Tag Archives: FMC

The OSCARs: Creating Greater Efficiency in Transpacific Agricultural Shipping

The United States Department of Agriculture has teamed up with members of the Westbound Transpacific Stabilization Agreement[1] to enhance shipping and exports in the agricultural market by creating weekly projected equipment and container availability reports designed to increase efficiency and transparency of containers flows.

Current carriers including data for the initiative are APL, COSCO, Evergreen, Hanjin Shipping, Hapag Lloyd, Yang Ming Transportation Corporation, OOCL, NYK Line, K Line, and Hyundai Merchant Marine.[2]  The data is compiled each week to offer from information provided by these carriers from each of 18 intermodal locations regarding estimated container availability and supplies and is “based on up-to date bookings or reservation information in the westbound transpacific trade lane.”[3]

Weekly data on container availability as well as overview data for up to 6 prior months is available from these lines in the following 18 locations:

  • Charleston, SC
  • Chicago, IL
  • Cincinnati, OH
  • Columbus, OH
  • Dallas, TX
  • Denver, CO
  • Houston, TX
  • Kansas City, MO
  • Los Angeles and Long Beach, CA
  • Memphis, TN
  • Minneapolis, MN
  • New Orleans, LA
  • New York, NY
  • Norfolk, VA
  • Oakland, CA
  • Savannah, GA
  • Seattle and Tacoma, WA

Shippers can find the weekly reports, which also container more information on the initiative and how to read the reports, by visiting http://www.ams.usda.gov/AMSv1.0/ATContainerReport.

The Federal Maritime has also weighed in on the new initiative, applauding the efforts of the USDA and the WTSA and urging full shipper participation.  More information here:  http://www.fmc.gov/chairman_lidinsky_applauds_new_usda_container_availability_report_and_urges_full_shipper_participation/.


[1] The “Westbound Transpacific Stabilization Agreement (WTSA) is a research and discussion forum of container shipping lines operating in the trade lane from the U.S. to Asia.”  http://www.wtsacarriers.org/home_nf.html

[3] Id.

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FMC Simplifies Negotiated Rate Arrangements

The Federal Maritime Commission revised its Negotiated Rate Arrangement (NRA) regulations to reduce recordkeeping requirements.   With immediate effect, the FMC is

a) eliminating the requirement for the shipper’s title and address in their written assent to rates,

b) eliminating the requirement that the bill of lading include a notice that a shipment is moving pursuant to an NRA; and

c) eliminating the requirement that an NVOCC retain all associated records and written communications pertaining to an NRA. List of Subjects in 46 CFR Part 532

 

Accordingly, the Federal Maritime Commission amends 46 CFR Part 532 as follows:

PART 532 – NVOCC NEGOTIATED RATE ARRANGEMENTS

  1. The authority citation for Part 532 continues to read as follows:

AUTHORITY: 46 U.S.C. 40103.

  1. In § 532.5, revise paragraph (b) to read as follows:

§ 532.5 Requirements for NVOCC negotiated rate agreements.

* * * * *

(b) Contain the names of the parties and the names of the representatives agreeing to the NRA;

* * * * *

  1. Revise § 532.6 to read as follows:

§ 532.6 Notices.

An NVOCC wishing to invoke an exemption pursuant to this part must indicate that intention to the Commission and the public by a prominent notice in its rules tariff.

4. Revise § 532.7 to read as follows:

§ 532.7 Recordkeeping and audit.

(a)        An NVOCC invoking an exemption pursuant to this part must maintain original NRAs in an organized, readily accessible or retrievable manner for 5 years from the completion date of performance of the NRA by an NVOCC, in a format easily produced to the Commission.

(b)        NRAs are subject to inspection and reproduction requests under § 515.31(g) of this chapter. An NVOCC shall produce the requested NRAs promptly in response to a Commission request. All records produced must be in English or be accompanied by a certified English translation.

(c)        Failure to keep or timely produce original NRAs will disqualify an NVOCC from the operation of the exemption provided pursuant to this part, regardless of whether it has been invoked by notice as set forth above, and may result in a Commission finding of a violation of 46 U.S.C. 41104(1), 41104(2)(A) or other acts prohibited by the Shipping Act.

* * * * *

For more information on NRA’s you can contact us via email at nmooney@customscourt.com or smorrison@customscourt.com or by phone at (850) 893-0670 or toll free at (800) 583-0250.

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When Is C-TPAT Right For You?

The Customs-Trade Partnership Against Terrorism (C-TPAT) was established to ensure the safety and security of cargo arriving in the United States. Although being C-TPAT certified is not required by any governmental agency, many private companies only partner with C-TPAT compliant businesses. Thus, Third Party Logistics Providers (3PLs) are strongly motivated to obtain certification.

However, in order for a 3PL to be eligible for C-TPAT certification it must meet some minimum requirements. For example, it MUST do all of the following:

1. Be directly involved in the handling and management of the cargo from point of stuffing overseas up to the first U.S. port of arrival. (Entities which only provide domestic services and are not engaged in cross border activities are not eligible.)

2. Manage and execute these particular logistics functions using its own transportation, consolidation and/or warehousing assets and resources.

3. Be licensed and/or bonded by one of the following: the Federal Maritime Commission, the Transportation Security Administration, U.S. Customs and Border Protection, or the Department of Transportation, and

4. Maintain a staffed office within the United States.

And in order to participate in the C-TPAT program a 3PL may NOT:

1. Subcontract any service beyond a second party other than to other CTPAT members (This means that CBP does not allow the practice of “double brokering”, the 3PL may contract with a service provider, but it may not allow that contractor to further subcontract the actual provision of this service to an unknown third party).

2. Be a non asset-based 3PL which only performs duties such as quoting, booking, routing, and auditing (these type of 3PL may possess only desks, computers, and freight industry expertise) without its own warehousing facilities, vehicles, aircraft, or any other transportation assets. These non-asset based entities are excluded from C-TPAT as they are unable to enhance supply chain security throughout the international supply chain.

If your business is not otherwise eligible for C-TPAT certification but desires to obtain it, it might consider obtaining one of the necessary agency licenses. If you have questions on doing so, we are able to help.

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FMC RULING OPENS DOOR TO MISCHIEF

Sometimes the best intended act can lead to unanticipated results.  In the case of informal docket no.  1916(I)   GUMTREEFABRICS, INC. v. EVER-LOGISTICS INTERNATIONAL FORWARDING LIMITED d/b/a EVEROK INTERNATIONAL FORWARDING CO., LTD, the FMC opened the door to conduct which would ordinarily be prohibited.  In that case an importer claimed that cargo was extortionately withheld from delivery to it by a Chinese NVOCC seeking to collect its agent’s debts on other cargo from the importer.  The NVOCC’s agent in the United States had gone bankrupt, leaving the Chinese and with some unpaid obligations.  According to the complaint, fully aware that Gum Tree had already paid the Chinese company’s bankrupt agent what it owed, the Chinese NVOCC nevertheless extortionately withheld other cargo until Gum Tree paid nearly $20,000 of the bankrupt OTI’s debts.

After paying the Chinese again what it had already paid to the bankrupt agent, Gum Tree filed a complaint with the FMC hoping to collect its duplicate payments from the Chinese OTI’s bond.  The Federal Maritime Commission ruled that it had no jurisdiction over the NVOCC’s conduct because the NVOCC used Canadian ports to first discharge the U.S.-bound cargo. In previous rulings the FMC had said that it could not require untariffed or unbonded OTIs using Mexican or Canadian ports to post bonds and tariffs, or obtain other FMC authority to operate between the United States and foreign nations if they avoided U.S. seaports.  But for the first time the agency said that licensed, bonded and tariffed NVOCC can divert cargo to avoid FMC jurisdiction as well.

Now FMC licensing of NVOCCs and the corresponding bonds and tariffs may, in certain circumstances, be reduced to a charade.  All the NVO has to do is divert the cargo via Mexican or Canadian ports.  It can extort or otherwise abuse U.S. shippers without fear of Mexican or Canadian intervention (since the extortion/abuse will be committed in United States), and it can take comfort in the FMC’s position that it has no authority over the NVOCC in those circumstances.  The harmed shipper/consignee cannot invoke the terms of the OTI’s tariff or bond or seek the agency’s assistance as long as the cargo is diverted.

If this ruling is to stand, OTI’s should be required to provide notice to American shippers and consignees when such cargo will not be arriving or departing by sea from a U.S. port and to advise the implications of that fact.  This would help the cargo owner to affirmatively select an OTI which is operating under FMC jurisdiction and has a tariff to abide with a bond at risk.   It would avoid the Gum Tree situation where a shipper unknowingly placed its trust in an OTI which presented only the facade of FMC jurisdiction.  Such a regulation could also strongly encourage the use of U.S. ports in place of cargo diversion to Mexican or Canadian seaports.

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Federal Maritime Commission Begins Rulemaking Process to Amend Regulations to Eliminate Filing of Rate Tariffs By Licensed NVOCCs

On April 29, 2010, the Federal Maritime Commission published a proposed rulemaking to implement its February 18, 2010, decision to relieve licensed NVOCCs from the costs and burdens of tariff rate publication. The April 29 rulemaking promulgated new and amended regulations that, when given effect, will establish the criteria that must be adhered to by NVOCCs that seek to be exempt from the tariff rate publishing requirement. Publication of rules tariffs would still be required under the regulations.

The proposed FMC regulations would recognize “negotiated rate agreements,” or NRAs, as a new type of instrument that, in function, would serve to set individualized rates as between a shipper and NVOCC. An NRA is defined in the regulations as a “written and binding arrangement between a shipper and an eligible NVOCC to provide specific transportation service for a stated cargo quantity, from origin to destination, on or after the receipt of the cargo by the carrier or its agent (or the originating carrier in the case of through transportation).”

For an NVOCC to avail itself the FMC’s newly-relaxed tariff rate publication requirement, it must follow certain rules outlined in the new regulations, namely:

  • The NVOCC must give notice to the public that it is opting out of rate publication by publishing that fact in a prominent place in its filed rules tariff. An NVOCC can also elect to invoke the exemption by filing with the FMC a Form FMC-1, which would then be reflected on the FMC website along with the NVOCC’s tariff location.
  • The rules tariff must be available to the public free of charge, or it must be provided with each of the NVOCC’s proposed NRAs or rate quotes.
  • NRAs must be (1) be agreed to by both parties; (2) be memorialized in writing; (3) include the applicable rate for each shipment; (4) be agreed and memorialized on or before the date on which the cargo is received by the common carrier or its agent (including originating carrier in the case of through transportation rates); and (5) include prominent notice of the existence and location of the NVOCC’s rules tariff.
  • NRAs and associated records must be retained for five years and are subject to the records availability requirements of the Commission’s regulations at 46 CFR § 515.31(g).

When these criteria are met, a NVOCC will be exempted from the requirement that rates tariffs be published in an automated tariff system. Associated tariff rate regulations, such as those governing the timing of rate increases and decreases, which would then be inapplicable insofar as there would be no published rate to adjust.

An NVOCC who fails to maintain its bond or license or has had its tariff suspended or cancelled by the FMC is ineligible to avail itself of the new exemption.

Interestingly, the new proposed regulations would only exempt licensed NVOCCs from the tariff rate publication requirement. Registered but unlicensed NVOCCs, which are those that have no physical U.S. location and are incorporated abroad, would not be exempt from rate publication even if the proposed regulations go into effect. The FMC has stated that it will consider whether to expand the exemption to cover registered, unlicensed entities. Already there have been some cries of discrimination from foreign NVOCCs due to this disparate treatment.

The deadline for interested parties to file comments concerning the new proposed regulations with the FMC is June 4, 2010.

The proposed regulations can be found on the FMC’s website at http://www.fmc.gov/userfiles/pages/file/NVOCC%20Tariff%20Exemption%20NPRM.pdf

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