Understanding NVOCC (Non-Vessel Operating Common Carrier)

Sections:

What is an NVOCC?

Why is it called “Common Carrier”?

Why are NVOCCs important?

LCL Operations: End-to-End Consolidation, Documentation, and Delivery

NVOCC vs Freight Forwarder

Can NVOCCs be Freight Forwarders?

Benefit of Setting Up an NVOCC Instead of a Freight Forwarder

Core Services Provided by NVOCCs

What are NVOCC Charges?

Is VOCC equal to carriers like CMA CGM and Maersk?

Disclaimer: The content of this article is based on my independent research across various platforms and on insights drawn from over 10 years of professional experience in the maritime and IT industries. While every effort has been made to ensure accuracy, the information provided may not be exhaustive or free from error. If you identify any inaccuracies or have alternative perspectives, you are encouraged to share your comments for continuous improvement.

Understanding NVOCC: The Role of Non-Vessel Operating Common Carriers in Global Shipping

Think of an NVOCC as a “virtual carrier.” They buy space on ships in bulk from major shipping lines (like CMA CGM, Maersk) and resell that space to smaller shippers, often under their own brand. To the shipper (the customer), the NVOCC looks like the carrier; to the actual ship owner, the NVOCC looks like a customer.

What is an NVOCC?

NVOCC stands for Non-Vessel Operating Common Carrier.

Non-Vessel Operating: They do not own or operate the actual ships.
Common Carrier: They are legally considered a “carrier” because they accept responsibility for the goods being transported.

Why is it called “Common Carrier”?

The term “Common Carrier” comes from Common Law (used in the UK, US, and Singapore).

“Common” means “Public.” A Common Carrier holds itself out to serve the general public without discrimination. If you pay their published tariff, they must carry your goods (unless dangerous or illegal).
This is in contrast to a “Private” or “Contract Carrier,” which can choose to serve only specific clients under private contracts and refuse others.
By being a “Common Carrier,” the NVOCC accepts a higher standard of legal care and liability for the safety of the goods than a simple agent would.

Why are NVOCCs important?

NVOCCs make ocean freight accessible and cost-effective, especially for small and medium businesses that cannot book full containers directly with shipping lines. They provide flexibility, competitive rates, and expertise in global trade logistics. They also have a wider range of trade lanes partnering with different VOCCs.

LCL Operations: End-to-End Consolidation, Documentation, and Delivery

An NVOCC typically plays a key role in managing Less-than-Container Load (LCL) shipments by consolidating cargo from multiple shippers into a single container. This consolidation process optimizes container utilization and helps reduce overall transportation costs. Cargo is received from various shippers at a Container Freight Station (CFS) or warehouse. Depending on their operating model, the NVOCC may own or lease its own CFS facilities, or leverage a network of third-party CFS partners for consolidation and deconsolidation activities.

One of the primary advantages of LCL shipping is cost efficiency, as shippers are charged only for the space their cargo occupies. This makes LCL a practical solution for smaller-volume shipments. Additionally, LCL allows businesses to move goods more frequently without waiting to accumulate sufficient cargo for a full container load, supporting improved inventory management and supply chain flexibility.

During consolidation, cargo is stowed in the container according to weight, size, and handling requirements to minimize the risk of damage. The NVOCC is responsible for ensuring proper labeling, cargo segregation, and accurate documentation for each individual LCL shipment. Once consolidation is completed, the sealed container is transported to the port and handed over to the ocean carrier for onward shipment.

The NVOCC contracts space with an ocean carrier and arranges transportation under its own House Bill of Lading (HBL), which is issued to each individual shipper, while receiving a Master Bill of Lading (MBL) from the ocean carrier. Prior to shipment, the NVOCC ensures that all required export documentation is properly prepared and validated. It also manages regulatory and compliance requirements at both the port of origin and the port of destination, either directly or through appointed agents.

Throughout the voyage, the NVOCC provides shipment visibility by issuing tracking and status updates, actively monitoring estimated time of arrival (ETA), and managing exceptions such as schedule changes, rollovers, or operational disruptions.

Upon arrival at the destination port, the consolidated container is discharged and transferred to a CFS or bonded warehouse for deconsolidation. Individual LCL consignments are segregated and made available for consignee pickup or arranged for final-mile delivery. Depending on the service scope, the NVOCC may also coordinate import customs clearance and last-mile transportation through local partners.

NVOCC vs Freight Forwarder

While the terms are often used interchangeably, there is a strict legal and operational difference.

Primary Role

Freight Forwarder: Acts as an agent for the shipper. Like a travel agent for cargo.

NVOCC: Acts as a carrier to the shipper. Like a chartered airline that rents planes.

Bill of Lading

Freight Forwarder:Does not issue its own Bill of Lading (usually). Uses the Shipping Line’s Master Bill of Lading.

NVOCC: Issues its own House Bill of Lading (HBL).

Liability

Freight Forwarder: Limited Liability. If cargo is lost, they blame the carrier (unless they were negligent).

NVOCC: Carrier Liability. If cargo is lost, they are legally responsible to the shipper (they then claim against the VOCC).

Space Booking

Freight Forwarder: Books space on a shipment-by-shipment basis.

NVOCC: Often signs volume contracts to buy space in bulk from shipping lines.

Container

Freight Forwarder: Uses the shipping line’s containers.

NVOCC: Can use shipping line containers or their own leased containers.

Can NVOCCs be Freight Forwarders?

An NVOCC can operate in the capacity of a freight forwarder by managing not only the ocean freight leg but also the broader suite of logistics services. This may include trucking, customs clearance, inland transportation, warehousing, air freight and related value-added services, thereby offering customers an integrated, end-to-end logistics solution under a single contractual framework.

However, not all freight forwarders can operate as NVOCCs. Freight forwarders that do not hold NVOCC status are unable to contract directly with ocean carriers (shipping lines) and issue their own Bills of Lading.

For NVOCCs that do not offer additional value-added services, their scope is typically limited to the carriage of goods and does not extend to broader logistics coordination that a freight forwarder provides.

Benefit of Setting Up an NVOCC Instead of a Freight Forwarder

1. More Control

Business owners choose the NVOCC model when they want more control and higher profit potential, despite the higher risk.

2. Higher Profit Margin

Profit Margin Control (Buy Low, Sell High): A Freight Forwarder typically charges a fixed handling fee or commission. An NVOCC negotiates a bulk rate (e.g., $1,000/container) with a shipping line and resells it to a customer at a market rate (e.g., $1,200/container). This allows them to profit from the spread rather than just a service fee.

3. Brand Visibility

Since an NVOCC issues its own House Bill of Lading, the customer sees the NVOCC’s name on the legal title document, not Maersk’s or CMA CGM’s. This builds stronger brand equity.

4. Volume Discounts

NVOCCs can aggregate cargo from many small shippers to sign service contracts with VOCCs. This gives them purchasing power that a standard forwarder (who books one-off shipments) might not have.

OTI License and Fees For U.S. Trades:

To operate lawfully in U.S. ocean trades, NVOCCs and Ocean Freight Forwarders (OFFs) fall under the jurisdiction of the U.S. Federal Maritime Commission (FMC) and are generally required to hold an Ocean Transportation Intermediary (OTI) license. This licensing framework establishes financial responsibility and compliance standards intended to safeguard shippers, carriers, and other parties engaged in international ocean transportation.

An NVOCC license is issued by the FMC to companies that act as common carriers in ocean transportation without operating their own vessels.

U.S.-based NVOCCs must maintain a surety bond of USD 75,000 and keep a publicly accessible electronic tariff that sets out their rates, charges, rules, and terms of service.
Foreign-based NVOCCs must register with the FMC, appoint a U.S. agent for service of process, and provide a higher surety bond of USD 150,000. A physical office in the United States is not required for foreign NVOCC registrants.

Ocean Freight Forwarders are likewise regulated under the FMC’s OTI regime and are authorized to arrange international ocean shipments on behalf of shippers. Licensed freight forwarders must carry a surety bond of USD 50,000. If a freight forwarder intends to perform U.S. import customs clearance, it must obtain a separate customs broker license from U.S. Customs and Border Protection (CBP).

License for Non-US Trade:

If there is no U.S. trade involved A carrier or forwarder moving cargo only between foreign countries (e.g., China–EU, intra‑Asia) is outside the scope of the U.S. Shipping Act and FMC’s OTI rules, so no OTI license is required for that activity.

What is required instead depends entirely on local law: some jurisdictions have their own NVOCC/forwarder registration or licensing schemes (e.g., China’s NVOCC filing, EU freight forwarder regulations, local customs broker rules), which must be checked country by country.

Core Services Provided by NVOCCs

They typically deliver a comprehensive range of logistics and shipping services, including the following:

Tariff Management
NVOCCs publish and maintain their own tariffs and negotiate freight rates with multiple ocean carriers, enabling competitive and flexible pricing structures for their customers.
Cargo Consolidation
They consolidate multiple shipments into a single container—often through LCL(Less than Container Load)-to-FCL (Full Container Load) or groupage arrangements—allowing small and medium-sized exporters to benefit from lower per-unit transportation costs.
Issuance of House Bill of Lading (HBL)
NVOCCs issue House Bills of Lading as contractual and transport documents, providing legal evidence of receipt of cargo and clearly defining responsibilities between shippers, consignees, and intermediaries.
End-to-End Logistics Coordination
They manage the entire shipment lifecycle, including carrier booking, documentation, customs clearance support, inland transportation, and final delivery, ensuring seamless door-to-door execution.

What are NVOCC Charges?

These charges typically include:

Ocean Freight Charges: Fees for transporting cargo by sea, calculated based on factors such as cargo weight and volume, voyage distance, and the type of vessel or service used.
Terminal Handling Charges (THC): Costs incurred for handling cargo at the ports of loading and discharge. These cover activities such as moving cargo between the vessel and the terminal, as well as temporary storage where applicable.
Documentation Fees: Charges for the preparation and processing of shipping documents, including bills of lading, customs declarations, and commercial invoices. These documents are often mandatory to comply with destination-country regulations.
Surcharges: Additional fees applied for specific conditions or services, such as fuel surcharges, security surcharges, and currency adjustment factors. These charges may vary over time and are subject to change without prior notice.

Is VOCC equal to carriers like CMA CGM and Maersk?

Yes.