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NVOCC Rules Eased Under FMC Proposal

Monday, November 13, 2017
Sandler, Travis & Rosenberg Trade Report

The Federal Maritime Commission voted Nov. 9 to approve publication of a proposed rule that would make it easier for non-vessel-operating common carriers to use negotiated service arrangements and negotiated rate arrangements. Acting FMC Chairman Michael Khouri said this proposal would “reduce unnecessary regulatory burdens that increase complexity and costs in America’s ocean supply chain.”

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

The FMC states that in the forthcoming proposed rule it will seek feedback on three proposals: ending the requirement for NSAs to be filed with the Commission, expanding the ability of NVOCCs and shippers to amend NRAs, and allowing the act of tendering cargo to be considered acceptance of a rate under the terms of an NRA. The proposal will also include a specific request for comments on whether the FMC should expand the NRA rules to allow inclusion of non-rate economic terms.

Elements of the proposed changes were raised in an April 2015 petition filed by the National Customs Brokers and Forwarders Association of America. The FMC notes that in March 2017 its regulatory reform taskforce identified this petition as an immediate objective to rapidly and successfully address burdensome, unnecessary, and outdated directives.

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