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FMC Reviewing Regulations for Repeal or Modification

Wednesday, May 31, 2017
Sandler, Travis & Rosenberg Trade Report

The Federal Maritime Commission is accepting through July 5 comments and information on which of its existing regulations may need to be replaced or revised because they are outdated, unnecessary, or ineffective; eliminate jobs or inhibit job creation; impose costs that exceed benefits; or otherwise interfere with regulatory reform initiatives and policies. Input is sought from all members of the interested public, including ocean common carriers, marine terminal operators, ocean transportation intermediaries, tariff publishers, surety companies, exporters, importers, and beneficial cargo owners. The FMC specifically requests comments and current information or data on any (or all) of the following areas.

Ocean Transportation Intermediaries. The FMC reviews all applications for OTI non-vessel operating common carrier and ocean freight forwarder licenses. After approval, OTI licenses are issued to applicants upon receipt of acceptable proof of financial responsibility, usually in the form of a surety bond. The FMC also manages the Regulated Persons Index as to licensed or registered parties, receives and processes all OTI bonds and bond riders, registers foreign-based unlicensed NVOCCs, and provides for the renewal of OTI licenses and registrations every three years.

Carrier Automated Tariffs. The FMC reviews carrier-published tariff systems under the accessibility and accuracy standards of the Shipping Act of 1984, reviews published tariff material for compliance with the Shipping Act's requirements, and responds to inquiries or issues that arise concerning tariff rates, rules, and practices. The FMC also acts on applications for special permission to deviate from tariff publishing rules and regulations and recommends action on specific problems and concerns regarding the publication of tariffs.

Marine Terminal Operator Schedules. For MTOs who choose to make a schedule of their rates, regulations, and practices available to the public, a complete and current set of schedules must be maintained for five years and made available to the FMC upon request.

Service Contracts. The Shipping Act allows ocean common carriers, either individually or through agreements, to negotiate and execute service contracts with one or more shippers or shippers' associations. Service contracts are filed confidentially with the FMC and are maintained in its SERVCON system. A concise statement of certain contract essential terms (i.e., commodity or commodities involved, minimum volume or portion, duration, and origin and destination port ranges) must be published in the carrier's tariffs. Original signed service contracts, amendments, and associated records must be maintained for five years from the termination of the contract and be made available to the FMC for audit upon request. An FMC-developed Web service allows VOCCs to incorporate the filing of service contracts into their own contract management systems.

NVOCC Service Arrangements. NSAs are the NVOCC functional equivalent to a service contract, are filed confidentially with the FMC, and are maintained in the SERVCON system.

NVOCC Negotiated Rate Arrangements. NRAs are written arrangements between a shipper and a licensed or registered NVOCC to provide specific transportation service for a stated cargo quantity, from origin to destination, on and after a stated date or within a defined time frame. NVOCCs using NRAs need not publish the applicable rate in the tariffs they make available to the public. NRAs are not filed with the FMC but are instead maintained in private electronic systems.

Carrier and MTO Agreements. The FMC has responsibility for competition review and market analysis, focusing on activity that is substantially anticompetitive under the standards of the Shipping Act of 1984. In this regard the FMC administers a variety of monitoring programs and other research efforts designed to track relevant competitive and economic activity in major U.S. trade lanes and apprise the Commission of emerging commercial trends and carrier pricing and service activities. Agreement program activities consist of processing carrier and MTO agreement filings, making appropriate recommendations on the disposition of filed agreements, administering monitoring report filing requirements, reviewing agreement meeting minutes and reports, and maintaining a database that contains pertinent information on each agreement filed.

Controlled Carriers. Special regulatory oversight is exercised by the FMC to ensure that controlled carriers, whose marketplace decision-making can be influenced by foreign governmental priorities or by access to non-market sources of capital, do not engage in unreasonable below-market pricing practices that could disrupt trade or harm privately-owned shipping companies.

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