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What is a BCO Contract?

BCO is an acronym for Beneficial Cargo Owner. 

The BCO refers to the importer of record, who takes possession of cargo at the destination and does not act as a third party in the movement of the goods.

A BCO contract specifies the carriage of freight by ocean through two primary channels: a direct or indirect channel. 

Direct Channels

A direct channel can negotiate directly with the carrier. This mechanism is usually chosen by large shippers and manufacturers such as GM, Dell, Walmart, and Target. The idea is that these shippers have such a huge volume of cargo and require so much international coverage that they can communicate with carriers more directly regarding their needs (and negotiate accordingly) rather than communicate via a middleman. 

Indirect Channels

An indirect channel is more commonly used by small to medium sized BCOs. These shippers typically lack the volume that would give them bargaining power for lower rates and other service guarantees. 

Additionally, an indirect channel may be better for these BCOs in terms of cost, as it would eliminate their need for maintaining an internal logistics team.


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