By  Vincent Wen.      Photo：Khunkorn Laowisit

Maybe many importers and exporters, especially new companies that are new to the transportation industry, often have a question: why do we need to ship through a freight forwarder instead of booking directly with a carrier? Let’s first explain the contracting entity with the carrier. According to contracting parties, are mainly divided into two types of contracts: BCO and NVO.

BCO (Beneficial Cargo Owner) refers to a contract signed directly between a carrier and a large enterprise. Simply put, it is a direct contracting to carriers. Of course, BCO is divided into different levels. The top level is the cargo owner of the shipping company's strategic cooperation, or the industry's leading company across multiple routes with a contract volume of five or six figures, such as Wal-mart，Costco. Secondly, there are small and medium-sized BCOs classified according to container volume per year. When carriers want more of their own supply of cargoes, the contracting threshold will also be lowered. However, if a company is not big enough in scale, there will not be much advantage in price and whether they can get positions.

NVO refers to a contract signed between a carrier and a freight forwarding company (non-vessel operating common carrier) with NVOCC qualifications. NVO is the main source of carriers’ bookings. The relationship between carriers and large NVOs is unusual, the characteristics of it are discounted contract freight rate and reserving large cargo spaces for them and not easily drop their cargoes during peak seasons.

1. For price, NVOCC itself has the contracting container quantity that it can negotiate with carriers, and its relationship with carriers is relatively good, so it can negotiate better freight rates.

2. For professionalism, NVOCC has professional knowledge in international transportation, ensuring that transportation strictly obeys the regulations throughout the entire stages, and can also avoid fines and additional fees caused by failure to process some transportation documents in a timely manner (such as AMS and ISF). Since each country has different regulations and local transportation environment, different NVOCCs also have different professional knowledges for different areas.

3. For services, NVOCCs can simplify the paper work processes. As NVOCC plays the role of a service provider and needs to use different customized services for different customers, such as providing relevant transportation information, suggestions, and tracking records for customers in different industries. In addition, carriers can't do with customs clearance and inland transportation services, this also requires the NVOCC which has rich experience in long-term cooperation with reliable local trucking companies.

In short, if it is a leading company in an area with a demanding of considerable container spaces of 5-6 figures per year, and has its own professional international transportation department to operate, it is a good idea to contact with carriers directly(BCO). If you are an small and medium enterprise, choosing a suitable NVOCC as a service provider can not only refrain to many transportation risks, but also enjoy additional services and save a lot of personnel salaries and freight costs.

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