Introduction:
The Middle Eastern trading system cannot be thought of without considering the pivotal role of the UAE within it. If you run traders, importers, exporters, and e-commerce businesses, your primary task is to ensure your commercial goods reach their destination without any hitches via ports such as Jebel Ali or Khalifa Port.
Unfortunately, many businessmen often get themselves tangled in the logistics industry lingo and terminologies. The two terms that are interchangeably used but have entirely different meanings are freight forwarding services and shipping lines.
Choosing the incorrect service framework can create severe operational hurdles for your business. It can cause unnecessary storage charges at the container yard, as well as disrupt the continuity of your supply chain.
This is why at Road Rover Transport, we know that the initial step in making your entire distribution system efficient is understanding the difference between freight forwarder and shipping line.
This all-inclusive architectural guide will fully dissect the logistics mechanics, financial implications, and scope of operations involved in setting up a Freight Forwarding vs Shipping Company in UAE. Knowing these basic differences will allow your procurement department to enter into better contracts, cut down on time, and efficiently control your global overhead.
What is a Shipping Company (Ocean Freight Carrier) in the UAE?
A shipping company, known alternatively as an ocean freight carrier UAE, is an organization responsible for owning and maintaining its own infrastructure for carrying goods across international waters. It owns and maintains the big ship containers, RoRo ships, and bulk ships moving along set international routes.
If you use an ocean freight carrier directly, then your contract with that company will operate within the confines of port-to-port boundaries only. The primary strength of an ocean transport company is its ability to perform the blue water journey of transporting goods.
They supply the needed empty container and put it in their own ship at the place of departure. Their role is to move across international shipping channels to deliver the goods at the designated port in the UAE.
In addition to physical movement of cargo, one of the most important administrative services provided by an ocean carrier is the issuance and verification of the official Bill of Lading signed off by the Master. The Bill of Lading acts as the legal agreement for carriage of cargo between the shipper and ocean carrier.
As both parties work on large scale operations, their customer service operations have become very standardized and automated.
They are not responsible for handling any inland trucking services, nor for solving any documentation issues locally, nor for clearing your shipment through the Federal Customs Authorities. In case your shipments get delayed because of the documentation issue at the port, the shipping company would simply levy demurrage charges on you until you clear your legal hurdles.
In essence, they operate as a pure vessel owner type organization.
What is a Freight Forwarding Company in Dubai?
A freight forwarding company is a specialist logistics architect responsible for the complete supply chain system. Unlike the carrier who owns cargo vessels or airplanes, a freight forwarder does not have control over such massive assets.
They are just a logistics coordinator in Dubai that has access to various industry networks through which they can coordinate transits from the factory level to the warehouse.
A freight forwarder acts as a one-stop-shop operator in coordinating the numerous transport services needed for an international shipment. A freight forwarding company contracts for bulk shipping spaces for cargo ships, commercial airplanes, and cross-border trucks, passing the savings to smaller commercial shippers.
It covers all operations of a professional forwarder. After getting services from them, they take care of everything right from the pick-up from the factory to arranging temporary warehouse storage.
They will pack up several small consignments in one container and coordinate through an expert air freight agent. They will finally perform door-to-door shipping in the UAE.
Moreover, the in-house compliance agents of these forwarders look after all aspects of the customs clearance matrix at the port. They ensure that your commercial invoices, certificates of origin, and delivery orders align perfectly with the declarations made by your customs to avoid penalties.
The ultimate aim of these logistics experts is to ensure that your teams are solely engaged in core business activities.
Key Differences: Freight Forwarding vs Shipping Company
In order for your purchasing and supply chain management departments to quickly conduct a strategic analysis, below are the key functional aspects of comparing Freight Forwarding vs Shipping company operations in UAE:
| Metric Name | Shipping Company (Ocean Freight Carrier) | Freight Forwarding Company |
| Ownership of assets | A vessel owner has own ships, chassis and sea containers. | Non-vessel owning manager that leases cargo space on several carriers. |
| Range of services provided | Strictly port-to-port delivery; no inland destination logistics. | End-to-end control from origin to final point (door-to-door shipping UAE). |
| Versatility in service operations | Very low; dependent on pre-planned ship schedules and routes. | High versatility; can redirect cargo through different modes of transport. |
| Customs formalities handling | Issues only bill of lading master for consignment; no clearing assistance. | Offers full support on customs clearance, taxes, permits and documents. |
| Minimum load volume for transport | Favorable towards large shipments and contracts on full container loads. | Can accept any size cargo: from individual pallets (LCL) to project consignments. |
| Service customer communication style | Corporate queue system with automation. | Individual assistance of a coordinator providing live tracking. |
The Role of NVOCC (Non-Vessel Operating Common Carrier) in UAE Logistics
In your exploration of shipping business in the Middle East, you will come across the unique phenomenon referred to as the NVOCC Dubai. For today’s traders to operate effectively, it is imperative to know the position that an NVOCC occupies in the comparison framework.
An NVOCC stands out as a middle tier shipper that does not own any vessels but conducts many activities like that of a shipper. The organization acquires container spaces in bulk at very reduced prices from the companies owning vessels.
They in turn sell those spots to small-time businesses that may not fit into the high volume requirements set by the mainline shipping carriers.
In contrast to the usual freight forwarder that functions mostly as an agent, NVOCC assumes the role of a virtual carrier. The company has the ability to issue its own House Bill of Lading for the goods shipped to it by the shipper.
This gives the NVOCC legal cargo liability during the ocean segment of the transportation.
On the other hand, a typical NVOCC mainly concentrates on the ocean leg of the shipment. If you want to ensure that you have all the assistance that you need in terms of trucking, warehousing, and complicated paperwork at the destination point, the best strategy would be to team up with a competent freight forwarder who works as a dedicated logistics coordinator Dubai alongside an NVOCC.
Which one do you need for your business?
The decision to either deal directly with the shipping line, or work via a freight forwarder is dependent to a large extent on your company size, the experience of your personnel and the specifics of your shipment.
When to choose a Shipping Line directly
Working directly with a maritime freight operator makes absolute commercial sense if your company meets the following criteria:
- You have a specialized division of your company that manages all port exchanges under supply chain management.
- Your division is well equipped with technical know-how that enables them to deal with changes in legislation, make claims on marine insurance policy and settle disputes regarding ports independently.
- Your cargo is made up of many full container loads (FCL) or bulk cargoes traveling on predetermined routes each month.
- You have independent contracts with truckers from destination regions and are also registered with destination custom clearance brokers at your UAE ports.
When to hire a Freight Forwarder in the UAE
On the contrary, if the following conditions apply to your firm’s model, then partnering with a freight forwarder will be the safe and most economical way to go:
- The volume of your shipments varies in the course of the year and requires LCL consolidation space to minimize freight costs.
- Your logistics need door-to-door shipping UAE, meaning that one company is expected to pick up your shipment from your overseas supplier and drop them off at your point of sale or production facility.
- You do not have a large logistics department within your organization and need someone else to manage intermodal transfers via sea, air, and road.
- You need professional assistance when dealing with customs regulations, dangerous chemicals, and cross border road freight via the Gulf Cooperation Council network.
Internal Linking Opportunity:
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Conclusion
The successful weighing up of the options of whether to go for a direct shipping line and an all-encompassing freight forwarder is what sets the most efficient business models apart from costly businesses. With knowledge of the difference between freight forwarder and shipping line processes, you can ensure that your firm does not pay for anything beyond its fundamental needs.
If your firm requires big shipments to clear through the ports or special inland transportation services, ensuring the smooth running of your supply chain management systems will be critical for sustainable growth as traders, importers, exporters, and e-commerce businesses.
Leave your worldwide shipping services to Road Rover. Get in touch with our commercial logistics team today to receive your personalized pricing plan.