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FMC REGULATIONS AND NRA’S ver. 20130619. FMC (Federal Maritime Commission) Who are they? The...

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FMC REGULATIONS AND NRA’S ver. 20130619
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FMC

REGULATIONS AND NRA’S

ver. 20130619

FMC (Federal Maritime Commission)

Who are they?

The Federal Maritime Commission

(FMC) is the independent federal

agency responsible for regulating the

U.S. international ocean

transportation system for the benefit

of U.S. exporters, importers, and the

U.S. consumer.

Rev. 06/19/13Rev. 06/19/13

FMC (Federal Maritime Commission)

What is a tariff?

Tariff is what a licensee (VOCC, NVOCC) files with FMC

There are two parts to a tariff:

1. Rates – ocean selling rates quoted and billed to customers

2. Rules – rules/conditions that FMC licensee must conducts business in accordance to, including but not limited to:

Application of rates including currency Definition of heavy lift Definition of extra length Min. BL charges Payment of freight charges - prepaid, collect allowed

for listed countries Bill of Lading conditions (consistent with terms on back

of HBL) Hazardous cargo How overcharge claim should be filed and handled Definitions and Symbols GRI's

FMC (Federal Maritime Commission)

What is tariff rates?

Tariff rates are the ocean selling rates we bill to customers

Rates for both U.S. import and export shipments need to be filed

Minimum rate validity is 30 days; validity can be longer depending on how steady/regular the business is

Rates filed must be in effect based on the service type. eg:

DOOR rate: prior to loading at shipper’s facility

CY rate: prior to cargo delivered to container yard

RAIL rate: prior to cargo delivered to rail/ramp

PIER rate: prior to cargo delivered to pier

What is a DOOR rate?

Pick up or inland cartage charge is included in the Ocean Freight Rate

eg. Pickup rate $500/40’, port-to-port rate $1500/40’, then a DOOR rate would have Ocean Freight Rate quoted, filed and billed as $2000/40’

FMC (Federal Maritime Commission)

When will new rates and amendments go into effect?

• New Rate filing – activated on the same day of filing

• Rate change filing –

• that results in lower or no change in cost to shipper – same day

• that result in higher cost to shippers – 30 days

• Rate expiration filing – rates will effectively be expired either on the expiration date specified at time of filing or 30 days from the date expiration request is submitted to FMC, whichever comes first

Effective dates:

FMC (Federal Maritime Commission)

What is required information to file rate?

Commodity

Origin

Port of Loading

Port of Discharge

Destination

Service Type

Rate Basis

Currency

Container Size

Container Type

Minimum BOF (if applicable)

Rate Notes

Effective Date

Expiration Date

On 10 July the Federal Maritime Commission

(FMC) issued a cease and desist order and

imposed a civil penalty of US$7.9 million on

Hudson Express Lines, the operating name for

Hudson Shipping (Hong Kong) Ltd, a Hong

Kong-based non-vessel-operating carrier

(NVOCC).

Case #1: FMC FINES HONG KONG NVOCC US$7.9 MILLION

• The fine was imposed for violations of Section 10(a)

(1) of the Shipping Act of 1984 on 120 occasions in

1998 and 1999 by knowingly and willfully providing

two other NVOCCs with access to Hudson’s service

contract, thereby enabling two other NVOCCs to

obtain ocean transportation at less than applicable

rates.

• The other NVOCCs were fined as well.

Case #1: FMC FINES HONG KONG NVOCC US$7.9 MILLION

On investigating, the NVOCC’s were found to have: undercharged on tariffs

provided incorrect cargo description

inflated cubic measurements of certain cargo to obtain discounted rates from ocean carriers

engaged in unlawful access to service contract rates.

Other cases: FMC FINES NVOCC’s $477,500

• AE Eagle America – Jamaica, NY - $87,500.00

• Ba-Shi Yuexin Development dba Bus Logistics –

Alhambra, CA - $85,000.00

• Ocean Marine Shipping – Cummings, GA - $70,000.00

• SES Intl Express – Inglewood, CA - $62,500.00

• MB Logistics Intl – Jamaica, NY - $50,000.00

• Sinotrans Logistics – Alhambra, CA - $50,000.00

• Cargo Alliance – Monterrey Park, CA - $40,000.00

• Orion Cargo Services – Newark, NJ - $32,500.00

Other cases: FMC FINES NVOCC’s $477,500

FMC - Penalties for Non-Compliance

$6,000.00 for each unpublished tariff

$30,000.00 for each willful violation

Each day of continuing violation is considered a separate offense

FMC (Federal Maritime Commission)

High level flow of quotation, filing and billing process

Send quotation to customer

Quotation accepted by customer

After rates go into effect, load/move shipment

Invoice customer based on quotation

New rates filed in FMC tariff

•Rates in quotation, tariff and on invoices must match, down to line item level

•Examples of non-compliance:

•Moved/loaded shipment prior to rates becoming effective

•Filed door-rate to customer but invoice shows a pickup charge

•No effective bunker filed in tariff but customer is billed for bunker

FMC (Federal Maritime Commission)

Alternative to tariff rate filing?

Tariff rate filing is extremely rigid Rates once filed takes 30 days for amendment to take

effect Cannot quote different rates to different customers

for the same port pair, service and commodity

Alternative to tariff rate filing: NRA

NRA stands for NVOCC Negotiated Rate Arrangement

NRA’s do not need to be filed with FMC

An NRA structure needs to be set up properly, including:

Indicating the use of NRA’s in the rules tariff

Indicating on HBL and all shipping documents that shipment is moved pursuant to an NRA

Submitting application to FMC

Oversea agents quoting on behalf of N/VOCC are boune to the same procedure and requirements

Developing internal procedure for systemic and robust recordkeeping of all NRA’s

FMC (Federal Maritime Commission)

How NVOCC’s can benefit from NRAs?

• UFL/WCT benefits from NRAs by being able to offer different special/promotional rates to individual direct customers and co-loaders

• These rates don’t have to be filed, and quoted rates are not restricted to existing filed rates

• Rates can be changed any time prior to cargo arriving at port, CFS or received by contracted trucker depending on rate type, allowing UFL to be extremely responsive to sudden market changes

FMC (Federal Maritime Commission)

What WCT needs to do to start using NRAs?

Add NRA Notice to some of our business documents that relate to quote and rates

HBL Invoices/Debit Notes E-mail signature

Develop NRA Rules Tariff

Publish NRA Rules Tariff on UFL’s website

File Form No. 1 with FMC

Procedure to keep good written record (such as emails) showing rates quoted and acceptance by customers

Procedure to ensure billing to customers is same as accepted rates

FMC (Federal Maritime Commission)

Quotation process and recordkeeping for shipments moved under NRA

Quotation must be done by “writing” which can be electronic

Quotation should be specific to Origin/Destination

Quotation should be specific to commodity and quantity unit(s) involved

Communication must reflect clear acceptance by shipper/consignee/co-loader/agent of rates/charges quoted

NRA’s must contain actual rates/charges invoiced to customer

Quotation communication must include NRA Notice

Quotation should indicate duration quotation is good for

Rates/charges cannot be changed once cargo is delivered to pier or yard or picked up by trucker depending on rate type

Recordkeeping (for shipments moved under NRAs):

NRAs and related records must be kept for 5 years

NRAs are subject to FMC inspection

Must be able to present record to FMC upon request. Failure to promptly provide record can result in NVOCC being disqualified to use NRAs and possible penalty

General guidelines:

FMC (Federal Maritime Commission)

Quotation process and recordkeeping for shipments moved under NRA

Attached is a detail procedure for invoking NRA exemption

When NRA regulations are applicable?

When quoting for shipments that:

• will be moved under W.C.T.’s H/BL

• W.C.T will invoice for Ocean Freight

• not based on existing rates filed with FMC

Microsoft Office Word Document

FMC (Federal Maritime Commission)

Quotation process and recordkeeping for shipments moved under NRA

NRA rules applicable?

Example….

UFL quoting for FOB shipments where UFL provides door to port service

UFL quotes for EXWORK shipments where UFL provides port to port service

UFL quotes for FCA shipments where UFL provide door to port service

UFL quotes for FCA shipments where UFL provides port to door service

FMC (Federal Maritime Commission)

Quotation process and recordkeeping for shipments moved under NRA

NRA rules applicable?

Example….

UFL quoting for FOB shipments where UFL provides door to port service

UFL quotes for EXWORK shipments where UFL provides port to port service

UFL quotes for FCA shipments where UFL provide door to port service

UFL quotes for FCA shipments where UFL provides port to door service

YES

NO

YES

YES


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