2FMC (Federal Maritime Commission) 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.Who are they?Rev. 06/19/13Rev. 06/19/13
3FMC (Federal Maritime Commission) Tariff is what a licensee (VOCC, NVOCC) files with FMCThere are two parts to a tariff:Rates – ocean selling rates quoted and billed to customersRules – rules/conditions that FMC licensee must conducts business in accordance to, including but not limited to:Application of rates including currencyDefinition of heavy liftDefinition of extra lengthMin. BL chargesPayment of freight charges - prepaid, collect allowed for listed countriesBill of Lading conditions (consistent with terms on back of HBL)Hazardous cargoHow overcharge claim should be filed and handledDefinitions and SymbolsGRI'sFMC (Federal Maritime Commission)What is a tariff?
4FMC (Federal Maritime Commission) Tariff rates are the ocean selling rates we bill to customersRates for both U.S. import and export shipments need to be filedMinimum rate validity is 30 days; validity can be longer depending on how steady/regular the business isRates filed must be in effect based on the service type. eg:DOOR rate: prior to loading at shipper’s facilityCY rate: prior to cargo delivered to container yardRAIL rate: prior to cargo delivered to rail/rampPIER rate: prior to cargo delivered to pierWhat is a DOOR rate?Pick up or inland cartage charge is included in the Ocean Freight Rateeg. 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)What is tariff rates?
5FMC (Federal Maritime Commission) Effective dates:FMC (Federal Maritime Commission)New Rate filing – activated on the same day of filingRate change filing –that results in lower or no change in cost to shipper – same daythat result in higher cost to shippers – 30 daysRate 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 firstWhen will new rates and amendments go into effect?
6FMC (Federal Maritime Commission) CommodityOriginPort of LoadingPort of DischargeDestinationService TypeRate BasisCurrencyContainer SizeContainer TypeMinimum BOF (if applicable)Rate NotesEffective DateExpiration DateFMC (Federal Maritime Commission)What is required information to file rate?
7Case #1: FMC FINES HONG KONG NVOCC US$7.9 MILLION 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).
8Case #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.
9Other cases: FMC FINES NVOCC’s $477,500 On investigating, the NVOCC’s were found to have:undercharged on tariffsprovided incorrect cargo descriptioninflated cubic measurements of certain cargo to obtain discounted rates from ocean carriersengaged in unlawful access to service contract rates.
10Other cases: FMC FINES NVOCC’s $477,500 AE Eagle America – Jamaica, NY - $87,500.00Ba-Shi Yuexin Development dba Bus Logistics – Alhambra, CA - $85,000.00Ocean Marine Shipping – Cummings, GA - $70,000.00SES Intl Express – Inglewood, CA - $62,500.00MB Logistics Intl – Jamaica, NY - $50,000.00Sinotrans Logistics – Alhambra, CA - $50,000.00Cargo Alliance – Monterrey Park, CA - $40,000.00Orion Cargo Services – Newark, NJ - $32,500.00
11FMC - Penalties for Non-Compliance $6, for each unpublished tariff$30, for each willful violationEach day of continuing violation is considered a separate offense
12FMC (Federal Maritime Commission) Send quotation to customerFMC (Federal Maritime Commission)Quotation accepted by customerNew rates filed in FMC tariffAfter rates go into effect, load/move shipmentHigh level flow of quotation, filing and billing processInvoice customer based on quotationRates in quotation, tariff and on invoices must match, down to line item levelExamples of non-compliance:Moved/loaded shipment prior to rates becoming effectiveFiled door-rate to customer but invoice shows a pickup chargeNo effective bunker filed in tariff but customer is billed for bunker
13FMC (Federal Maritime Commission) Tariff rate filing is extremely rigidRates once filed takes 30 days for amendment to take effectCannot quote different rates to different customers for the same port pair, service and commodityAlternative to tariff rate filing: NRANRA stands for NVOCC Negotiated Rate ArrangementNRA’s do not need to be filed with FMCAn NRA structure needs to be set up properly, including:Indicating the use of NRA’s in the rules tariffIndicating on HBL and all shipping documents that shipment is moved pursuant to an NRASubmitting application to FMCOversea agents quoting on behalf of N/VOCC are boune to the same procedure and requirementsDeveloping internal procedure for systemic and robust recordkeeping of all NRA’sFMC (Federal Maritime Commission)Alternative to tariff rate filing?
14FMC (Federal Maritime Commission) UFL/WCT benefits from NRAs by being able to offer different special/promotional rates to individual direct customers and co-loadersThese rates don’t have to be filed, and quoted rates are not restricted to existing filed ratesRates 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 changesHow NVOCC’s can benefit from NRAs?
15FMC (Federal Maritime Commission) Add NRA Notice to some of our business documents that relate to quote and ratesHBLInvoices/Debit NotessignatureDevelop NRA Rules TariffPublish NRA Rules Tariff on UFL’s websiteFile Form No. 1 with FMCProcedure to keep good written record (such as s) showing rates quoted and acceptance by customersProcedure to ensure billing to customers is same as accepted ratesFMC (Federal Maritime Commission)What WCT needs to do to start using NRAs?
16FMC (Federal Maritime Commission) General guidelines:FMC (Federal Maritime Commission)Quotation must be done by “writing” which can be electronicQuotation should be specific to Origin/DestinationQuotation should be specific to commodity and quantity unit(s) involvedCommunication must reflect clear acceptance by shipper/consignee/co-loader/agent of rates/charges quotedNRA’s must contain actual rates/charges invoiced to customerQuotation communication must include NRA NoticeQuotation should indicate duration quotation is good forRates/charges cannot be changed once cargo is delivered to pier or yard or picked up by trucker depending on rate typeRecordkeeping (for shipments moved under NRAs):NRAs and related records must be kept for 5 yearsNRAs are subject to FMC inspectionMust 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 penaltyQuotation process and recordkeeping for shipments moved under NRA
17FMC (Federal Maritime Commission) Attached is a detail procedure for invoking NRA exemptionQuotation process and recordkeeping for shipments moved under NRAWhen NRA regulations are applicable?When quoting for shipments that:will be moved under W.C.T.’s H/BLW.C.T will invoice for Ocean Freightnot based on existing rates filed with FMC
18FMC (Federal Maritime Commission) NRA rules applicable?Example….UFL quoting for FOB shipments where UFL provides door to port serviceUFL quotes for EXWORK shipments where UFL provides port to port serviceUFL quotes for FCA shipments where UFL provide door to port serviceUFL quotes for FCA shipments where UFL provides port to door serviceQuotation process and recordkeeping for shipments moved under NRA
19FMC (Federal Maritime Commission) NRA rules applicable?Example….UFL quoting for FOB shipments where UFL provides door to port serviceUFL quotes for EXWORK shipments where UFL provides port to port serviceUFL quotes for FCA shipments where UFL provide door to port serviceUFL quotes for FCA shipments where UFL provides port to door serviceQuotation process and recordkeeping for shipments moved under NRAYESYESNOYES