Agents, brokers, forwarders and NVOCCs all work in maritime trade, each in a different role. The customs broker, a forwarder of a special kind, gets its own short section. Below, each role is described by its tasks, its documents and, where it applies, the way it is paid.
The shipping agent
Wherever a shipowner’s vessels call, directly or through other lines, the owner needs an efficient and well-organized agency network in the port. Without it, offering and running the services at a profit is hard. Owners pick agents by market reputation, and by the record and set-up an agent can demonstrate.
In each country where the shipowner does business, a general agent is normally appointed. This person officially stands for the owner at every main port and, where it pays economically, in key inland areas of the country of residence, with reliable sub-agents expected to support the work. The contract rules out looking after other shipowners whose services compete with those of the owner being represented.
Winning the largest possible volume of export and import cargo for the owner is what the agent is there for. Beyond that, the owner expects every effort on the commercial, technical, legal, financial and administrative sides of running the ship.
From the day the ship arrives until it sails, the agent has to give the master full assistance, above all in getting through the bureaucratic requirements of the Port Authority. The rest of the agent’s list: canvassing for cargo, discharging and loading, collecting sea freight, settling port charges, and overseeing agreements with truckers for land transport. Every act is performed in the owner’s name. Any document the agent signs, a bill of lading in particular, should say so right above the signature.
A commission is what the agent earns. International practice usually fixes it, though the figure remains open to negotiation, and export and import cargo commonly carry quite different commissions.
When a charter party is involved
A company that operates regular services has a liner agent, also called an owner’s agent. Charter parties work differently: the charterer appoints the ship’s agent. The shipowner can still nominate a protecting agent of his own, whose job is to help the master and to make sure the charter party conditions are respected in full. The owner’s payment to this agent goes under the name “agency fee.”
Agents join national associations. At the international level those bodies are represented by FONASBA (the Federation of National Associations of Shipbrokers and Agents).
Ship brokers and cargo brokers
Brokers match cargoes with ships and ships with cargoes, and that gives two types: the cargo broker and the ship broker. Qualifications for the profession are high, and the service has to be extremely reliable if a broker wants to stay within the rules. A special license from the Chambers of Commerce is required, and the broker’s name must appear in registers recognized internationally.
Ship brokers handle chartering. A party that needs tonnage to operate a line service for a long or short period hires a vessel from its owner, on a time charter or a voyage charter respectively, and pays hire. Owning a ship would have meant heavy investment. Cargo brokers go the other way and find cargo for shipowners, with close links to manufacturers and traders. Both types work on commission.
Freight forwarders
A freight forwarder is also called a forwarding agent. Manufacturers and traders are closely connected with forwarders and count on them to get their goods shipped, which makes forwarders extremely important to shipowners and their agents.
Many forwarders specialize in particular commodities. That focus raises their contracting power and gives them a say when sellers or exporters choose a carrier. Shipowners and their agents keep forwarders friendly, and a liner service’s profitability basically depends on forwarder support.
The scope depends on the type of forwarder. A domestic (local) forwarder commits to every arrangement for moving cargo out of the exporter’s premises and as far as local customs on export, or the reverse route on import. An international forwarder organizes transport, customs clearance, insurance, packing and carriage by sea, for exports and imports alike, as the sales contract between buyer and seller requires.
The seller or exporter gives the forwarder the shipment and the required information, then adds copies of the sales contract and of the letter of credit, which sets out the payment terms agreed. The forwarder gets time to check whether these papers match the bill of lading.
On imports the forwarder takes delivery of the goods and arranges the last stretch to the receiver’s premises. To collect them, the forwarder presents the original bill of lading to the shipowner or the shipowner’s agent, endorsed to the forwarder by the receiver.
The customs broker
Customs brokers are forwarders with a narrower focus: clearing export and import cargoes through customs. The role is much the same worldwide. A special licence lets the broker deal with the customs authorities. Cargo owners usually sign an authorization that lets the broker file the customs declaration, and the broker then acts officially for them. Issuing false declarations about the cargoes is prohibited. A mistake by the broker still lands on the exporter, who is held liable.
Freight cost and the preparation of export documents can also be part of the broker’s work, and some large exporters employ their own licensed customs brokers. Professional secrecy applies, and the broker cannot take on any activity incompatible with the job. A brokerage fee pays for the work, set at different levels depending on the country.
The customs broker assists the master too, arranging the customs formalities for him. At sailing the master receives two papers. One is the ship’s manifest with customs approval and stamp. The other is the harbor master’s clearance, which is the permission to sail.
Forwarders have national associations of their own, and those associations belong to FIATA (Federation Internationale de Associations des Transitaires et Assimilés).
Consolidation and the house bill of lading
Leading forwarders frequently pick up small LCL (less than container load) parcels from separate exporters and pass them to the carrier as one FCL (full container load). Doing so makes them consolidators, or groupage operators.
A forwarder can also arrange the stuffing of those parcels itself and release a house b/l that names its own overseas branch as receiver. Toward its clients the forwarder then becomes a carrier, and toward the physical carrier a shipper.
The NVOCC
A Non-Vessel Operating Common Carrier (N.V.O.C.C.) is a maritime operator that acts as carrier for third parties and issues its own bills of lading. The vessel doing the actual carriage is not the N.V.O.C.C.’s to own, manage or operate as carrier. Like the forwarder, it is a shipper vis-à-vis the physical carrier.
All risks of carriage by sea fall on the N.V.O.C.C. When the market trends upward, the business can pay off handsomely. The operator also takes out cover for the risks accepted on behalf of clients, which shields its reputation and with it the business. For the b/ls it issues, ample insurance is usually bought from the Through Transport Club, a P. & I. club counted among the most prestigious and specialized in such risks.