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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