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11 NEW YORK/NEW JERSEY FOREIGN FREIGHT FORWARDERS & BROKERS ASSOCIATION AND AMERICAN SHIPPER SEMINAR APRIL 27, 2011 NEWARK, NJ NVOCCs’ EXEMPTION FROM.

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Presentation on theme: "11 NEW YORK/NEW JERSEY FOREIGN FREIGHT FORWARDERS & BROKERS ASSOCIATION AND AMERICAN SHIPPER SEMINAR APRIL 27, 2011 NEWARK, NJ NVOCCs’ EXEMPTION FROM."— Presentation transcript:

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2 11 NEW YORK/NEW JERSEY FOREIGN FREIGHT FORWARDERS & BROKERS ASSOCIATION AND AMERICAN SHIPPER SEMINAR APRIL 27, 2011 NEWARK, NJ NVOCCs’ EXEMPTION FROM PUBLISHING RATES: HOW TO EFFICIENTLY IMPLEMENT NEGOTIATED RATE ARRANGEMENTS Carlos Rodriguez, Esq. Rodriguez O’Donnell Gonzalez & Williams, P. C Connecticut Ave., N.W. Washington, D.C Direct Dial:

3 22 OVERVIEW LEGAL CHANGES - TARIFF REFORM KEY ITEMS : KEY ITEMS : *RATES ONLY IN NVO NEGOTIATED RATE ARRANGEMENTS (“NRAS”) * CHARGES: “ALL IN” O.K.; LINE ITEM CHARGES MUST BE IN NRA/RULES TARIFF *RATE/CHARGES INCREASES WITHOUT 30 DAY NOTICE *AMENDMENTS TO NRA NOT ALLOWED *REGISTERED NVOCCs EXCLUDED *EXEMPTION IS OPTIONAL, NOT EXCLUSIVE *TARIFFS, NSAs CAN CO-EXIST WITH NRAs RECORDKEEPING REQUIREMENTS RECORDKEEPING REQUIREMENTS RULES TARIFFS---NEW ROLE RULES TARIFFS---NEW ROLE EFFECTIVE DATE: ON APRIL 18, 2011 EFFECTIVE DATE: ON APRIL 18, 2011

4 NET EFFECT OF EXEMPTION: NVOCCs EXEMPT FROM PUBLISHING ITS RATES—EXPENSE RELIEF NVOCCs EXEMPT FROM PUBLISHING ITS RATES—EXPENSE RELIEF EXEMPTION FROM 30 DAY NOTICE FOR RATE/CHARGES INCREASES---FLEXIBILITY EXEMPTION FROM 30 DAY NOTICE FOR RATE/CHARGES INCREASES---FLEXIBILITY EXEMPTION FROM ADHERING TO PUBLISHED RATE--- PENALTY RELIEF EXEMPTION FROM ADHERING TO PUBLISHED RATE--- PENALTY RELIEF EXEMPTION FROM APPLYING TO FMC FOR REFUNDS TO SHIPPER FOR ERRORS, ETC.---FLEXIBILITY EXEMPTION FROM APPLYING TO FMC FOR REFUNDS TO SHIPPER FOR ERRORS, ETC.---FLEXIBILITY 3

5 WHAT TO DO FIRST 4 F IRST : A N NVOCC MUST GIVE NOTICE THAT IT WISHES TO INVOKE THE TARIFF EXEMPTION BY : F IRST : A N NVOCC MUST GIVE NOTICE THAT IT WISHES TO INVOKE THE TARIFF EXEMPTION BY :  (1) A PROMINENT NOTICE IN ITS RULES TARIFF AND ON ITS BILL OF LADING OR OTHER SHIPPING DOCUMENTS, E - MAILS ; AND  (2) N O LONGER REQUIRED TO FILE NOTICE ON FMC NVOCC F ORM FMC-1 BEFORE USING NRA S.  (3) I F YOU ARE BRINGING RULES TARIFF IN - HOUSE, YOU WILL NEED TO AMEND FMC NO. 1 TO SHOW WEB - SITE ADDRESS WHERE RULES ARE HOSTED Options on FMC-1: Options on FMC-1: A )M OVING ALL CARGO VIA NRA S B )M OVING ALL CARGO VIA TARIFF C ) MOVING ALL CARGO VIA NRA S OR T ARIFF

6 WHAT IS A WRITING? UCC-§1-201 (46)---”Written” or “writing” includes printing, typewriting or any other intentional reduction to tangible form. UCC-§1-201 (46)---”Written” or “writing” includes printing, typewriting or any other intentional reduction to tangible form. Black’s Law Dictionary---”Writing consists of letter, words, or numbers, or their equivalent set down by handwriting, typewriting,... Electronic recording... or other form of data compilation.” Black’s Law Dictionary---”Writing consists of letter, words, or numbers, or their equivalent set down by handwriting, typewriting,... Electronic recording... or other form of data compilation.” A collection of s would qualify if they contained all the rates and terms (names, addresses of parties). No signatures required, but the s should be clearly to/from the shipper and bind the parties. A collection of s would qualify if they contained all the rates and terms (names, addresses of parties). No signatures required, but the s should be clearly to/from the shipper and bind the parties. 5

7 WHAT IS AN NRA? “Negotiated Rate Arrangements “ FMC DEFINITION: “NVOCC Negotiated Rate Arrangement means a written and binding arrangement between a shipper and an eligible NVOCC to provide specific transportation service for a stated cargo quantity, from origin to destination on or after receipt of the cargo by the Carrier or its agent, etc.” FMC DEFINITION: “NVOCC Negotiated Rate Arrangement means a written and binding arrangement between a shipper and an eligible NVOCC to provide specific transportation service for a stated cargo quantity, from origin to destination on or after receipt of the cargo by the Carrier or its agent, etc.”  WHAT IS A WRITING? S ok; SIGNATURES NOT REQUIRED; BEST PRACTICES—USE EXISTING DOCUMENTATION---QUOTE SHEETS, BOOKING CONFIRMATIONS, ETC. NOT BILL OF LADING.  WHAT IS A “BINDING“ ARRANGEMENT?  ELIGIBLE NVOCC? ONLY LICENSED NVOS  “STATED CARGO QUANTITIES”---DOES NOT MEAN MQCS. CAN MEAN SINGLE SHIPMENT OR NO. OF SHIPMENTS. CAN HAVE MAXIMUM NO. OF SHIPMENTS. Expiration dates. WHY 30 DAY MODEL? 6

8 WHAT IS A WRITING? continued DISCUSSION POINTS: WHAT ARE YOU USING NOW TO COMMUNICATE RATES/CHARGES? DISCUSSION POINTS: WHAT ARE YOU USING NOW TO COMMUNICATE RATES/CHARGES? (MAKING YOUR NRA BUSINESS FRIENDLY--- ASSUMPTON: YOU CURRENTLY EMPLOY “WRITINGS” WITH YOUR CUSTOMERS)  QUOTATION SHEETS, PROPOSALS, BOOKING CONFIRMATIONS, SPECIAL TEMPLATE, S  MORE THAN ONE “WRITING” O.K.---”TIE” THEM TOGETHER  WHY BILL OF LADING MAY NOT BE AN NRA NOTICE 7

9 WHAT IS A WRITING? continued SAMPLE NRA NOTICE ON “WRITINGS”: SAMPLE NRA NOTICE ON “WRITINGS”: “ Carrier has opted to be exempt from tariff publication requirements per 46 C.F.R. §520 and 532. In that respect Carrier has opted for exclusive use of Negotiated Rate Arrangements (“NRAs”). The writings provided in Carrier’s _(name documents)_and exchanges between the Carrier and the shipper cumulatively contain an offer(s) by Carrier pursuant to 46CFR§ Acceptance of the quotation shall become binding after receipt of the cargo by the carrier or its agent (or the originating carrier in the case of through transportation). If the terms and conditions contained in the aforementioned documents do not reflect Shipper’s understanding, Shipper must notify Carrier immediately. Carrier Rules tariff, provided free of charge at contains the terms and conditions which are further applicable to this shipment. Carrier reserves the right to modify its NRA rate/charges offer prior to Carrier or its agent (including originating carriers in the case of through transportation) receiving the cargo for transport. “ 8

10 WHAT IS A BINDING ARRANGEMENT? THE ELELMENTS OF A CONTRACT (:”BINDING ARRANGEMENT”) THE ELELMENTS OF A CONTRACT (:”BINDING ARRANGEMENT”) *AN OFFER---THE WRITTEN EXCHANGES FROM THE NVOCC NEED TO BE CLEAR WHAT SERVICE AND RATES/CHARGES IT IS OFFERING TO ITS CUSTOMER * ACCEPTANCE---THE RESPONSE FROM THE SHIPPER MUST BE CLEAR THAT IT ACCEPTS THE OFFER; BUT IT IS ONLY THE CARRIER “RECEIVING” THE CARGO THAT LEGALLY BINDS THE PARTIES. * CONSIDERATON---USUALLY THE PROMISE OF RATES AND CHARGES BY THE NVOCC AND THE PROMISE TO PAY BY THE SHIPPER ARE SUFFICIENT CONSIDERATION + TENERING THE CARGO. NVOCC BEST PRACTICES: DEVELOP STANDARDIZED CLEAR LANGUAGE FOR QUOTES, OR OTHER TRANSMISSION OF AN OFFER; BINDING DOES NOT REQUIRE SIGNATURES 9

11 WHAT IS A BINDING ARRANGEMENT? CONTRACT REQUIREMENTS: DISCUSSION POINTS CONTRACT REQUIREMENTS: DISCUSSION POINTS 1. IS AN NRA A “PROMISE FOR A PROMISE”? If yes, then it is binding when the NVO offers the rate and the shipper “accepts” the offer with a writing ( , etc.). OR 2.IS AN NRA A “PROMISE FOR AN ACT”? If yes, then it is binding when the NVO (or agent) receives the cargo. 3. TEST: IF THE BINDING OCCURS AS PER 1, IS THE SHIPPER OBLIGATED TO SHIP ANYTHING? TEST: IF THE SHIPPER TENDERS NO CARGO, IS THE NVO OBLIGATED TO KEEP THE RATE OPEN? 10

12 PERMISSILBE ELEMENTS OF AN NRA BASE FREIGHT RATE BASE FREIGHT RATE “ALL-IN” FREIGHT RATE (WITH ALL CHARGES) “ALL-IN” FREIGHT RATE (WITH ALL CHARGES) BASE RATE SPECIFYING WHICH CHARGES INCLUDED BASE RATE SPECIFYING WHICH CHARGES INCLUDED IF OTHER CHARGES APPLY, MUST SPECIFY BY REFERENCE TO CHARGES IN NRA AND/OR RULES TARIFF IF OTHER CHARGES APPLY, MUST SPECIFY BY REFERENCE TO CHARGES IN NRA AND/OR RULES TARIFF NO ABILITY TO PROVIDE “GRI” NO ABILITY TO PROVIDE “GRI” CANNOT INCLUDE VOLUME COMMITMENT, MQC, LIQUIDATED DAMAGES, FORUM SELECTION CLAUSES, OTHER CONTRACT ELEMENTS (MUST USE NSAs); (OR RULES TARIFF?) CANNOT INCLUDE VOLUME COMMITMENT, MQC, LIQUIDATED DAMAGES, FORUM SELECTION CLAUSES, OTHER CONTRACT ELEMENTS (MUST USE NSAs); (OR RULES TARIFF?) NAMES AND ADDRESSES OF PARTIES MUST BE INCLUDED; AFFILIATES OF SHIPPERS ELIGIBLE TO SHIP MUST BE IDENTIFIED BY NAME AND ADDRESS NAMES AND ADDRESSES OF PARTIES MUST BE INCLUDED; AFFILIATES OF SHIPPERS ELIGIBLE TO SHIP MUST BE IDENTIFIED BY NAME AND ADDRESS 11

13 WHAT IS AN “ELIGIBLE NVOCC”? FMC REGULATION: APPLIES ONLY TO LICENSED NVOCCs FMC REGULATION: APPLIES ONLY TO LICENSED NVOCCs REGISTERED NVOCC OPTIONS: REGISTERED NVOCC OPTIONS: *A.If U.S. Affiliate is Licensed Forwarder, add NVO Function by FMC Application *B.Register Foreign Company to do Business in U.S. State and Apply for FMC NVOCC License (this company can be qualified with foreign officer experience or U.S. affiliate QI holding Forwarder License. 12

14 “Negotiated Rate Arrangements Key Requirements NRA MUST BE IN PLACE PRIOR TO CARGO BEING RECEIVED BY OCEAN CARRIER OR MOTOR CARRIER IF THROUGH BILL IS ISSUED BY NVOCC 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: ABOVE ALLOWS NVOCC TO ENTER NEW NRA IF MARKET PLACE CHANGES: RATES/CHARGES !!! NEW WRITING. EVERY SHIPMENT TRANSACTION AN NRA? WHAT DOES 30 DAY MODEL DO? PRIOR TO NVOCC ENTERING NRA: A) MUST PROVIDE SHIPPER WITH TERMS IN RULES TARIFF OR B) PROVIDE ELECTRONIC ACCESS TO RULES TARIFF (FREE OF CHARGE) PRIOR TO NVOCC ENTERING NRA: A) MUST PROVIDE SHIPPER WITH TERMS IN RULES TARIFF OR B) PROVIDE ELECTRONIC ACCESS TO RULES TARIFF (FREE OF CHARGE) 13

15 “Negotiated Rate Arrangements Miscellaneous Requirements DISCUSSION POINT RATES SHALL NOT BE MODIFIED AFTER THE TIME THE SHIPMENT IS RECEIVED BY THE CARRIER OR ITS AGENT (INCLUDING ORIGINATING CARRIERS IN THE CASE OF THROUGH TRANSPORTATION). RATES SHALL NOT BE MODIFIED AFTER THE TIME THE SHIPMENT IS RECEIVED BY THE CARRIER OR ITS AGENT (INCLUDING ORIGINATING CARRIERS IN THE CASE OF THROUGH TRANSPORTATION). Parties can mutually terminate NRA BEFORE CARGO IS RECEIVED and enter new NRA? Parties can mutually terminate NRA BEFORE CARGO IS RECEIVED and enter new NRA? 14

16 NEW NVOCC BIBLE: RULES TARIFFS--- WHAT TO PUT IN THEM? “RULES TARIFF” (as defined by 46 CFR 520.2), CONTAINS TERMS AND CONDITIONS GOVERNING CHARGES, CLASSIFICATION, RULES, REGULATIONS AND PRACTICES OF AN NVOCC (DOES NOT INCLUDE RATES). “RULES TARIFF” (as defined by 46 CFR 520.2), CONTAINS TERMS AND CONDITIONS GOVERNING CHARGES, CLASSIFICATION, RULES, REGULATIONS AND PRACTICES OF AN NVOCC (DOES NOT INCLUDE RATES). REMEMBER: TARIFF RULES HAVE THE EFFECT OF LAW ON PRIVATE TRANSACTIONS. REMEMBER: TARIFF RULES HAVE THE EFFECT OF LAW ON PRIVATE TRANSACTIONS. COURTS WILL IMPUTE CONSRUCTIVE KNOWLEDGE TO SHIPPER PARTIES OF RULES IN TARIFFS COURTS WILL IMPUTE CONSRUCTIVE KNOWLEDGE TO SHIPPER PARTIES OF RULES IN TARIFFS CHOOSE TARIFF RULES LANGUAGE WISELY CHOOSE TARIFF RULES LANGUAGE WISELY 15

17 RULES TARIFFS---WHAT TO PUT IN THEM? DISCUSSION POINTS: CHARGES----CARE SHOULD BE TAKEN IN COORDINATING NRA LANGUAGE & RULES TARIFF CHARGES----CARE SHOULD BE TAKEN IN COORDINATING NRA LANGUAGE & RULES TARIFF WHAT ABOUT CARRIER RATE INCREASES, GRI’s, PSS, BAF’s ETC. ? WHAT ABOUT CARRIER RATE INCREASES, GRI’s, PSS, BAF’s ETC. ? OTHER RULE ITEMS: OTHER RULE ITEMS: *GENERAL LIEN LANGUAGE *ABANDONEMENT *WAREHOUSEMEN LANGUAGE *DEMURRAGE, DETENTION, PER DIEM RESPONSIBILITY---PASS THROUGH LANGUAGE SHOULD BE CLEAR 16

18 Recordkeeping and Audit NVOCC MUST MAINTAIN ORIGINAL NRA’s AND ASSOCIATED RECORDS, INCLUDING WRITTEN COMMUNICATIONS FOR 5 YEARS. NVOCC MUST MAINTAIN ORIGINAL NRA’s AND ASSOCIATED RECORDS, INCLUDING WRITTEN COMMUNICATIONS FOR 5 YEARS. NRA’s MUST BE KEPT IN A FORMAT WHICH CAN BE PRODUCED PROMPTLY TO FMC UPON REQUEST. NRA’s MUST BE KEPT IN A FORMAT WHICH CAN BE PRODUCED PROMPTLY TO FMC UPON REQUEST. FAILURE TO KEEP OR TIMELY PRODUCE ORIGINAL NRA’s WILL DISQUALIFY NVOCC FROM EXEMPTION AND MAY RESULT IN SHIPPING ACT VIOLATIONS FOR NON-PUBLISHING OF RATES AND RELATED PRACTICES. FAILURE TO KEEP OR TIMELY PRODUCE ORIGINAL NRA’s WILL DISQUALIFY NVOCC FROM EXEMPTION AND MAY RESULT IN SHIPPING ACT VIOLATIONS FOR NON-PUBLISHING OF RATES AND RELATED PRACTICES. 17

19 ROLE OF TARIFF PUBLISHER REVISITED PRIOR TARIFF MATERIAL NEEDS TO BE MAINTAINED ELECTRONCIALLY FOR 5 YEARS, THE LAST 2 YEARS MUST BE RETRIEVABLE ON- LINE PRIOR TARIFF MATERIAL NEEDS TO BE MAINTAINED ELECTRONCIALLY FOR 5 YEARS, THE LAST 2 YEARS MUST BE RETRIEVABLE ON- LINE COORDINATION OF EFFECTIVE DATES OF CHARGES IN ALL TRADE LANES REQUIRED FOR ACCURATE PRICE QUOTATIONS (NRAs). COMMERCIAL QUESTION; NOT LEGAL. COORDINATION OF EFFECTIVE DATES OF CHARGES IN ALL TRADE LANES REQUIRED FOR ACCURATE PRICE QUOTATIONS (NRAs). COMMERCIAL QUESTION; NOT LEGAL. SHOULD NVOCC MAINTAIN ITS OWN DATA BASE WITH CURRENT CHARGES FOR ALL TRADE LANES, OR IS THIS FUNCTION FOR OUTSIDE VENDOR? COMMERCIAL QUESTION; NOT LEGAL. SHOULD NVOCC MAINTAIN ITS OWN DATA BASE WITH CURRENT CHARGES FOR ALL TRADE LANES, OR IS THIS FUNCTION FOR OUTSIDE VENDOR? COMMERCIAL QUESTION; NOT LEGAL. 18


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