Non-Vessel Operating Common Carrier

Non-vessel operating common carrier (NVOCC) is a type of business

providing through transport service but doesnt own any vehicles. NVOCC is
often confused with international freight forwarders because both
consolidate freight from different shippers and negotiate favorable
transportation rates from ocean carries. However, forwarders act as agents
on behalf of merchants. NVOCC is a shipper from an ocean carriers
perspective and carrier from a shippers perspective.

Currently, there are three main factors that differentiate NVOCC from
international freight forwarders. Firstly, NVOCC can issue its own bill of
lading. Secondly, NVOCCs can set their own rates for ocean and multimodal
shipments. Thirdly, NVOCC can enter into service contracts with ocean
carriers to purchase transportation services. The main profit of NVOCC is the
difference between the box rate from the line and the amount of freight
charged to individual shippers. In addition, they also chare on value added
services such as arranging pre and on carriage, and documentation.

The increasing sophistication of containerized services and multi-modal
transportation, the role of NVOCC has become greater because it is likely to
perform all the functions necessary in through transport services such as
provision of containers, booking for cargoes, documentation, collection and
delivery of cargoes. Combination of a variety of transportation in whole
service package is the reason why it is highly significant in todays liner
shipping industry. Thats why, many NVOCCs want to be recognized as
logistics provider or Multi Modal Transport Operator (MTO) because they see
their role as supply chain managers.

However, there may be advantages and disadvantages of using NVOCCS. As
advantages, NVOCCs promote material flow in a supply chain. For example,
the important activity of NVOCCs is provisions of service to LCL (Less Than
Container Load) shippers. Therefore, in other words, NVOCCs are serving
mass market. However, operations this far is similar to those of liner
companies. Why customers prefer to NVOCCs is that they have service in
package. For example, their service starts from picking up the cargoes to
delivery to destination.

Years ago, when there were many LCL shipments, liner companies provide
stuffing and consolidation services for LCL cargoes at Container Freight
Station (CFS). However, nowadays, there were less and less LCL shipments
so that liner companies do not want to provide LCL facilities which are not
cost efficient to them anymore. This role has be taken by NVOCC as they
accept lots of LCL cargoes and consolidated into one full container presenting
to lines as FCL (Full Container Load) Cargoes. The lines issue one bill of
lading to NVOCC as shipper. Then, the individual shipper is issued house bills
of lading by NVOCCs.

However, to provide door to door transport service, there are some
shortages in capacity of NVOCCs. First of all, house bill of lading issued by
NVOCCs does not have function of document of title. As a consequence,
letter of credit payment is not working for this kind of bill of lading. And, as
house bill of lading is not negotiable, it cannot be sold or used as collateral
in the market. Secondly, although there is a convention for multi modal
transportation such as Rotterdam Rules, it is not widely accepted by nations
yet. Thats why, delivery of goods to a nation where Rotterdam Rules are not
adopted yet, liabilities between shippers and carriers are still controversial.

Nonetheless, the package service in multi modal transportation and service
to LCL Shipments are still yet strong reasons why exporters and importers
accept NVOCCs. Even though, NVOCCs have some weaknesses to rely on,
shippers and importers still use them for its provision of logistics service to
mass market and filling up the LCL facilities which is needed in multi modal
transportation.


Modern Multimodal Transportation
In a multimodal transportation system, depending upon the throughput of
material flow, the efficiency of multimodal transportation interfaces, the
sufficiency of terminal and material handling equipments, right usage of
systems both in yard management and tracking, and skills of people
involved in this material flow are required to consider strategically. As the
efficiency of right usage of all these components produces the optimum
output in the system, the right combination of them is pivotal.

Container terminals are important interface in multimodal transportation
system as the containers are transferred from seaborne carrier such as
container vessels to inland transportation such as road and rail haulage. One
common problem happening in container terminal is a congestion of
container which makes longer in turn-around time of container vessels,
costing higher port dues as a consequence of longer lay time.

Truly, not all the outbound or inbound in container terminal are full container
load (FCL) cargo. It is reasonable to consider the facilities for less than
container load (LCL) cargo providing a space for storage, stuffing, packaging
and consolidation which are technically warehouse facilities. Thats why,
inland container depot (ICD) has become an important interface in
multimodal transportation.

On the other hand, equipments used in container terminals are radical too.
By the end of 2013, it is expected that ten 18,000 TEU vessels will be
introduced to the world fleet. It is a challenge for most hub container
terminals because those vessels have broader width than those of existing
container vessels. And, it requires the quayside gantry crane which can
reach to containers in starboard side.

Inside the container yard, in addition to inland container depot, sufficient
systems and equipments are required. Currently, most terminals use the
tractors and chassis, straddle carriers, yard gantry cranes and front end
loaders. Tractors and chassis system allows the container moving to and fro
the quayside gantry cranes. Then the containers are carried off from the
vessels and locked onto the trucks. This is an efficient system in multimodal
transportation.

Straddle carriers, yard gantry cranes and front end loaders are used to carry
and stack containers in the container yard (CY) and used to load and unload
containers for road and rail haulage. Automatic Guide Vehicles (AGVs) are
the latest system used to deliver containers between stacking area and ship
side. Moreover, to maintain and manage all the high tech technology and
equipment, the knowledge and skill of people involved in multimodal
transportation industry are also required. Moreover, a good trucking system
and technicians to manage it are integral components for fast and efficient
terminal handling.

All in all, individually, all components have strong and weak points. For a
multimodal transportation company, it is important to know the quality and
efficiency of a container terminal especially in transferring of container
terminal especially in transferring of containers from one port to another or
to road and rail haulage. For less container load (LCL) cargoes, the
consideration on inland container depot and warehouse facilities may require
in order to achieve optimum success or output.


Role of Supervisory or Protecting Agent
Port agent and protecting agent are not the same. However, why ship owner
considers appointing a supervisory or protecting agent is largely
concerned with role and responsibility of port agent. Generally, it can be said
that protecting agent only looks after the ship owners favor. And, protecting
agent will be working closely with port agents. The responsibilities of port
agency are to look after all the needs of the ship and her personnel while
she is arriving at, staying in and departing from the port.

Normally, port agent is hired by ship owner. But in time chartering, a time
charterer could be assume as a ship owner as he is a disponent owner by
the law. And he is also responsible to pay for port dues, fuel, towage and
agent fees. Nonetheless, the one who pays the agent fees is the principal
technically. Sometimes, ship owner wants the time charterer does some
tasks that the time charterer is not responsible for. However, there are also
many circumstances that the time charterer could not perform as the ship
owner wants him instructs the Agent.

For example, the actual contract is made between the time charterer and the
port agent. And, there is no problem if the agent spends within the
estimated expenditure. If the expenditure of the agents exceeds the
estimated expenditure, form legal point of view, there is nothing a time
charterer can perform according to actual ship owner because the direct
contract is made only between the time charterer and the port agency.
However, in most cases, a range of tasks and the estimated fees are
mentioned when a contract is made between actual ship owner and the
agent who is appointed by the time charterer.

Even though the agent legally represents ship owner or disponent owner, a
charterer still appoints his agent for some reasons. Commercially, ship
owner is not trading but a charterer is the one who is trading as cargoes are
his. Thats why, mostly for commercial reasons, a charterer appoints his
agent to ship owner. For example, by nominating an agent who is skillful in a
specialized market, ship owner can save a lot of cost concerning with port
dues and port facilities. However, in some trades, it is important to protect
trade secrets. Obviously, charterer is the one who is trading so that he is
sensitive to the leakage of tracking information by port agency. Thats why;
he couldnt let the ship owner appoint his own agent because the charterer
doesnt trust the agent.

In such cases, the agent nominated by the charterer will have to handle
evenly in favor of ship owner interests and charterers interests. However,
ship owner generally dislikes the charterers agents. When he is incapable of
refusing charterers reason of leakage information, he has no choice than to
hire a protecting agent who make ensure that owners interests are
protected. Another reason why ship owner doesnt like charterers agent is
because he is not able to know the financial stability of the agent but he has
to make disbursement of some amount of money before the ships call.

Such protecting agent normally does the domestic requirements of the ship
including stores, cash, crew travel and so on. Moreover, it may act as check
and balance with the charterers agent to make working times and stamen of
facts are done in accordance with ship owner interests. In the name of
domestic requirements, protecting agent may take care of the health of
crew, cooperation with the preparation of notice of readiness and calculation
of lay time.

Technically, it means that there will be two agencies; one is hire by
charterer and another is hired by ship owner which is called protecting
agent. But both agents principal is ship owner which is called protecting
agent. But both agents principal is ship owner because ship owner pays and
charterer appoint one agent. Normally, protecting agent charge the 50% of
the agent fees. It is fair enough in ship broking field. Whenever there is and
additional broker or agent to perform or carry out a service, both agents and
brokers charge 50% of the total remuneration.


THE Shipping Agent
Definition
The shipping agent is a permanent representative who, in a foreign port of call, looks after the
owner's interests, in the latter's name and at his expense.
The shipping agent or for brevity's sake the agent, is thus in a way the trusted representative of
the owner in a harbour. He is allowed to act in the owner's name with regard to the rights and
duties of the owner towards third parties.
The responsibilities/competencies as well as the remuneration of the agent may be explicitly
entered into a contract which has been concluded between himself and the owner. This practice
is very common in the liner trade. In tramping, the agent usually has a tacit competency to act in
the owner's name. Consequently, in the tramping there is almost never a written contract between
the agent and the owner. In any case, the owner remains legally liable for the acts taken by the
agent in the frame of the agency.
The duties of a shipping agent are very variable and depend mainly on the sort of service he has
to render (liner traffic or tamp trade). Some duties will be the same for both services such as the
duties with regard to the agency or dispatch of the vessel; other duties will be typical to the liner
trade such ensuring there is enough cargo in the port of call (this is called acquisition).
Because of the great diversity of his duties, the shipping agent, within the framework of his
responsibilities/competencies, often performs the tasks of other intermediaries such as chartering
brokers (or cargo brokers), booking agents, etc.
From the foregoing it can be readily seen that there are several categories of shipping agents such
as: "port agents", "liner agents" and "own agencies".
The Port Agent
The port agent is the representative of the owner in a certain harbour in the tramp trade. As
mentioned before, there is usually no written agreement between the owner and the port agent, so
that in fact, the latter has a tacit responsibility/competence. His tasks may be multiple and may
include:
look for a berth for the incoming ship;
arrange for the pilot and the tugs if necessary;
make-up the documents for the customs and harbour services;
assist the master in making the necessary contacts with the local authorities and the harbour
authorities;
arrange for the necessary ship provisions;
arrange for the bunkers if needed;
arrange for the necessary repairs;
convey instructions to and from the owner;
organize the supply, transport and the handling of the goods;
organize the necessary contacts with the stevedores;
collect the freights;
contact the shippers and receivers of the goods;
in case of damage, make the necessary contacts (only at the master or owner's request) with
the insurance company, the P & I club, the classification society, the nautical inspection, the
experts or surveyors, etc.
For his services/intervention, the port agent receives a fee called "agency fee".
It is in the owner's interest to appoint a trustful and energetic agent. It is customary in the tramp
trade that the expenses for loading and discharging are for charterer's account. The latter shall
therefore usually demand the right to appoint himself the agent in the port of loading and
discharging to look after his interests. This has to be clearly stipulated in the charter party in the
"Agency Clause" which has to mention: "Owners' agents" or "Charterers' agents".
Notwithstanding the fact that the charterers appoints the agent, it is nonetheless customary that
the owners pays the agency fee.
If the owner is obliged to take the charterer's agent (which is realized during the conclusion of
the charter party) the owner can nonetheless protect his interests, up to a certain point, by
appointing a "husbandery agent", who will then assist the master and protect the interests of the
owner, so that the actions of the charterer's agent will not harm the owner's interests.
Notwithstanding the fact that the agent, for his appointment, will have the tendency to show
allegiance to the charterer, he must not forget that he is in fact remunerated by the owner. It is his
duty to protect the interest of the owner, independent of who appointed him. This means that if
the agent has been appointed by the charterer, he still needs to provide a full service to the ship
and the master, as if he were appointed by the owner.
The Liner Agent
In harbours in which the company does not have his own organization, the owner of a liner trade
will appoint a liner agent.
The relationship between the liner agent and the owner (the principal) is laid down in an
agreement called "agency contract" or "agency agreement".
In 1969 a uniform agreement was drafted by FONASBA (Federation of National Associations of
Ship-brokers and Agents), the use of which is highly recommended by the 23 affiliated members.
This type of agreement, "Standard Liner Agency Agreement" refers also to the local uses in case
of intervention by the agents as included in the general conditions of the professional association
of the country concerned.
DUTIES OF THE LINER AGENT
The duties of the liner agent can be classified into two categories: the duties of the cargo broker
and the duties of the dispatcher.
Duties of the liner agent as cargo broker
One of the main duties of the liner agent is to act as a canvasser.
According to the size of the ships and the frequency of their calls, the liner agent receives a
certain allotment for purposes of acquiring cargo. In order to be as rational as possible, the liner
agent will work as follows:
he will establish a sailing list which he will circulate widely and he will also announce the
departures in specialized journals (e.g. the Lloyds).
He will promptly establish contacts with forwarders, factory agents, importers and exporters. he
will mainly seek these contacts through his canvassers.
These canvassers will try to impress the shippers with the excellent service and/or freight the
liner agent has to offer. This can sometimes be a very delicate task to fulfil, as quite often, the
canvasser of the forwarder also visit these potential shippers.
The liner agent's canvasser must, therefore, inform the shipper if he doesn't have a fixed
forwarder, through whom, for commercial reasons, the bookings will have to be made.
To inform the agency of the results of their contacts and the possible shipping prospects, the
canvassers make solicitation reports or canvassing reports.
These canvassing reports are used to forward information to their own agent, as well as to a
representative agent or to the owners.
As a cargo broker, the liner agent will also book outward cargo and inform the shippers on which
quay and when the goods are to be presented and when the loading will start. According to the
incoming bookings, booking lists are drawn up. Meanwhile, in the manifest department the
shipping documents are collected (shipping permits, bills of lading) which are necessary to
commence the loading operations. The collected documents are also compared with the booking
lists.
The liner agent also has an important role with regard to the inward cargo. The receiver or his
forwarding agent shall, as holder of the bills of lading, present himself to the shipping agent and
receive the necessary information regarding the quay and the time where the goods will be
discharged. Upon arrival of the goods and after payment of the reception costs and eventually of
the freight, the receiver presents the delivery order whereupon he collects the goods from the
reception corporation.
Duties of the liner agent as dispatcher of the vessel
Besides looking after the in- and outward cargo, the agent is also responsible for the dispatch of
the vessel. As a dispatcher he needs to aim at the quick dispatch of the vessel at the lowest cost.
He should, of course, not forget to also look after the interest of the master and the crew of the
ship.
Summary of the duties of the liner agent
As cargo broker
Provide the necessary information concerning the freight rates and the publication of the sailing
lists.
Look for cargo via notices and sailing lists.
Booking of cargo and the conclusion of the agreements.
To draw up, to initiate and deliver the required documents (booking lists, shipping permits,
delivery orders).
Contact the shippers/forwarders with regard to the deliveries for shipment.
Fulfil the necessary formalities regarding the delivery and reception of the goods.
Settle cargo claims.
To organize receptions or other entertainment.
As dispatcher
Arrange for a suitable berth.
Contact the stevedores and the corporations.
Assist the master and his crew.
To arrange for the pilot and/or tugs.
Arrange for the clearing of the ship and the goods and to fulfil the other custom and
administrative formalities.
Deposit the note of protest.
Arrange for loading, discharging, provisioning and bunkering of the ship.
The signing on and signing off of crew members.
To mediate in case of general average.
By outward cargo
Mail the sailing lists; visit exhibitions or fairs; announcement in specialized papers.
Contact shippers by telephone, in writing, by fax or e-mail.
Visit customers, inland as well as abroad.
Quote freight charges to the clientele.
Enter cargo on booking lists.
Forward details of booked cargo to the owners.
Hand over the shipping permits and bills of lading from shippers; to initial shipping permit; to
check bills of lading.
Deliver the shipping permits to the chief marker.
Calculate the freight in accordance with the measurement slips.
Hand over a copy of the booking lists to the stevedore.
Arrange the formalities in connection with dangerous goods.
Request a berth from the harbour master.
Draw up the manifests per destination harbour.
Arrange for clearance of the ship on arrival by the water clerk
Signing and dating of bills of lading.
Collect freights if payable before departure and before delivery of the bills of lading.
Clearing of the ship at departure.
Inform the next port of call and the owners of the ship's departure.
Prepare the settlement of account.
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Prepare the special documents required in the different ports of discharge.
Draw up "manifest correctors" in case of wrong freight calculations.
Deal with claims.
By inward cargo
Reception of cargo plan and manifests per harbour and cargo.
Check the freight calculations.
Send loading plan to stevedores; drawing up of discharging plan.
Mail the notices of arrival to receivers.
Contact receivers/forwarders to agree on means of reception of the goods.
Draw up freight lists for customs.
Prepare the delivery orders, freight and/or reception invoices
Deliver goods on the exchange for the delivery order.
Appointment of a surveyor in case of damage to the goods.
Prepare a report to the owners in connection with damages.
Draw up settlement of accounts.
Appointment of experts in case of dispute regarding damages to the cargo.
The Relationship Agent Owner
The agreement between the agent and the owner can be established either in writing (e.g.
Standard Liner Agency Agreement), verbal or tacit.
In case of a tacit agreement, the agent has authority to take any action which is not covered in a
written contract or in clearly defined instructions (e.g. instructions transferred by fax) but which
may be necessary in the context of his assignment as an agent. An example of a tacit competence
is the signing, in the name of the owner, of some guarantees required by the harbour authorities,
before they grant permission for the ship to berth in the harbour. If the agent does not comply
with the demands of the harbour authorities, or if he had to wait for clear instructions from the
owner to comply with this request, he would harm the interests of the owner and be unable to
fulfil his original task (namely his duty as an agent).
Any action taken by the agent shall bind the owners if they have entered into a tacit agreement.
Whether the agent has been appointed by the owners themselves or in accordance with the terms
of the charter party, makes no difference. The agent must, at all times, protect the interests of the
owners (and of the charterers) to the best of his ability and always carefully follow the owners'
instructions.
The agent may never exceed his authority/competence. If he exceeds his authority anyway and
refuses to accept or follow the instructions from the owners, he will be personal responsible for
his act and bear all the consequences thereto.
The agent always has to be sure that third parties with whom he deals, in the name of the owners,
are well aware of his capacity as an agent and that all costs made in the frame of the agency, for
the account of the owners, are regarded as such. In other words, the agent may never give to a
third party with whom he deals, the impression that he is the owner. Therefore, it is of the utmost
importance that all documents are signed by the agent as agents only or as agents for owners.
In most countries, this practice is protected by law.
Accordingly, a person who signs a document in his own name and without reservations, is
supposed to have acted personally and to be thus personally responsible. If, as a consequence, the
agent wants to avoid every misunderstanding and make it very clear that he is not acting in his
personnel name ( and as such not personally bound) but only acts in name of his principal (the
owner) each document presented to a third party must display as agents only. Thanks to the
words "as agents only" which is universally and legally accepted, the agent cannot be obliged to
pay, for example, an invoice for the account of the owners and which has been accepted as such.
Remark
The mention of only the word "agent" when signing a document is not a sufficient guarantee that
the agent is not personally bound.
The agent may never delegate his assignment or a part thereof to a third person, unless he has
received the explicit or tacit authorization from the owners to do this. All documents and
information entrusted to him by the owners must be considered as confidential.
The Agent and the Time Charterer.
The position of the agent in a voyage charter is in fact the same as the one from the port agent.
The "Agency Clause" stipulates who appoints the agent, Owners' agent or Charters' agent.
Usually the charterer appoints the agent and the owner pays the agency fee.
In a time charter, the situation is different to a voyage charter. In a time charter, the time
charterer becomes a so-called disponent owner. He becomes a sort of acting owner, who now is
the operator of the ship and who, in this capacity appoints the agent. The time charterer decides
when the ship will load or discharge, what the ship will load and under which terms. During the
time charter period he pays all the variable expenses or costs of the ship such as fuel costs, port
and light dues, tugs and pilot dues, canal dues, agency fees, and the costs for cargo handling. The
fixed costs or running costs of the ship such as the crew's wages, the ship's stores, the insurance
of the ship, the costs for administration and others costs remain with the owners. The master
now has to follow the instructions of the charterer and offer him his services the best he can. It is
consequently normal not to say compulsory that the time charterer now appoints and pays the
agent. The agent will now have to act in the charterer's interest and satisfy all his requirements
including those of the master.
The remuneration
For his intervention, the agent is remunerated by the owners or the ship's operator (in case of a
time charter)
In tramping, the agent will be remunerated for his intervention as dispatcher. This remuneration
which is called "agency fee" is usually determined in accordance with the "Official Agency
Fees" or the agent can propose a certain amount based on commonly used tariffs.
In the liner shipping, the agent receives besides his "agency fee" also a commission (agent's
commission) for his intervention as a cargo broker which is determined as a percentage on the
net freight (freight less rebates). This percentage is different for inward and outward cargo and
is, of course higher for outward cargo.
The expenses made or advanced by the agent in connection with the ship and her cargo are called
"ship's disbursements" and are entered in the "disbursement account".
The Liner Agent as the Owner's Confident
As mentioned before, the liner agent has two important tasks: one as a cargo broker and one as
dispatcher. Besides these two direct tasks, a good agent will, as a trusty to the owners, also have
an information task and a control task.
The information task of the agent
The agent must inform the owners continuously about the facts directly connected to the cargo of
the ship. These include:
the state of the bookings;
the prospects with regards to weights and volumes;<:
the assumed time necessary to load and/or discharge the goods;
the expected time of departure (E.T.D.).
Besides the above technical particulars about the ship and her cargo, the agent needs to inform
the owners constantly about the following points:
the financial, commercial, social and even the political situation, not only in the harbour
concerned but also in the adjacent hinterland;
technical projects regarding the harbour;
large national or regional expansion programs or investments;
the possibility of strikes in or outside the harbour;
the flow of goods which takes place outside the company (by land, by sea or by air) to
destinations also called at by the company;
the names of large exporters so that the necessary efforts can be made to acquire a part of their
transport.
The control task of the agent
The control task of the agent extends on the one hand to the services rendered to the ship in the
harbour and on the other hand to the handling of the goods.
With regards to the services (harbour dues, provisioning, tugs and pilotage, repairs, etc.) the
agent has to carefully look at the prices and tariffs as well as at the quality.
With regard to the handling of the goods, he mainly needs to check the outward cargoes and
particularly the measurements, the volumes and whether the nature of the goods were correctly
given and if the correct freight was applied. He must also assure himself that certain goods are
not of a dangerous nature (e.g. IMO-goods and the like).
The Own Agent
Large shipping companies often have, in countries where they have a lot of commercial interests,
their own office, usually called "agency".
The head of such an agency is usually a delegate from the company who is well acquainted with
the uses and customs of the company. He will consequently follow the same policy in the agency
as in the company. Between the agency and the company there are seldom any conflicts, except
for local ones. The agency often has to adapt itself to the local practices.
Further, the own agent nearly has the same tasks as those from the liner agent:
the tasks of a cargo broker ;<:
the task of a dispatcher ;
an information task and
a control task.