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© Husch Blackwell LLP NEW YORK/ NEW JERSEY FOREIGN FREIGHT FORWARDERS & BROKERS ASSOCIATION, INC. SEMINAR/ LUNCHEON MEETING JUNE 20, 2012 NEWARK, NJ NRAs:

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Presentation on theme: "© Husch Blackwell LLP NEW YORK/ NEW JERSEY FOREIGN FREIGHT FORWARDERS & BROKERS ASSOCIATION, INC. SEMINAR/ LUNCHEON MEETING JUNE 20, 2012 NEWARK, NJ NRAs:"— Presentation transcript:

1 © Husch Blackwell LLP NEW YORK/ NEW JERSEY FOREIGN FREIGHT FORWARDERS & BROKERS ASSOCIATION, INC. SEMINAR/ LUNCHEON MEETING JUNE 20, 2012 NEWARK, NJ NRAs: ONE YEAR LATER And FMC ENFORCEMENT REVIEW Carlos Rodriguez, Esq. Husch Blackwell th Street, N.W. Washington, D.C

2 QUICK REVIEW OF NRAs KEY ITEMS : (EXPERIENCE: GENERALLY SUCCESSFUL) * ROUTINE RATES NEGOTIATIONS BECOME THE NRAS *MUST BE IN WRITING--- EXCHANGES O.K. * ROLE FOR BOOKING CONFIRMATION, QUOTE SHEETS, ETC. Notice Requirement: Rules Tariff, bill of lading or other shipping document---September 12: Rules Tariff only-Direct Rule Making * SHIPPER AGREEMENT MUST BE CLEAR * CHARGES CAN BE IN RULES TARIFF OR AS LINE ITEMS IN NRA (QUOTATION) *RATE/CHARGES INCREASES WITHOUT 30 DAY NOTICE DISCUSSION: WHAT ARE YOU DOING AND WHY? 2

3 KEY ITEMS continued THE FMC RESPONSE (TWO MAIN ITEMS) * ACCEPTANCE BY THE SHIPPER The Rule States: In order to qualify for the exemptions... an NRA must: (a) Be in writing; (c) Be agreed to by both NRA shipper and NVOCC, prior to receipt of cargo by the common carrier or its agent (including originating carriers in the case of through transportation); FMC WANTS TO SEE SOME WRITTEN RESPONSE BY SHIPPER: OK WOULD BE ENOUGH IN CLEAR RESPONSE TO QUOTATIONS. DISCUSSION. 3

4 THE FMC RESPONSE continued * RATE AND CHARGES: WHERE DO THEY GO? RATES: ON THE NRA---THE NRA: THE GROUPING OF S, QUOTATION SHEETS, BOOKING CONFIRMATIONS ETC. CHARGES: CAN BE ON NRA MATERIAL, OR IN YOUR RULES TARIFF *WHAT ABOUT LOCAL ORIGIN/DESTINATION PORT CHARGES? All applicable origin and destination local terminal and/or port charges shall apply for the account of the cargo to all NRAs. RULES TARIFF ITEM 4

5 THE FMC RESPONSE continued MISCELLANEOUS FMC ITEMS ON NRAs *GET IT RIGHT OUTREACH v. ENFORCEMENT *NRAs ADDRESS RULE: Contain the legal name and address of the parties and any affiliates; and contain the names, title and addresses of the representatives of the parties agreeing to the NRA---This should change to Contain the names of the parties and the names of the representatives agreeing to the NRA Direct Rule Making. Effective date: Sept. 12, 2012 *HISTORICAL TARIFF: MUST KEEP THE RATES TARIFF ACCESSIBLE FOR THE PRIOR 5 YEARS; LAST TWO YEARS MUST BE ELECTRONICALLY RETRIEVABLE. AFTER 2 YEARS: HARD COPY O.K. *FMC STATES: No longer required to file NOTICE on FMC NVOCC Form FMC-1 before using NRAs. NOT SO: MUST INDICATE ON FMC NO. 1 THE WEB LOCATION OF THE RULES TARIFF. 5

6 THE FMC RESPONSE continued * STATED CARGO QUANTITIES---DOES NOT MEAN MQCS. CAN MEAN SINGLE SHIPMENT OR NO. OF SHIPMENTS. CAN HAVE MAXIMUM NO. OF SHIPMENTS. NRA IS NOT AN NSA. *RULE: An NVOCC wishing to invoke an exemption pursuant to this part must indicate that intention to the Commission and to the public by a prominent notice in its rules tariff and bills of lading or equivalent shipping documents. September 12: Rules Tariff only-Direct Rule Making SUGGESTION (PUT IN SMALL FONT ON FRONT OF BILL OF LADING: Rates and charges for this shipment apply pursuant to 46C.F.R and 520. See Carriers Rules tariff at com. WILL BE ABLE TO REMOVE SEPT SEE ABOVE. * REGISTERED NVOCCs AND NRAs---WHATS NEXT? DISCUSSION. 6

7 NRA DISCUSSION POINTS 1. NRA MUST BE IN PLACE PRIOR TO CARGO BEING RECEIVED BY OCEAN CARRIER OR MOTOR CARRIER IF THROUGH BILL IS ISSUED BY NVOCC. DISCUSSION POINTS: MARKET PLACE CHANGES: A.TOO BAD---YOU ARE STUCK WITH THE RATES/CHARGES YOU QUOTED!!! YEA/NAY? DOES 1 ABOVE ALLOW NVOCCs TO ENTER NEW NRA IF MARKET PLACE CHANGES? B.WHAT DOES 30 DAY OFFER MEAN IN YOUR RULES TARIFF OR YOUR NRA QUOTATION? ----JUST WHAT IT SAYS. YOU ARE STUCK. ----NOT MUCH. YOU CAN TAKE IT BACK. WHEN? C.BOTH SHIPPER AND NVOCC AGREE THAT THEY MADE A MISTAKE ON THE NRA QUOTE AND ACCEPTANCE. CAN THEY MUTUALLY AGREE TO DIFFERENT RATES OR CHARGES? 7

8 NRA DISCUSSION POINTS---continued 2.NRAs AND FOREIGN AGENT ROLE ISSUES? * IS IT ALL OR NOTHING? OR CAN YOU HAVE NRAs OUTBOUND AND RATE TARIFF PUBLICATION INBOUND? OR VICE VERSA? * ON AN ALL NRA ENVIRONMENT, WHAT DOES THE FOREIGN AGENT OBLIGATED TO DO? NOTHING? THE FMC CANT REACH THEM. EVERYTHING WE TELL THEM TO DO TO MAKE US COMPLIANT? IF THEY DONT DO THE NRA QUOTES RIGHT CAN WE BLAME THEM? WHAT WILL THE FMC LOOK AT? * AGENT AGREEMENTS SHOULD CONTAIN NRA GUIDELINES AND INDEMNITY LANGUAGE. WILL THIS SAVE US FROM FMC ISSUES? ARE THEY ENFORCEABLE? 8

9 FMC ENFORCEMENT REVIEW A.BUREAU OF ENFORCEMENT OTI AUDITS B.SERVICE CONTRACT REVIEWS 9

10 FMC ENFORCEMENT REVIEW continued *BUREAU OF ENFORCEMENT OTI AUDITS FOR DISCUSSION THE AUDIT LETTER SENSITIVE POINTS (selected items from audit letter): FEDERAL MARITIME COMMISSION OCEAN TRANSPORTATION INTERMEDIARY AUDIT REVIEW OCEAN FREIGHT FORWARDER & NVOCC PART I: OTI - OCEAN FREIGHT FORWARDERS: 1. Website: Amount of Surety Bond (Total):(Ocean Freight Forwarder) $ 2. Name of Qualifying Individual: Is the qualifying individual an active officer of the firm?Yes [ ]No [ ] 5. Please attach a sample of the stationery and billing forms which are used in your ocean freight forwarding business. 10

11 THE AUDIT LETTER TRAPS (elected items from audit letter) continued ---Forwarder 6.Do you have branch offices or agents operating in any U.S. location other than the office to which this letter is addressed? Yes [ ] No [ ]. If the answer is YES, please provide the complete address of each branch office or agent. 8.Have you entered into special arrangements or contracts with any shipper in the foreign commerce of the United States? Yes [ ] No [ ]. If the answer is YES, please attach a copy of each special arrangement or contract. 10.Are you a party to or have you entered into a service contract, in your own name or for your own behalf, with any ocean common carrier for the transportation of cargo in the foreign commerce of the United States? Yes [ ] No [ ] 11.If you have a related NVOCC, have you provided the certification required by 46 CFR (h) to the underlying ocean common carrier(s) for collection of ocean freight forwarder compensation? Yes [ ] No [ ] If the answer is NO, please explain. 46. C.F.R. § (h) The undersigned certifies that neither it nor any related person has issued a bill of lading or otherwise undertaken common carrier responsibility as a non-vessel-operating common carrier for the ocean transportation of the shipment covered by this bill of lading. 13.Have you collected ocean freight forwarder compensation from a vessel operating common carrier on shipments involving a related NVOCC and/or shipper? Yes [ ] No [ ] 11

12 THE AUDIT LETTER TRAPS (elected items from audit letter) continued ---Forwarder 15.On a separate sheet of paper, please list the fees (or range of fees) which you charge to shippers for forwarding services (Do not list charges for ancillary services such as postage/petties and insurance placement). 16.For each invoice prepared by your firm to a principal, does the following notice appear: "Upon request, we shall provide a detailed breakout of the components of all charges assessed and a true copy of each pertinent document relating to the charges"? Yes [ ] No [ ]. If the answer is NO, please explain. 17.For each bill of lading prepared by your firm, is the identity of the actual shipper always disclosed in the shipper identification box? Yes [ ] No [ ]. If the answer is NO, please explain and provide complete details. 12

13 THE AUDIT LETTER TRAPS (elected items from audit letter) continued ---NVOCC PART II: PERTAINING TO OTI NON-VESSEL OPERATING COMMON CARRIERS: 1.Amount of Surety Bond (Total):(NVOCC) $ 3.Do you have branch offices or agents operating in any U.S. location other than the office to which this letter is addressed? Yes [ ] No [ ]. If the answer is YES, please provide the complete address of each branch office or agent. 4.Are you a party to or have you entered into a service contract, in your own name or for your own behalf, with any ocean common carrier for the transportation of cargo in the foreign commerce of the United States? Yes [ ] No [ ] 5.If the answer to number 4 is YES, provide complete details of each arrangement, including service contract number(s), name of the ocean common carrier(s), and name(s) of any other entities participating under such contract. 13

14 THE AUDIT LETTER TRAPS (elected items from audit letter) continued ---NVOCC 6. Have you ever accessed a service contract which you did not sign on your own behalf either as an NVOCC or as an ocean freight forwarder acting on behalf of your principal? Yes [ ] No [ ]. 7.If your answer to number 6 is YES, provide complete details, including service contract number(s), name of the ocean common carrier(s), and name(s) of shipper signatory to each service contract. 12.In lieu of NVOCC tariff rates, did your company offer NVOCC service arrangements (NSA) to your customers during 2011? Yes [ ] No [ ]. If yes, how many NSA did you make available in 2011? (For info, see 46 CFR Part 531.) 13.In lieu of NVOCC tariff rates, did your company offer NVOCC negotiated rate arrangements (NRA) to your customers during 2011? Yes [ ] No [ ]. If yes, how many NRAs did you make available in 2011? (For info, see 46 CFR Part 532.) NOTICE: Please be advised that an on-site investigation may be scheduled at a later date. 14

15 FMC SERVICE CONTRACT REVIEWS MOST NVOCC COMPROMISED PENALTIES INVOLVE THE FOLLOWING SCENARIOS: 1.Foreign NVOCC enters service contract as shipper party and provides a similar rate to co-loading NVOCC. Co-loading formalities are not observed. What are the co-loading formalities? 2.Foreign NVOCC who is not registered with FMC or licensed, acting as Agent for licensed NVOCC, enters service contract with a carrier as Agent. It identifies the U.S. NVOCC on the Consignee box of the Master bill of lading, but issues its own housebill. Is it sufficient to meet the FMC regulations that the licensed NVOCC appear as either Shipper or Consignee.? No service contract involved and same agent uses its own house bill and your company is the Consignee on the Master b/l. 3.U.S. licensed NVOCC enters service contract and allows foreign FMC registered NVOCC agent to issue its own housebill on the service contract. Is that permissilbe if the foreign NVOCC is shown as affiliate. What is an affiliate? 15


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