Transportation Freight/ Logistics: NVOCCs

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Table of Contents

Characteristics of NVOCCs
Working of NVOCC
Competitors of NVOCC
Possible Gaps in Security of Air Freight Services with Regards to Terrorism
Incomprehensive background checks of employees
Absence of Air Marshals on All Cargo Aircrafts
Known Shipper Program
Transport of US Mail
Online Tracking of Parcels
References

Characteristics of NVOCCs

Non Vessel Operating Common Carriers (NVOCCs) are third party logistics provider. They are intermediary in freight business, similar to the Freight Forwarders. They operate by providing scheduled ocean shipping services to other logistics providers, without operating ships.

Working of NVOCC

NVOCCs, work by, fulfilling the role of carrier for the shipper and the role of shipper for the carrier. Typical NVOCC guarantee a vessel operator a certain amount of freight in a week or month and purchase space on their vessels, on wholesale basis for shipment of cargo to and from a port. They have their own tariff, issue their own bills of lading and receive and consolidate less than a container (LCL) cargo from different shippers for transportation to the same port. Many Freight forwarders often use NVOCC for movement of LCL goods over the ocean segment. In the US, NVOCC handle about 10 percent of the total shipping volume per year (Enterpreneur.com, 2000).

Competitors of NVOCC

NVOCCs are facing tough competition from other combined shipping companies. At the turn of 21^st century, the shipping industry consolidated and a number of small parcel shippers have purchased various freight forwarding firms, offering a number of advantages over NVOCCs in a combined form. This has put NVOCC future in a doubt. Further shadow is casted by fact that the combined companies were quick to adopt new technologies and offer services, like consignment tracking, over the Internet to manage freight in transit which NVOCCs were very slow to adopt (Wood, 2002).

Possible Gaps in Security of Air Freight Services with Regards to Terrorism

Post 9/11, the threat of terrorism has been prominently highlighted throughout the world. This threat has also affected logistics industry including air freight services. While air transport organizations, around the world, have tightened their regulations regarding the security of passenger baggage on aircrafts, less attention has been paid to freight that is transported through air, via passenger or cargo aircrafts. Though steps are being taken on air freight security as well, gaps still exist in the current system for handling air cargo which can be exploited easily. Some of these gaps are highlighted below.

Incomprehensive background checks of employees

Current standards of security for cargo handling do not require comprehensive background checks and screening of the workers handling cargo and have full access to the aircraft. This pose a serious threat to security of air cargo as this flaw can used to pass weapons inside the secure area of the airports, which could eventually used by terrorists. There is also a great danger of sabotage of the aircraft by anybody who is able gain access to it.

Absence of Air Marshals on All Cargo Aircrafts

The lack of importance given to all cargo aircraft makes them an attractive target for terrorist seeking to highjack large cargo airplanes. Currently, federal air marshals, who are mandated to be present on all passenger flight in the US, are not present on aircrafts carrying only cargo. This security gap is further enhanced by the fact that all-cargo aircrafts are also not required to have hardened cockpit doors as long as security measure as specified by Transport Security Administration (TSA) are implemented to control access to the aircraft.

Known Shipper Program

The Transportation Security Administration (TSA) accepts that 100% physical screening of all cargo is not possible as no single technology is currently available to screen all cargo, for various types of explosives threat, effectively and comprehensively. The TSA has therefore adopted a strategy which heavily relies on examining and evaluation shippers through government certified agents and certifying them. This is done through a system called “Known Shipper”.The TSA then screen shipments against the database of those shippers to verify security. The “Known Shipper” system is itself flawed, as little investigation of these shippers is required to show that they are trustworthy. Any consignment from them is not subject to any security check or X-Ray, until someone suspects it. This flaw can be easily exploited by terrorists, who can temper the shipment at any of the number of point it goes through before it reaches the aircraft (Bloom, 2006).

Transport of US Mail

The transportation of US mail onboard aircrafts itself presents unique challenges to prevent illegal and hazardous material and the introduction of explosives. The Postal Service regards First Class, Priority and Express mail items as private materials which are protected under the Fourth Amendment against search, making the inspection of these items very difficult. Furthermore, the employees Postal Service do not question individuals sending less than 1 pounds of package, thereby increasing chances of sending explosives in small packages.

Online Tracking of Parcels

Several large courier companies like FedEx and UPS offer Internet base services to the customers. This includes online tracking of the parcels. Though a very useful facility to genuine customers, it can easily be exploited by terrorists planning to blow up aircraft, for a fair indication of when the aircraft will be in air (Elias, 2007).

References

Bloom, J. (2006). Air cargo security gaps exposed.

Elias, B. (2007). CRS Report for Congress: Air Cargo Security. Congressional Research Service.

Enterpreneur.com. (2000). Abstract: Ocean Freight Intermediaries: An Analysis of Non-Vessel Operating Common Carriers (NVOCC’s) and Maritime Reform. Web.

Wood, D. F. (2002). International Logistics. AMACOM Publishers.

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