It's tricky business, shipping freight across international waters. Freight regulations and tariffs vary from country to country, and sometimes, even from port to port. That's why logistics providers, especially those who also handle customs brokerage, are such valuable assets to the fluidity of any supply chain utilizing maritime transport.
Freight forwarding agents vary, too, with different types generally providing a diverse array of ocean freight services. For example, CAF Worldwide is an Ocean Transportation Intermediary (OTI) and licensed non-vessel operating common carrier (NVOCC). There are also OTIs that are strictly freight forwarders. In addition to NVOCCs and traditional forwarders, there are vessel-operating common carriers (VOCCs) and beneficial cargo owners (BCOs), too.
The respective roles of strict ocean forwarders and NVOCCs differ only slightly, but those nuances are not definitive. In some cases, the scope of a company's work straddles the line between the roles of NVOCC and traditional freight forwarder—such is the case with CAF Worldwide.
Ocean Transportation Intermediaries (OTIs) are defined either as "Ocean Freight Forwarders" or "Non-Vessel Operating Common Carriers," and regulated by the Federal Maritime Commission (FMC) pursuant to the Shipping Act of 1984. To ensure all correct goods and materials within a freight shipment get to their rightful destinations in a timely fashion, OTIs act as veritable travel agents for all cargo transported across the globe.
Shipping cargo via waterways is cheaper than doing so through the air. That's why most of the world's freight is sea-bound, at one point or another, during its journey from manufacturer to retailer, and finally, to the customer.
Generally speaking, OTIs are tasked with the following:
Because vessel-operating common carriers (VOCCs) own their containers and ships, they have a definitive pricing advantage over NVOCCs and traditional forwarders.
For this reason, NVOCCs and traditional forwarders must find opportunities to add value elsewhere in order to capture market share.
Three practices helping NVOCCs stand out in the crowd include:
Even though VOCCs may be able to charge less for cargo space, they are known to only run one sailing per port each week. When shippers are running low on inventory, they likely need their shipment urgently—not at the end of an arbitrary seven-day waiting period.
NVOCCs like CAF Worldwide work with many carriers across varied shipping alliances. So, in instances where a shipper is indeed running light on inventory and requiring a speedy delivery, an NVOCC's convenient access to cargo space and sailing options becomes invaluable.
Forwarders should always be monitoring FCL and LCL prices to ensure the most economical and time-efficient mode of transport for your shipment. They should also be mindful of the weight and density of your cargo, as it could be reason enough for a change from one size container to another.
To that point, if your shipment is particularly dense, a small FCL container might be an economical choice. However, that same size container would not be smart to use for a less-dense shipment likely better off lumped into an LCL shipment inside a larger container.
The above is true, because a 20-foot FCL container still costs about 90% of a 40-foot FCL container, making space in the 40-foot container far more enticing for those seeking additional cargo room. The smaller container option is only feasible in instances of high-density freight (as in brick or tile).
Another often overlooked factor when deciding between FCL or LCL shipping concerns unloading costs. Smaller shipments teetering on the edge of being/appearing cheaper using LCL can actually end up costing more after such charges are factored in.
When dealing with an FCL shipment, the entire container is typically delivered to the customer at their warehouse, and the goods are unloaded at the delivery point. With LCL, there is a mixture of importers involved, so the shipment must go from the terminal to a container freight station (CFS), where it is consolidated or separated, based upon each importer, before being transported to its respective customer and/or ultimate destination.
The cost of this service is paid at the time the LCL shipment is picked up from the CFS, and is not included in the ocean freight cost. This cost can be substantial and outweigh the savings of using the LCL service.
At CAF, our logistics experts diligently keep watchful eyes on FCL and LCL rates and leverage longstanding relationships with various shipping lines, to ensure the best shipping rates for your cargo, even during hectic peak seasons.
Note: For more information about freight density and its impact on freight classification, read this blog.
One of the most important aspects of customs brokerage is accurate documentation.
NVOCCs draft their own bills of lading, so attention to detail is imperative at all stages of freight forwarding, including all customs clearance procedures. We don’t like to brag, but our founding president, Joe Barry, has been a licensed customs broker for nearly three decades.
Customs brokerage is one of the things CAF Worldwide is the very best at; we're sure of it.