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Difference between Freight Forwarder and NVOCC

This post describes the main differences between an international freight forwarder and an NVOCC according to the Federal Maritime Commission (FMC) of the United States. Most of the information in this post is taken from the FMC’s own website.

Ocean Transportation Intermediaries (OTIs) are either Ocean Freight Forwarders or Non-Vessel-Operating Common Carriers and are regulated by the FMC pursuant to the Shipping Act of 1984.

An Ocean Freight Forwarder (OFF) is an individual or company located in the U.S. which:

• arranges cargo movement to an international destination
• dispatches shipments from the United States via common carriers and books or otherwise arranges space for those shipments on behalf of shippers
• prepares and processes the documentation and performs related activities pertaining to those shipments

Prior to Offering Services in the U.S. Trades, OFFs:

• are required to obtain a license from the FMC (46 CFR § 515.3)
• are required to submit proof of financial responsibility for payment of claims (46 CFR Part 515 Subpart C) arising from transportation-related activities

A Non-Vessel-Operating Common Carrier (NVOCC) is:

• a common carrier that holds itself out to the public to provide ocean transportation, issues its own house bill of lading or equivalent document, and does not operate the vessels by which ocean transportation is provided
• a shipper in its relationship with the vessel-operating common carrier involved in the movement of cargo
• a shipper to carriers and a carrier to shippers

Applying for an OTI License
U.S.-based companies or sole proprietors operating as OFFs or NVOCCs are required to obtain a license from the FMC. Non-U.S.-based NVOCCs are not required, but may obtain a FMC-issued license.

Publication of Tariffs
All NVOCCs operating in the U.S. trades are required to publish a tariff (46 CFR § 520.3).  Tariffs must be open for public inspection and show all rates, charges, classifications, rules, and practices between all points or ports on their service routes.

Tariffs must be published:

• After a license has been issued, and prior to commencement of services, a NVOCC must provide the Commission its organization name, home office address, name and telephone number of firm’s representative, the location of its tariff(s), and the publisher used to maintain its tariff(s), and submit this information using Form FMC-1. Once the Form FMC-1 is reviewed, an organization number will be assigned
• If there is any change to the information on Form FMC-1, it must be immediately submitted to the Commission
• A non-U.S.-based NVOCC must list in its tariff an agent for service of process in the United States

The Commission publishes the location of all NVOCC tariffs online.

Service Contracts
A NVOCC may enter into a service contract for transportation services with a vessel-operating common carrier as a shipper signatory. The shipper party (NVOCC) must certify on the signature page its shipper status.

NVOCC Service Arrangements (NSAs)

NVOCCs that are in compliance with the requirements of the Shipping Act (46 USC 40901-40904) and the Commission’s licensing and financial responsibility requirements (46 CFR § 515) may enter into an NSA with one or more NSA Shippers subject to the Commission’s rules governing NVOCC Service Arrangements (46 CFR § 531).

NVOCC Negotiated Rate Arrangements (NRAs)
NVOCCs may enter into negotiated rate arrangements when provided exception from certain tariff rate publication requirements. The FMC procedures and requirements to qualify for and use the exemption are found in Part 532 of the Commission’s Regulations.

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