Global logistics and supply chains are a complex web of things that requires careful handling and multiple sources to keep things running smoothly. It takes several players to ensure that cross-border shipments move without any hassle and reach their destination on time. And all of this happens at conducive rates. This is why a lot of different entities are involved in its functioning including carrier, freight forwarder, NVOCC, 3PL, EMC, ETC, customs broker, etc. out of which NVOCC and freight forwards play a significant role in helping the logistics companies and shipping companies, especially the comparatively smaller ones to keep their wheel churning. However, their roles are not limited to helping these companies. They play a much larger role in global logistics and supply chain solutions.
NVOCC – Why it is such a significant part of Global Logistics
NVOCC or Non-Vessel Owning Common Carrier is a company that provides ocean transportation services just like a regular carrier would do. The difference is that it doesn’t own or operate any of the vessels being used. NVOCC’s operations mainly include loading, sales, and transport to different gateway ports. An NVOCC operator usually acts as a moderator or a middleman for different shipping companies and their customers in order to make things more streamlined for the customers. They enter into volume-based freight arrangements with shipping companies to help them set their tariff for space selling on their containers.
The nature of their work is such that they have emerged as one of the most important bodies in the global logistics industry. Globalization has opened the international waters for all sorts of businesses and a number of small and large-scale players have started entering this industry. However, it is not always possible to sail through these complex waters for everyone, especially for newcomers and smaller companies. This is where NVOCCs play an important role in providing those shipping companies and logistics companies thorough support.
An NVOCC comes in handy in bringing the operators the best deals, shipment services, and ensuring proper documentation apart from assisting them with several other shipment-related facets. It acts like a perfect partner for small-scale companies, bringing better shipment rates, and better connectivity. And they do all of this with a personal touch to make the proceedings smoother.
Rates redefined: NVOCCs partner and negotiate with several large shipping lines by getting them business and booking huge amounts of space for them. The shipping lines, in turn, provide them better rates in return for the business allowing them to provide better rates to smaller businesses.
Personalized to your benefit: NVOCC, due to the nature of its dealings with large shipping lines, is able to provide more personalized services that big shipping companies can’t. This evokes better trust in overall dealings as well as options in terms of shipping routes, rates, online tracking services, etc.
They Connect Better: One of the biggest advantages of working with an NVOCC is that they have good relations with local traders, associations, local transporters, and other service providers. This helps in local networking and the movement of goods.
Documentation simplified: NVOCC can provide the Bill of Lading themselves, allowing them to render the necessary documents by themselves. This makes the entire shipping exercise smoother.
Role of Freight Forwarders in Supply Chain Solutions
Unlike NVOCC, a freight forwarding company is an intermediary between customers and shipping companies helping in enabling the transfer of goods to be shipped to the final destination. As they provide this extremely important support service, their role has significantly increased in the overall supply chain management. Here’s how they help:
Transportation network across the globe: Through close contacts with cross-border colleagues, freight forwarders are able to gather heaps of important information about legalities, cultural differences, regional tactics, systems, and department information, etc. This helps them guide their customers well and get the shipments across well.
Integrated operations: They initiate the movement of goods by consolidating different verticals in supply chain management. They do this by utilizing the information they are privy to and using them in the right place.
Consultancy services: Freight forwarders are the masters of all things related to shipping movements. Be it export strategies, handling critical situations, trader terms, or what to include in trade contracts, customer needs, etc. This knowledge is really helpful to the customers as freight forwards can help them sail through the complexities of the global logistics network.
Affordable: The cost of transportation makes for the biggest chunk of the entire logistics cost structure. A good freight forwarder can help create a competitive differentiation when it comes to the cost of transportation. Their global network allows them to bring the best prices for their customers. The rise of freight forwards has made logistics movement a lot more affordable for all kinds of operators, aiding the global supply chain.
Assisting legally: Since global transportation involves a lot of legalities, cross-border laws, customs clearance, and a lot more, having someone who has the right knowledge about all these legal aspects is a huge help. This is what freight forwards do. By helping their customers provide the right documentation and certifications, they reduce the overall time taken for shipping by a considerable amount.
NVOCCs and Freight Forwards might look the same at a glance and while they both play a significant role in maintaining the global logistics system and supply chain solutions, their roles are different and they are equally important in their own space.
