The Ultimate Guide to the Difference Between Shipping Agents, Ship and Cargo Brokers, Freight Forwarders, and NVOCCs

Apr 10, 2022 Lilia Khovrak Lilia Khovrak

Getting to know the differences between shipping agents, ship and cargo brokers, freight forwarders, and NVOCC will help you make an informed decision about which shipping provider will work best for your particular business requirements. At SeaRates, we understand how important it is to choose the right shipping provider to work with. That is why we provide a wide range of freight shipping services that are perfect for businesses of all shapes and sizes.

This article will introduce the reader to the various types of maritime operators and their roles in the shipping process.


What is a shipping agent?

In all ports of call served directly or indirectly by his ships, a shipowner must be in a position to rely on an efficient and properly organized agency network in order to offer and operate his services successfully and profitably.

Agents are selected according to their reputation in the market and on the basis of the experience, efficiency, and organization that they are able to provide.

A general agent is, as a rule, appointed by a shipowner in whatever country that shipowner has dealings with. He officially represents the shipowner in all main ports and, most economically speaking, key areas inland in his country of residence. He is expected to work with the support of reliable sub-agents.

Appointed agents are obviously compelled by their contract not to undertake to look after the interests of other shipowners whose operating services may be in competition with those of the shipowners they represent.

The agent's main task is to secure for the shipowner the maximum amount of export and import cargo. He is also expected to do everything in his power to help the shipowner with whatever concerns the commercial, technical, legal, financial, or administrative side of the ship's operation.

The shipping agent is also bound to provide full assistance to the master from when the ship arrives till it sails, especially in dealing satisfactorily with all the necessary bureaucratic formalities required by the Port Authority.

The agent is also in charge of the canvassing of cargo, discharging and loading operations, collecting sea freight, paying port charges, and supervising land transport agreements with truckers, etc. The agent always acts, in every respect, for and on behalf of the owner. Any documents signed by the agent, particularly bills of lading, should bear this wording before the signature.

The agent's remuneration is called his commission. This is normally fixed in accordance with international practice, but is nevertheless open to negotiation. Commissions on the export and import of cargo usually differ significantly.

An agent of a shipping company that operates regular services is called a liner agent or owner's agent. However, when a vessel is sailing under a charter party, it is the charterer who appoints the ship's agent. Nonetheless, the shipowner may himself nominate a protecting agent, whose job is to assist the master and check that the conditions set forth in the charter party are fully respected.

The compensation paid by the shipowner to the protecting agent is called the "agency fee."

Shipping agents are members of national associations, which are internationally represented by the Federation of National Associations of Shipbrokers and Agents (FONASBA).


What is a ship and cargo broker?

A broker is a maritime operator whose job it is to procure cargoes for ships and, conversely, ships for cargo. That is to say, brokers may be cargo brokers or ship brokers.

His profession demands high qualifications, so the services a broker offers must be extremely reliable if he is to keep to its rules.

In order to operate, a broker must obtain a special license released by the Chambers of Commerce, and his name must appear in internationally-recognized registers.

Ship brokers specialize in arranging the chartering of a shipowner's vessels to another party. Such a party would be seeking tonnage to operate a shipping service on a long or short basis, respectively, time charter and voyage charter, against payment of a hire, thus avoiding the heavy investment that ownership involves.

Cargo brokers specialize instead in providing shipowners with cargo and are closely connected with various manufacturers or traders.

Both ship brokers and cargo brokers work on commission.


What is a freight forwarder?

The services of freight forwarders, also referred to as forwarding agents, are of the utmost importance to both shipowners and shipping agents in view of their close connections with manufacturers and traders, who rely on them to arrange the shipment of their cargo.

Many freight forwarders specialize in specific commodities, a practice that, besides strengthening their contracting power, enables them to influence the sellers or exporters in choosing would-be carriers.

This is why shipowners and their agents make sure they keep on the best of terms with freight forwarders. In fact, the profitability of a liner service basically depends on their support.

A domestic (local) freight forwarder commits himself to making all the necessary arrangements regarding the transport of cargo, from the exporter's premises to the local customs in export, or v.v. in import.

International freight forwarders arrange the transport, the customs clearance, the insurance, the packing and the carriage by sea of the goods, whether for export or import, as the case may be, in accordance with the contract of sale signed between buyer and seller.

After entrusting a freight forwarder with the shipment of his cargo and providing him with all the necessary information, the seller/exporter hands over to him a copy of the contract of sale and a copy of the letter of credit containing the agreed terms of payment. This gives the freight forwarder time to check whether all the details contained in these documents correspond to those shown in the bill of lading.

When imported cargo is involved, the freight forwarder will take delivery of the cargo and arrange for its final delivery to the receiver's premises. This he does by presenting to the shipowner or his agent the original bill of lading duly endorsed in his name by the receiver. 

Leading freight forwarders may often collect less than container load (LCL) parcels of cargo from individual exporters, which they then deliver to the carrier in a full container load (FCL).

In such cases, they act as consolidators or groupage operators.

They may also arrange the stuffing of LCL parcels of cargo on their own, releasing a house b/l (indicating their own branch overseas as receiver). They thereby become carriers vis-à-vis their clients and shippers vis-à-vis the physical carrier.

The customs broker, whose role is generally the same worldwide, is a particular kind of freight forwarder, concerned with the clearance of both export and imported cargoes through customs. He possesses a special licence that enables him to deal with the customs authorities.

The customs broker acts officially on behalf of cargo owners, who normally sign an authorization for the customs broker to handle the customs declaration. They are bound not to issue any false declarations in respect of their cargoes. However, if the broker commits an error, the exporter is held liable.

The customs broker may also provide the following: the freight cost, the preparation of export documents, etc. Some large exporters have their own in-house licensed customs brokers.

The customs broker is committed to professional secrecy and may not engage himself in any activity that is not compatible with his particular job. His remuneration is the brokerage fee, which varies from country to country.

The customs broker also assists the master, arranging, on his behalf, all the necessary customs formalities. Upon sailing, the customs broker delivers to the master the ship's manifest, approved and stamped by customs, together with the clearance (permission to sail) released by the harbor master.

Freight forwarders are members of their respective national associations, which are, in turn, members of FIATA (Federation Internationale de Associations des Transitaires et Assimilés).


What is a Non-Vessel Operating Common Carrier (N.V.O.C.C.)?

The N.V.O.C.C. is a maritime operator who acts as a carrier on behalf of third parties. He issues his own bills of lading, but he is neither the owner, the managing owner, nor the carrier of the vessel on which the carriage is actually performed.

The N.V.O.C.C. takes upon himself all the risks connected with carriage by sea. In particular circumstances, however, when the market shows a positive trend, his activity may prove very rewarding.

Like the freight forwarder, the N.V.O.C.C. becomes a shipper vis à vis the physical carrier.

Obviously, the N.V.O.C.C. covers himself against the risks he is taking on behalf of his clients, thereby also protecting his own reputation and, therefore, his business.

Usually, the N.V.O.C.C. takes out ample insurance coverage for the bs/l he issues with the Through Transport Club, one of the most prestigious P. & I.-s specializing in the coverage of such kinds of risks.

In conclusion, maritime operators play a vital role in making the global shipping system work. They contribute to the growth of world trade and economic development.

Lilia Khovrak is a professional content manager from Odessa, Ukraine. Loves life by the sea. Dreams to see Paris and eat a croissant on the thresholds of Notre Dame de Paris. Hates to read meaningless articles.