FMC simplifying service, rate arrangements
Date: Thursday, June 7, 2018
Source: American Shipper
The Federal Maritime Commission voted Wednesday to approve new regulatory language it says will relieve regulatory burdens on non-vessel operating common carriers (NVOCCs) and give shippers more choices and flexibility.
FMC commissioners voted to move forward with a final rule that simplifies requirements for the use of NVOCC service arrangements (NSAs) and negotiated rate arrangements (NRAs).
NSAs and NRAs are instruments created by the FMC, at the request of shipper and carrier stakeholders, respectively in 2004 and 2010.
FMC says they provide shippers and OTIs with a more efficient way to comply with Shipping Act reporting requirements while relieving them from the tariff filing process.
NSAs are an alternative way for NVOCCs to negotiate confidential shipping arrangements with their shippers, says the FMC. They are a “written contract, other than a bill of lading or receipt, between one or more NSA shippers and an individual NVOCC or two or more affiliated NVOCCs, in which the NSA shipper makes a commitment to provide a certain minimum quantity or portion of its cargo or freight revenue over a fixed time period, and the NVOCC commits to a certain rate or rate schedule and a defined service level.”
NRAs, the FMC explains, “are written and binding arrangements between a shipper and a licensed NVOCC to provide specific transportation service for a stated cargo quantity, from origin to destination, on and after a stated date or within a defined time frame.” If an NVOCC uses NRAs and meets certain conditions it does not have to publish the rate in the tariff it makes available to the public.
Acting FMC Chairman Michael Khouri said, “The purpose of NRAs and NSAs was to make it faster, simpler and less burdensome for shippers and NVOCCs to conduct business and move cargo efficiently.”
He said the National Customs Brokers and Forwarders of America Association had “pointed out where certain commission rules and practices impeded those purposes” and petitioned the FMC for a change.
“I believe that whenever a Section 16 (a section of the Shipping Act) exemption request will not result in substantial reduction in competition or be detrimental to commerce, then we have an obligation to openly consider well-founded petitions that seek exemptions from requirements of the Shipping Act,” said Khouri. “I am pleased that today we have moved this petition forward.”
As a result of Wednesday’s action addressing NRAs, the FMC said it will be implementing three key changes: allowing NRAs to be amended at any time; allowing the inclusion of non-rate economic terms; and allowing an NVOCC to provide for shipper’s acceptance of the NRA by booking a shipment.
The FMC said it make NSAs easier and more attractive to use by removing filing and essential terms requirements.
The FMC plans to publish a final rule incorporating the changes early this summer.
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