FMC to Initiate Rulemaking Relieving NVOCCs From Publishing Rates in Tariff

“Under the current economic conditions, the commission must use its expanded exemption authority to simplify the business processes of American companies, put cash back into businesses, and generate additional American jobs.” – Commissioner Rebecca F. Dye

In a 3 to 1 vote, the Commissioners of the the Federal Maritime Commission (FMC) voted last month to initiate a proposed rulemaking that would excuse Non-Vessel Operating Common Carriers (NVOCCs) from the requirement to publish in its tariff the rate it charges for shipping cargo.

"Tariff means a publication containing the actual rates, charges, classifications, rules, regulations and practices of a common carrier or a conference of common carriers. The term “practices” refers to those usages, customs or modes of operation which in any way affect, determine or change the transportation rates, charges or services provided by a common carrier or conference and, in the case of conferences, must be restricted to activities authorized by the basic conference agreement."
--46 CFR Part 520.2

As described by the FMC in its announcement about the vote, NVOCCs are “common carriers that act as intermediaries between their shipper customers and steamship lines.” In other words, they are not vessel operating common carriers, i.e., the ship operator themselves, but rather they work to coordinate the movement of the cargo in relation to the transportation needs of the shipper, while to the average person, often appears to be the carrier themselves.

NVOCCs also come under the designation of an Ocean Transportation Intermediary (OTI). Along with freight forwarders, these two parties make up the two intermediary cargo coordinating bodies available for use in overseas waterborne shipping. You can learn more about them in a prior blog post here.

Under the current federal maritime regulations, found in 46 CFR Part 500, NVOCCs must publish their rates in their tariff which is filed with the FMC. While the proposed rulemaking is intended to relieve NVOCCs from filing this information, it doesn't come without any strings attached – several other conditions will be imposed such as:

1. A continued requirement to “publish standard rules tariffs” that would contain the Terms and Conditions under which the carriage is governed
2. A requirement to provide these tariff rules for free to the public
3. A requirement that the rate charged for carriage be agreed to and “memorialized in writing” by the date upon which the cargo is received for carriage, and
4. A requirement that NVOCCs hold for a period of five (5) years documentary proof of the agreed upon rates and terms for each shipment, and upon request by the FMC, to make such records promptly available.

Keep in mind that while the FMC has voted to begin the process of creating a new rule, the practice of “notice and hearing” must still take place and this process takes time. In other words, just because the FMC is announcing this proposed change, there may be no changes for many months, and the final version, while close, may ultimately have slight variations. The FMC addressed this in a subsequent press release which can be read here.

The petition requesting this relief from filing was brought by the National Customs Brokers and Freight Forwarders Association and the FMC decision is widely supported by the shipping and intermediary, i.e., OTI, community.

Questions/comments? Post below or email me at clark.deanna@gmail.com