The United States Federal Maritime Commission (FMC) has issued a
Notice of Proposed Rulemaking under which foreign unlicensed
Non-Vessel Operating Common Carriers (NVOCCs) will be allowed to
register with the Commission and begin using Negotiated Rate
Agreements (NRAs) with their shippers.
NRAs are simple written rate contracts (which can be concluded
by email) in which a shipper and NVOCC may agree to confidential
negotiated rates for carriage of cargo in U.S. trades subject to
the NVOCC's rules tariff without the need for a published rate
tariff or filing of the NRA with the FMC.
Ongoing Deregulation of NVOCC Tariff Rules
This latest step taken by the FMC follows a progressive
deregulation of NVOCC tariff rules that began in 2005 with an
exemption in Petition P3-03 et al. to permit NVOCCs to enter
confidential service contracts called NVOCC Service Arrangements
(NSAs) with shippers. NSAs are similar to service contracts used by
Vessel Operating Common Carriers. They may contain confidential
non-tariff rates, but must meet extensive content and format
requirements and be filed with the FMC. The "essential
terms" in NSAs (origin, destination, commodities, minimum
volume, length of term) must be published in the NVOCC's
tariff. This was followed in March 2011 by the FMC's initial
NRA rule in Docket 10-03, which allowed use of unfiled simple
written rate agreements, provided the NVOCC published and gave free
access to a rules tariff and maintained transaction records for
subsequent audit. The FMC further liberalized rules as to the
contents of NRAs in Docket 11-22 in June 2012.
However, the FMC has previously only allowed licensed NVOCCs to
use NRAs. Under FMC licensing regulations in 46 CFR Part 515,
domestic U.S. NVOCCs that ship in the outbound direction must
publish an ocean tariff, be bonded and be licensed, which entails
submission of detailed corporate information covering ownership,
officers and directors and designating a "Qualifying
Individual" with three years of requisite ocean transport
intermediary experience. Foreign NVOCCs may ship into the United
States without a license, provided they publish a tariff and are
bonded. FMC staff took the position that the Commission lacks
sufficient jurisdiction and control over foreign unlicensed NVOCCs
and their offshore records to regulate them properly as to use of
The industry, including shippers, carriers, shipping and
logistics trade associations, continued to request that the FMC
take the further step of allowing foreign NVOCCs to use of NRAs,
noting that the simplicity and lack of a filing or publication
requirement would facilitate shipping transactions at all levels of
business, and would enhance competition and reduce costs for the
shipping public. The FMC has decided to take this next step along
with implementation of a registration requirement for foreign
NVOCCs in order to give the FMC greater regulatory control.
Under the FMC's new rulemaking in Docket 11-22, published on
February 21, 2013, the FMC will allow foreign NVOCCs to register,
pursuant to a new Section 515.19 of the FMC licensing regulations.
Registrations will be effective for three years, and may be
terminated by the FMC in the event of Shipping Act or FMC
regulatory violations or failure to maintain a tariff and bond.
Registered NVOCCs must comply with FMC inspection and record
production requirements in the same manner as licensed NVOCCs.
Under a new Section 515.24, registered foreign NVOCCs must also
designate an agent for service of process in the United States. The
FMC also published proposed new conforming provisions in 46 CFR
Part 532, the rule governing use of NRAs.
Deadline for Comments to the Rule
The FMC's proposed rule and registration process can be
viewed on its
Comments on the new FMC Proposed Rule on foreign NVOCC use of
NRAs are due by April 29, 2013.
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