Non-Vessel Operating Common Carrier (NVOCC)

NVOCC stands for non-vessel-operating common carrier. The Shipping Act defines it as a common carrier that "does not operate the vessels by which the ocean transportation is provided" and "is a shipper in its relationship with an ocean common carrier" (46 U.S.C. 40102(17); the FMC's rules repeat it in 46 CFR 515.2(m)(2)). An NVOCC faces two ways: to its customer it is the carrier, under its own bill of lading and tariff; to the shipping line it is a shipper, booking and paying for space like any other. US law regulates NVOCCs that carry cargo between the United States and a foreign country, and the Federal Maritime Commission (FMC) licenses them.

What an NVOCC does

• Buys space and resells it: it purchases transportation from a vessel-operating carrier and offers it for resale, collects the freight from its shippers and pays the line as a shipper on its own behalf (46 CFR 515.2(k))
• Issues its own bill of lading: the line issues a master bill of lading (MBL) to the NVOCC; the NVOCC issues a house bill of lading (HBL) to each customer, and the house bill is that customer's contract of carriage
• Consolidates LCL cargo: in LCL shipping it loads several shippers' cargo into one container, so one master bill covers several house bills (consolidation)
• Signs service contracts with the lines: because an NVOCC that accepts responsibility for the freight counts as a shipper (46 U.S.C. 40102(23)(E)), it can sign service contracts, in which it commits a volume of cargo over a fixed period and the carrier commits a rate and service level (46 U.S.C. 40102(21))
• Prices under a tariff or an arrangement: it must keep its rates and rules in a tariff open to the public (46 U.S.C. 40501; 46 CFR part 520), or quote under an NVOCC negotiated rate arrangement (NRA, 46 CFR part 532) or an NVOCC service arrangement (NSA, 46 CFR part 531), both exempt from tariff rate publication. Before using NRAs it must give the public free electronic access to its rules tariff (46 CFR 532.4)
• Runs the shipment end to end: arranging inland transportation, working with origin and destination agents and coordinating the move between origin, vessel and destination are all listed NVOCC services (46 CFR 515.2(k))
• Reports its cargo to US Customs: for US-bound cargo, an NVOCC licensed or registered with the FMC and holding an international carrier bond may send its house bill data to CBP through the Automated Manifest System (AMS) itself, at least 24 hours before the cargo is loaded at the foreign port; otherwise it must give that data to the vessel carrier to file (19 CFR 4.7(b)(3)(i))

NVOCC vs VOCC vs freight forwarder vs brokers

The FMC treats NVOCCs and ocean freight forwarders together as ocean transportation intermediaries (OTIs) (46 U.S.C. 40102(20)). In its terms an ocean freight forwarder is a company in the United States that dispatches shipments from the United States and books space on behalf of shippers (46 U.S.C. 40102(19)), so the forwarder category covers exports; a company that carries other people's cargo under its own bill of lading, inbound or outbound, is acting as an NVOCC. In everyday use "freight forwarder" covers both roles and air freight too, and many companies hold both FMC licenses. Neither license lets a company file US customs entries for others: that needs a customs broker license (19 U.S.C. 1641(b)), and the importer's customs bond covers the entry.

FMC licensing, bonds and registration (46 CFR part 515)

• Who needs a license: a person in the United States may not advertise, hold itself out or act as an OTI without an FMC license (46 U.S.C. 40901(a); 46 CFR 515.3(a)). "In the United States" means resident in, or incorporated or established under the laws of, the United States (46 CFR 515.3(b))
• How it is issued: the applicant files Form FMC-18 (46 CFR 515.12) and names a qualifying individual with at least three years' OTI experience and the necessary character (46 CFR 515.11(a)(1)). The FMC issues the license once its investigation finds the applicant qualified by experience and character, the bond is filed and, for an NVOCC, the Form FMC-1 tariff notice is submitted (46 CFR 515.14(a)); licenses then renew every three years (46 CFR 515.14(c))
• Bond or other surety: no OTI may operate without a bond, proof of insurance or other surety (46 U.S.C. 40902; 46 CFR 515.21). The amounts in 46 CFR 515.21(a) are $75,000 for a licensed NVOCC, $50,000 for an ocean freight forwarder and $150,000 for a foreign registered NVOCC. The surety covers the OTI's transportation-related activities
• Tariff: before starting service an NVOCC submits Form FMC-1 giving the location of its tariff, and the FMC publishes the list of tariff locations (46 CFR 520.3(d)-(e)). An NVOCC that fails to maintain a tariff has its license revoked, or its registration suspended if it is foreign-based (46 CFR 520.3(f))
• Foreign NVOCCs: an NVOCC whose primary place of business is outside the United States may register with the FMC instead of taking a license, by filing Form FMC-65, posting the $150,000 surety and publishing a tariff. Registration lasts three years, and providing NVOCC services in the US trades without a valid registration and an effective tariff is a violation (46 CFR 515.19). A foreign NVOCC may also choose to be licensed (46 CFR 515.11(a)(1))

How to check that an NVOCC is licensed

• Look the company up on the FMC's public OTI list, which can be downloaded in full and gives each OTI's license number. The NVOCC list shows only NVOCCs that hold a license or foreign registration, have proof of financial responsibility on file and have a current Form FMC-1; a company licensed as both NVOCC and forwarder appears on both lists
• Compare the name on the house bill of lading and the invoice with the name on the list, including any trade name (d/b/a)
• For a foreign company quoting US-bound or US-origin ocean freight under its own bill of lading, look for it on the list as a registered or licensed NVOCC

Why shippers book with an NVOCC

• Less than a container of cargo: the lines sell container space; an NVOCC's LCL consolidation lets a shipper book a few pallets or cubic meters
• Contracted space without a contract of your own: an NVOCC ships under its own service contracts with the lines, so a shipper without the volume for a service contract can still book on them
• One carrier, door to door: one house bill of lading and one company answerable from pickup to delivery, with the inland moves and agents at both ends arranged by the NVOCC
• A licensed, bonded counterparty: a US NVOCC is FMC-licensed, and its surety covers its transportation-related activities

One example: Airlift USA (AIRLIFT (U.S.A.), INC., d/b/a Airlift Container Line, Westlake Village, California) is an FMC-licensed NVOCC and ocean freight forwarder, OTI license 016162; it issues its own house bills of lading and files the ISF (10+2) for the ocean shipments it books, and it is not a licensed customs broker.