A good third party logistics provider is many things to many different clients. In the ocean transportation world, a 3PL should be a freight forwarder as well as an NVOCC (non-vessel operating common carrier). OK, so what does that mean? First, some quick definitions:
Freight Forwarder – a party engaged in all modes of the domestic or international transportation process by the means of arranging shipping, preparing documentation, customs clearance, warehousing and delivery. It is a critical part of providing third party logistics and supply chain services on behalf of a client.
NVOCC (non-vessel operating common carrier) – NVOCCs are defined as “carriers” in that they are allowed to issue their own house bills of lading, and also publish tariff rates or enter into service contracts with steamship carriers through licensing granted through the Federal Maritime Commission (FMC). Note that you must be a freight forwarder to be an NVOCC. This is an important regulatory designation that allows a third party logistics provider to incorporate ocean logistics services into their value proposition to the client.
Below is a basic chart illustrating some of the primary responsibilities each plays in a shipping transaction:
We often get questions from people on what these two terms actually mean, and more importantly what purpose each serves in day-to-day logistics operations. Both are important pieces of the logistics and supply chain game, and are critical elements that any full-service third-party logistics provider should bring to the table.
Visit our global logistics solutions page for more information.
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