News
Print PDF

Revised Rules on Negotiated Rate/Service Arrangements Effective Aug. 22

Tuesday, July 24, 2018
Sandler, Travis & Rosenberg Trade Report

The Federal Maritime Commission has published a final rule making it easier for non-vessel-operating common carriers to use negotiated service arrangements and negotiated rate arrangements. The FMC has said this rule, which will take effect Aug. 22, will relieve regulatory burdens on ocean transportation intermediaries while simultaneously giving shippers more choices and flexibility.

NSAs are the NVOCC functional equivalent of a service contract. They contain a minimum volume or quantity commitment as well as a defined service level and a certain rate or rate schedule over a fixed period of time. They also include port ranges or geographic areas rather than specific points of origin and destination. NSAs may include non-rate economic terms, including liquidated damages in the event of non-performance. The FMC states that the final rule will make NSAs easier and more attractive to use by removing filing and essential terms publication requirements.

NRAs are written arrangements between a shipper and a licensed or registered NVOCC to provide specific transportation service for a stated cargo quantity, covering specific points of origin and destination, and including rates effective 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 the final rule will allow NRAs to be amended at any time, allow the inclusion of non-rate economic terms, and allow an NVOCC to provide for shipper acceptance of the NRA by booking a shipment thereunder.

To get news like this in your inbox daily, subscribe to the Sandler, Travis & Rosenberg Trade Report.

Customs & International Headlines