www.bifa.org
Policy & Compliance
or NVOCC with the FMC for trades to/from the USA should include: • Ocean freight rates (for both import into and export from the US),
• Any associated surcharges, • Cargo and commodity classifications/ description,
• Port pairs (port of load and port of discharge), • Sample of the bill of lading that will be used for the shipment.
The tariff rate is also dependent on the service
type that is used such as door/door, CY/CY, rail ramp, pier to pier, etc. The freight rate must be filed with the FMC
before the date cargo is received at the origin. While there is no set validity to the rates filed, the rate must have been filed with the FMC for a minimum period of 30 days. Any increase in the rate cannot become effective earlier than 30 days after it has been published. The FMC may allow the rate to become effective sooner on application, but any decrease may become effective on publication. As of now, OTI licensing is mandatory for
NVOCCs domiciled in the US but is optional for overseas based NVOCCs. According to FMC records, there are approximately 4,500 FMC- licensed OTIs authorised to operate in the US trades and over 1,700 non-licensed carriers.
lines such as Maersk Line or MSC which provide ocean transportation between the US and other countries in exchange for payment. VOCCs accept the responsibility for such movement from point A to point B, whereby point A or B could be an inland location or a pier. OTI is an ocean transport intermediary who is
based in the US and holds an OTI licence issued by the FMC to conduct business in the capacity of a freight forwarder and/or an NVOCC. NVOCC stands for non-vessel operating
common carrier. An NVOCC offers services and responsibilities similar to that of a VOCC except that an NVOCC issues its own house bill of lading (this bill of lading needs to be registered with FMC) but does not operate the vessel. An NVOCC may utilise its own container. As per the US Shipping Act of 1984, a person
in the US may not act as an OTI unless the person holds an OTI licence issued by the FMC. The tariff or rates that must be filed by a VOCC
September 2017
How and where is the filing done? In order to file tariffs with FMC, the OTI, VOCC or NVOCC must first register on the FMC website and use the appropriate forms for filing. Once an OTI licence is filed, it does not expire unless it has been surrendered by the OTI or revoked by the Commission due to any irregularities. Until 2011, VOCCs and OTIs were required to publish tariffs electronically and the rates billed to customers were required to be included in these tariffs. However, in line with the mandate of former
President Obama, the FMC published new regulations in 2011 which significantly reduced the rate filing requirements for VOCC and OTI. This ruling exempted NVOCCs from publishing their rates in tariffs or filed service contracts, provided that the NVOCC entered into an arrangement called Negotiated Rate Arrangement (NRA), subject to certain conditions being met. With the ruling, while the rate filing is
exempted, the OTI must still publish the rules, terms and conditions that may include but are not limited to: • Definition and classification of heavy lift, • Definition of out-of-gauge/over dimensional cargo,
BIFAlink
• Bill of lading charges, • Terms of freight payment – whether prepaid or collect,
• House bill of lading terms and conditions, • Details of any hazardous cargo, • Details of claim filing and handling, • Expand and define any abbreviations and/or symbols,
• Any general rate increases envisaged.
Non-compliance could include: • Undercharging or overcharging on tariffs, • Declaring incorrect tariff headings (HS Codes) or cargo description to circumvent duty and taxes,
• Incorrect cargo description, • Manipulating volume and weight information to obtain lower rates,
• Misuse of service contracts or negotiated rate arrangements,
• Collusion with other OTIs and sharing of service contracts.
Some OTIs may find the rules governing FMC
tariff filing and publishing to be complex, but there are several online systems that enable an OTI to meet all FMC tariff filing documentation and compliance requirements. These systems also allow the OTI to manage their service contracts and tariff rate documents.
Conclusion The FMC was created to ensure that US exporters, importers and consumers were protected from unfair costs that may arise from the activities of liner shipping and other foreign government laws and regulation. It is in the interest of the VOCC or OTI to ensure that they follow all the regulations of the FMC in relation to licensing, tariff filing, compliance and maintaining proper records. Record keeping is an important compliance
point for the FMC and as per 46 CFR 532.7, OTIs are expected to maintain original contracts and NRA for five years from the date of performance in a format that is easily accessible and retrievable for the FMC. If proper records are not maintained, the FMC is mandated to disqualify the OTI and classify it as a violation of the Shipping Act 1984. Staying compliant is important because
penalties for non-compliance can be quite severe, running into thousands of dollars, and could also result in the entity’s licence being revoked.
BIFA is grateful to Freight Hub for permission to reproduce this article which is posted on its website
www.freighthub.com
15
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20
