31 Frequently Asked Questions about Freight Forwarding Services
Table of Contents
What is an NVOCC?
NVOCC stands for Non-Vessel Operating Common Carrier. NVOCC purchases ship space from Vessel Operating Common Carriers (VOCCs) mainline transport vessels and sell or leases them to clients. The NVOCC also creates its tariffs to finalize the price. When you enter into a contract with an NVOCC, you are the 'shipper,' and the NVOCC is the 'carrier'. The NVOCC performs functions such as:
- Conclusion of international goods carrier contracts.
- Receiving and delivering cargo as carriers.
- Issuing various transport documents along with the Bill of Lading
- Sell/lease cargo or container space onboard mainline transport vessels to prospective clients
- Arrange transportation payments between port to port along with other essential charges.
- Consolidation and deconsolidation of containers using third-party services or through Container Freight Station (CFS).
Forwarding agents are an example of NVOCCs. In a nutshell, as the name suggests, NVOCCs transport your goods without operating any vessels. Instead, they do so by working with NVOCCs, and some of the top NVOCCs around the globe include Maersk, APL, CMA CGM, etc.
What is a freight forwarder?
Freight forwarders function as intermediaries between the company that requests the shipment and the final destination for the goods. Although they do not transport the cargo, they offer different transport modes. Freight forwarders use their contacts with carriers and partners from air transport specialists and trucking companies to transoceanic lines to negotiate the best price. To get the best price, they may use established commercial routes with regular, frequent departures or by charter, assessing different offers and choosing the better course that optimizes speed, costs, and reliability.
How do I differentiate between an NVOCC and a freight forwarder?
Generally, if you are an exporter or importer, you can ship goods using an NVOCC or a freight forwarder. However, the freight forwarder acts as an agent, whereas the NVOCC is a middleman between the shipper (you) and the vessel operator. Here are some other notable differences:
|Freight forwarders are agents to shippers( ie, you as the client).||NVOCCs are carriers to shippers( ie, you as the client).|
|Freight forwarders neither own nor operate any containers.||NVOCCs operate cargo containers.|
|Freight forwarders typically own and operate the warehouses for the shipment they carry.||Only large NVOCCs take on almost all functions of freight forwarders' warehouses.|
|Freight forwarders worldwide cooperate in their processes to reduce costs and improve deliveries.||NVOCCs are independent, using an extensive network of agents or third-party companies.|
A freight forwarder can be an NVOCC if authorized to do so. Since NVOCCs sign contracts with shipping lines to guarantee the shipment of a certain number of containers each year, NVOCCs usually enjoy more favorable shipping rates.
What is the difference between an NVOCC freight forwarder and a local freight forwarder?
Only accredited NVOCC freight forwarders can
- Act as a go-between for the shipper and the vessel operator.
- Authorise their bills of lading.
- Sign contracts with Shipping lines with a target quota for containers annually
- Negotiate for a more favorable cargo rate.
A local freight forwarder is not authorized to do the above, nor can they do so.
Glossary of common export terms
FOB (Free on Board) - The seller fulfills his delivery obligation when the goods have passed over the ship's rail at the named shipment port. CFR: Cost and Freight - Cost and Freight are paid at the named port of destination CIF: Cost, Insurance, and Freight. - These terms are used for oversized or bulk cargo and overweight shipments. DDP (Delivered Duty Paid) - The seller fulfills all responsibilities and assumes delivery costs when the goods are made available at the named destination. EXW (Ex Works) - A buyer incurs the risks of bringing the goods to their final destination.
Are the dates of delivery guaranteed?
We will schedule an estimated delivery date and keep the customers posted on the up-to-date status. However, delays can occur due to customs inspections, weather conditions, and unpredictable circumstances.
What is a Bill of Lading?
A bill of lading (BL or BoL) is a legal document with the goods' type, quantity, and destination. A carrier issues it to a shipper. It also serves as a shipment receipt when the goods reach a destination. This document must accompany the cargo, and it is signed by an authorized representative from the carrier, shipper, and receiver.
What are these terms: Shipper, Carrier, Consignee, Notify Party?
- Shipper: The sender of the goods by any form of shipping.
- Carrier: A carrier is a person or business that transports goods or people for any person or company.
- Consignee: Consignee is the stakeholder indicated on the bill of lading or air waybill to whom the shipment is consigned. It need not always be the buyer; some countries will be the buyer's bank.
- Notify party: the person or company to be advised by the carrier when goods arrive at the destination port.
How do I know what a House Bill of Lading(HBL) and Master Bill of Lading(MBL) is?
NVOCC (or freight forwarder) issues an HBL. It lists the actual shipper and consignee. But the carrier issues the MBL. Both the HBL and MBL contain similar information about the cargo. Note also that the shipper, consignee, and notify party is the only details that will be different. Regardless of the vessel, a bill of lading guides the parties' actions along the entire shipment route and tells the cargo handlers where the shipment is going, how transporters should handle the goods, what the piece count should be, and how it will be billed.
How do I check whether the bill of lading issued is a Master B/L or House B/L?
Master B/L is issued by a shipping line. You can track your shipment from the system through a B/L number, a container number, or a booking number. Whereas a freight forwarder issues the House B/L. You will not be able to track your shipment.
What is a Switch Bill of Lading? When and why is it used?
The carrier or its carrier agent issues a Switch Bill of Lading. It is the second set of the Bill of Lading(BL). It's given to substitute the Original Bill of Lading issued at the time of shipment. Often, it replaces the Shipper and Consignee details from the Original Bill of Lading. That is to say, a switch Bill of Lading is used to hide the factory's identity. In certain situations, the trader selling the goods to the importer may not want to reveal the factory of procurement. Therefore, the trader will often require that a Switch Bill of Lading be used for their shipments. This is also known as a 'Triangle Trade'.
Can we change the bill of lading number on a Switch Bill of Lading?
You should not change the Master Bill of lading number on the Switch Bill of Lading. This is because the BL number corresponds to the outward manifest report at the Port of Loading where customs can do a possible audit of the shipping line and origin shipper. Besides, the principal system is using/creating the BL number based on the vessel voyage, which means if the BL number changes, then the cargo on said BL would not be loaded on the vessel. In conclusion, the numbers of Bill of lading remain the same on the Switch Bill of Lading. This is to identify the rightful owner of the space allotted to the cargoes. Only the name of shippers, consignee, and notify party name can be changed.
Who is responsible for the loss of the original Bill of Lading?
The Bill of Lading is very important because: At the port of departure, it is a receipt for the goods issued by the carrier or its agent. During transportation, the Bill of Lading is a document of title to the goods. At the port of destination, the Bill of Lading is contractual proof of the delivery of the goods to the carrier or its agent. Only one set of Bill of Lading can be issued for one shipment of goods. The Bill of Lading is also a negotiable document. If the Bill of Lading is lost, the seller is unable to settle foreign exchange and the buyer cannot pick up the goods. So what should you do if the Bill of Lading is lost?
- Immediately contact the freight forwarder or shipping company, and the consignee also needs to be notified.
- Publish it in the newspapers and periodicals above the municipal level for three consecutive days, stating that the Bill of Lading has been lost and declaring that it is invalid.
- The shipping company will issue a letter of guarantee for the loss of the Bill of Lading, filling in the Bill of Lading number, box seal number, and other information as required, and affix the original with the official seal and send it back to the shipping company.
- The most important part is the deposit. If the Bill of Lading is lost, the shipping company will generally require a deposit of 2-3 times the value of the goods, and the detention time is one to two years. This number and time are not fixed and the freight forwarder can negotiate on this.
- After that, the shipper should sign the deposit agreement with the shipping company (in triplicate) under the witness of the freight forwarder (Press statement plus loss of guarantee, together with the agreed deposit)
- If the goods still take some time to arrive at the port, the shipping company will re-sign the original Bill of Lading. If they have already arrived at the port, or even exceed the container-free period and the free-stack period, to avoid high port miscellaneous fees, you could ask the freight forwarder to help you apply. There is no need to send the original Bill of Lading, and instead, choosing Telex Release can save a lot of time.
What is FCL, and LCL?
FCL shipment: Full Container Load. This term means goods from a single shipper occupy the entire filled and sealed container. LCL shipment-: This is a small ocean freight shipment wherein the shipper does not charge for a full container since the shipment quantity is inadequate to contract for a full 20 feet container.
Why does the transit time differ between FCL and LCL cargo to the same destination?
If the container carries FCL cargo for one shipper and one consignee, it is not reworked anywhere once it is packed at the Port of Load. Instead, it is delivered to the Port of Discharge. However, for LCL cargo, the shipping line or operator will load cargoes belonging to many shippers and consignees in the same container going to various destinations. If there is insufficient cargo for one port, the shipment may wait in the port to properly consolidate all the LCL cargo coming from elsewhere until there is sufficient cargo for shipping.
What does "less than container load" mean?
"Less than container load" refers to the number of personal effects or commercial products being shipped that would not be enough to fill a standard 20-foot ocean shipping container.
What is transshipment?
Transshipment (sometimes also trans-shipment or transshipment) means unloading goods from one ship and loading them into another. The vessel must complete a journey to a different destination, even when the cargo may have to remain ashore some time before its onward trip. A transshipment is required from Qingdao to Port Gentil as there is no direct connection between the ports. Containers bound for Gentil are transported on one vessel from Qingdao to Point Noire and then reloaded onto a second vessel from Port Noire to Port Gentil.
What are the parameters of ocean containers of various types?
- Dry storage container:
Dry storage containers are designed to transport dry goods. They come in lengths of 20, 40, and 45 feet.
- Flat rack container:
A flat rack container allows heavy loads to be set from above or from the side. It has no top and only two sides. Overheight Frames handle this type of equipment.
- Open top container
Open top containers have an open top wrapped by a tarp instead of a solid roof. Oversized cargo (e.g. timber and scrap metal) is loaded from the top. Open top containers usually also have end doors, like closed containers, to give flexibility for loading and unloading.
- Open-side storage container
An open-side container has one long side. This is open for wide goods that may be difficult to get through the end of a tunnel or dry storage container.
- Refrigerated ISO containers
It is refrigerated to transport temperature-sensitive cargo.
- ISO Tanks
These are storage containers that hold liquids.
- Half-height containers
Half-height containers, as their names suggest, are half the height of full-sized containers. It's used mainly for goods such as coal, stones, etc., which need easy loading and unloading.
- Special purpose containers
They come in nearly any shape or dimension. They are used to transporting items that require a custom container.
Does the freight forwarder provide a custom clearance facility?
Customs clearance is an integral and essential part of the freight forwarding procedure, and many global shipping companies offer this service. If this service is not provided, it can create problems and put the supply chain into complete disarray. If you engage a company that only works as forwarders, they will only manage transportation and logistics. You will need a separate vendor to handle custom clearance details. ABC Global Shipping offers custom clearance at the source and landing ports in the destination country. It saves the shipper from unnecessary extra expenses and disarray situations. ABC Global has the experience to ensure your goods are well-managed.
Will there be any expenditures to bear at the destination?
Freight forwarders should be able to provide information about expenses you will have to bear at the destination.
Are there any additional charges that one needs to stay aware of?
There are many factors to consider which can increase your expenditure. These expenses depend upon destination, seasonality, freight being forwarded, and other details. An experienced freight forwarder will update you about these additional charges.
Are there any special requirements I need to meet at the destination?
Import requirements vary from one destination to another, even when the cargo is the same. The freight forwarder should be aware of these details so that you can prepare beforehand.
Difference between telex release and express release
At present, there is no difference between the two. They both mean “Telex Release”. In the past, there was no fax or email. There were two ways of doing the Telex release. First, if telex is applied, the destination port agent will be notified to release the goods to the consignee, which was called TELEX RELEASE.
Second, a Release Notice is issued on a copy of the Bill of Lading which is delivered to the consignee by express so that he can pick up the goods from the agent. If this copy of the Bill of Lading is lost, the Freight Forwarder or Shipping line can immediately re-sign it to avoid the complications caused by the loss of the original Bill of Lading.
Now that technology is more developed, you can fax, or send emails. So although the terms we use in the shipping industry haven’t been updated, the practice has actually changed.
However, the current practice of SEA WAYBILL is similar to the previous EXPRESS RELEASE. It also needs to issue a Bill of Lading. The consignor needs to send the Bill of Lading to the consignee. The cargo can also be picked up by fax copy from SEA WAYBILL.
What is breakbulk cargo? Is it the same with OOG cargo?
Break bulk cargo: freight too large to be transported on a single flat rack or platform.
Typically, shippers load break bulk cargo across multiple flat racks on the deck of a vessel and then secure it for shipment.
OOG cargo is a load that exceeds the dimensions of a standard 20 ft or 40 ft shipping container by height, length, and width.