common, longer routes are more expensive. Moreover, ocean/sea freight is the cheapest method of transportation, followed by rail, road and finally air freight being the most expensive.
Port/Cargo Charges: This is the cost of loading and unloading your goods at either end of your shipment. Port charges generally refer to the costs of moving your goods by sea whereas cargo charges can include costs associated with airports, distribution centres, etc.
Custom Charges: This is the cost of importing (and sometimes exporting) goods internationally between countries. Your freight forwarder should be able to help you figure how much you need to pay and to who.
Consular Fees: These are fees associated with documentation including notarial, documentary and legalisation fees.
Insurance Costs: This is the cost to insure your goods. The costs will vary depending on your method of transportation, route, etc. Marine insurance covers shipments by sea, air cargo insurance covers shipments by air and contingent cargo insurance is a general insurance policy that covers shipments by any and all means depending on what is specified in the policy.
Handling Fees: These are fees and charges associated with loading, unloading and handling your shipment. The cost will vary depending on weight (lighter is generally cheaper) and how hazardous your goods are to transport (the more dangerous the more you’ll pay).
Document & Administration Fees: These fees are normally charged by the freight forwarder or NVOCC directly and cover the cost of providing documents to the relevant governments, shipping companies and other relevant parties. Moreover these fees also cover their cost of freight forwarders own costs of operations and their profit.
BAF & CAF – Bunker adjustment factor (BAF) & currency adjustment factor (CAF) are two other feels that you may encounter. BAF refers to adjustments based on oil prices and CAF is based on adjustments to currency risks against the US dollar.
VAT & other Taxes – Depending on the origin and destination ports, VAT and other taxes more also be applicable in addition to all of the above.
Both freight forwarders and NVOCC can both help you move your goods by a variety of modes of transportation. For NVOCC’s this is most commonly done via ocean going container ship, whereas as forwarders may specialise in particular type of land transportation.
In summary your options are:
Sea freight – The majority of the world’s freight and cargo is shipped via container ships. This is the cheapest method of transportation, but only helps get your goods from one port to another and is usually not a door-to-door solution. Ships can be ocean going, coastal or travel by inland waterways.
Air freight – While air cargo is incredibly popular, it only really makes sense for high value, perishable and/or time sensitive goods, due to the relatively high cost compared to ocean going cargo.
Road freight – In most countries most cargo is delivered to and from ports and/or airports via truck. Depending on the distance travelled and road conditions, it can often work out cheaper than air freight, but more expensive than sea freight.
Rail freight – Rail transportation can be the cheapest method of overground transportation in countries with well developed freight rail networks. However, rail transport will almost always still involve a truck at either end.
All transportation methods above will allow for LCL (Less container load) and FCL (Full conatiner load) shipments. A good freight forwarder will help you get the best deal no matter what you’re shipping.