On December 21, 1998 the FMC issued its Docket No. 98-29 ” Carrier Automated Tariff Systems” to implement provisions of the Ocean Shipping Reform Act of 1998 (OSRA). These new regulations will be finalized by March 1, 1999, and become effective on May 1, 1999, at which time they will become part of CFR-46 Part 520. These new regulations form the basis for FMC’s new tariff publication requirements for conferences, rate agreements, independent vessel operating common carriers, and NVOCCs.

ATFI Standards Retained: the new regulations make very few changes to the current FMC tariff requirements. It’s clear the FMC intends to retain the standards of its current “ATFI” tariff database system. Most of the current tariff format and publication requirements are retained; the standard tariff terminology used by the ATFI system will be required. For example, spellings used in tariffs for ports and cities must be agree with those used in ATFI. Surcharges imposed by carriers must continue to be published with “assessorials” that enable the calculation of total freight charges for any shipment.

ATFI Will be Replaced by Private Systems Monitored by FMC: the only significant change made by Docket 98-29 is tariffs will no longer be electronically transmitted to the ATFI computer system operated by the FMC. Instead, each carrier, or an FMC certified tariff publisher acting its behalf, must provide the FMC with free access to its computerized tariff database system. The FMC will monitor tariffs published on certified databases, and notify carriers when it finds items that are not acceptable. Carriers must also provide FMC with a written certification from an officer that the information in their tariffs is true and accurate. Carriers who fail to comply with FMC instructions risk substantial penalties.

The FMC will maintain a master listing of certified tariff database systems: access to each database system must also be provided to the shipping public, at reasonable charge, via the Internet or via telephone dial-in services. Tariff database systems must also provide retrieval and rate calculation abilities similar to those currently provided by ATFI, and must maintain data on-line for a period of 5 years.

Here at Distribution-Publications, Inc. (DPI) we see no problem in meeting FMC’s new tariff publication requirements: we expect to gain FMC certification for our tariff database systems, and for each of the tariffs published on behalf of our customers in good standing. Details of tariff amendments as may be required to meet the new regulations will be advised in due course. DPI will also continue to print page based paper tariffs for customers who require these, and provide tariffs on CD-ROM disks.

secretary@fmc.gov

Ocean Transportation Intermediary (OTI) Licensing: effective May 1, 1999

New FMC licensing requirements will require every US based Non-Vessel Operating Common Carrier (NVOCC) that is not already licensed by the FMC as an ocean freight forwarder to apply for a license to operate as an Ocean Transportation Intermediary (OTI) by April 30, 1999. This new regulation is proposed in FMC Docket No. 98-28 , which was issued December 22, 1998; it will become part of FMC’s regulations issued in CFR-46 Part 515 governing “Licensing, Financial Responsibility Requirements, And General Duties For Ocean Transportation Intermediaries.”

This new licensing requirement for NVOCCs in the USA is part of an important change made by the Ocean Shipping Reform Act of 1998 (OSRA) . In order to implement this new requirement, the FMC has proposed to amend the licensing application procedures it currently uses for ocean freight forwarders, and make these apply for NVOCCs operating in the USA as well. To obtain the OTI license, each NVOCC in the USA must complete License Form FMC-18 Rev. in good order, submit it with a License Fee of USD 778, and meet the necessary qualifications. Each applicant must prove to FMC:

“(1) It possesses the necessary experience, that is, its qualifying individual has a minimum of three years experience in ocean transportation intermediary activities in the United States, and the necessary character to render ocean transportation intermediary services; and

(2) It has obtained and filed with the Commission a valid bond, proof of insurance, or other surety in conformance with CFR-46 Part 515.21.

(3) An NVOCC with a tariff and proof of financial responsibility in effect as of December 22, 1998 may continue to operate as an NVOCC without the requisite three years experience; and will be provisionally licensed while the Commission reviews their application. Such person designated as the qualifying individual for a provisionally licensed NVOCC may not act as a qualifying individual for another ocean transportation intermediary until it has obtained the necessary three years experience in ocean transportation intermediary services in the United States.”

Ocean freight forwarders who have a valid license and bond in effect on May 1, 1999, will continue to be licensed while the Commission issues those freight forwarders new licenses as OTIs, provided that they increase their bonds as required by the new regulations. Each OTI license application must provide a “Qualifying Individual” that meets FMC requirements, who must be an active partner or officer. The Commission will issue a license only in the name of the applicant, whether the applicant is a sole proprietorship, a partnership, or a corporation. More information on OTI licensing requirements is available from the FMC Bureau of Tariffs, Certification and Licensing (tel: 202-523-5818, fax: 202-523-5830, e-mail: austins@fmc.gov however, Form FMC-18 Rev. is not yet available.

01May1999 FMC Docket No. 98-28

1. Ocean Freight Forwarders in the USA: $50,000, plus $10,000 per branch office;
2. NVOCCs in the USA: $75,000, plus $10,000 per branch office;
3. USA based firms acting as both freight forwarder and NVOCC: $100,000, plus $10,000 per branch;

d. NVOCCs outside the USA: $150,000 (no branch office bonding requirement).

The branch office bonding requirement has applied for ocean freight forwarders for since 1991, but for NVOCCs it is new. Forwarders and NVOCCs who do not comply risk substantial penalties.

two alternatives under consideration for OTIs Docket No. 98-28 in the USAoutside the USAin the USA

Docket 98-28 offers for consideration and comment two alternatives for this definition, viz:

1. “…a person is considered to be ‘in the United States’ if such person is resident in or incorporated or established under the laws of the United States. Only persons licensed under this part may furnish or contract to furnish ocean transportation intermediary services in the United States on behalf of an unlicensed ocean transportation intermediary.”
2. “…a person is considered to be ‘in the United States’ if such person is incorporated in, resident in, or established under the laws of the United States, or otherwise maintains a physical presence in the United States. Such indicia of physical presence may include, but are not limited to, whether the person holds a taxpayer identification number, a state or local business license, or maintains a mailing address in the United States.”

The decision on these two definitions is an significant one for the FMC, and for the NVOCC industry. Under the first alternative, the FMC plans to require each NVOCC based outside the USA to retain a licensed OTI as its agent in the USA. The simplicity of this definition would make FMC enforcement easier. Under the second alternative, an NVOCC could meet the “in the USA” requirement just by obtaining a mailing address in the USA. This would increase the number of firms subject to the new OTI licensing requirements, and make FMC enforcement more complex. The FMC is very interested in comments on the USA agent requirement. A final decision must be reached by March 1, 1999.

vessels must call US Ports

In addition to implementing Ocean Shipping Reform Act of 1998 (ORSA), the new FMC rules are also aimed at closing loopholes in FMC regulations. A new definition of vessel operating common carrier (VOCC) contained in FMC Docket No. 98-26 will prevent carriers whose liner vessels do not call at US ports from enjoying the advantages of VOCC status after May 1, 1999. This closes a loophole currently enjoyed by some regional vessel operators, who issue bills of lading for shipment to/from the USA, even thought their vessels may never call a US port. These carriers often operate under connecting carrier agreements. This loophole might have become even more attractive when the new ORSA rules become effective, and VOCC’s may enter into confidential service contracts with shippers.

In comments issued under FMC Docket No. 98-26, the FMC noted “companies that operate vessels only in foreign-to-foreign trades… have no vessels or assets in the United States that can be attached to satisfy a Commission or U.S. court judgment.” Under the new definition carriers operating in the US whose liner vessels do not call directly at US ports will be required by the to comply with FMC requirements for Ocean Transportation Intermediaries (OTIs), including NVOCC bonding and tariff publication.

ATFI based electronic filing system

The Ocean Shipping Reform Act of 1998 (OSRA) makes important information about service contracts confidential, but it did not eliminate the FMC filing requirement. Docket No. 98-30 , issued Dec. 23, 1998, proposes rules to implement provisions of OSRA relative to service contracts effective May 1, 1999.

New FMC Service Contract Filing Regulations: ( continued) In its Docket 98-30, the FMC proposes new requirements for service contract filing and essential terms publications, and invites comments on several important issues raised by OSRA, viz: carrier duty to disclose to collective bargaining agreements; confidentiality; excepted commodity (“mixed”) and global contracts; re-rating; and miscellaneous matters. For vessel operating common carriers a thorough understanding of Docket 98-30 and CFR-46 Part 530 will be critical. Key elements of the docket are as follows:

The filing of Service Contracts (S/C) with FMC will continue to be required under the new regulations. Each carrier, or its publisher, will be required to transmit complete terms of each s/c to a new area of the FMC-ATFI system which will be accessible only to FMC. S/C effective dates may not be earlier than electronic filing dates. The Commission acknowledges there may be better methods of automating the filing procedure, but due to time constraints, the ATFI system provides the most cost effective solution.

S/C Record Keeping: paper copies of service contracts, including signature pages, and shipment records, must be maintained by carriers for a period of five years after the termination of each contract. Service contract records must be maintained in the United States, except if Chief Executive Officer of the carrier certifies annually that service contract records will be made available to the FMC as required.

Essential Terms (ET) Tariffs will contain only five terms of each S/C: these must be published and made available to the public under requirements similar to those proposed for carrier tariffs according to Docket 98-29; the five terms are: origin, destination, commodity, minimum volume, duration.

Confidentiality of S/C terms not included in ET Tariffs, but filed with FMC, including freight rates and surcharges, is a key issue. Docket 98-30 states “All service contracts and amendments to service contracts filed with the Commission shall, to the full extent permitted by law, be held in confidence, however, nothing contained in the proposed rule shall preclude the Commission from providing certain information from or access to service contracts to another agency of the Federal government of the United States.” Additionally, labor organizations may obtain access to certain s/c information in the event of collective bargaining action involving s/c cargo under provisions set forth in Part 530 (8).

effective 01Jan1999

Chairman Harold J. Creel, Jr., recently announced several executive reassignments and retirements at the Federal Maritime Commission. Commission Secretary Joseph C. Polking has retired after 33 years of service with the Commission. With Mr. Polking’s departure, Bryant L. VanBrakle has been reassigned as the Commission’s new Secretary. Austin L. Schmitt has replaced Mr. VanBrakle as the Director of the Bureau of Tariffs, Certification, and Licensing. Florence A. Carr has been promoted to become a member of the Senior Executive Service and replaces Dr. Schmitt as the Director of the Bureau of Economics and Agreement Analysis. Additionally, James Canon, Chief of the FMC Office of Tariffs, has retired. Additional staff reassignments within the Bureau of Tariffs, Certification and Licensing are expected.

Index of all SIGNALS™ Issues

SIGNALS™ is provided as a service to its customers by Distribution-Publications, Inc. © 1999. All rights reserved.

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The information contained herein is obtained from reliable sources. It is subject to change at any time, however, depending on changes in laws and regulations. While we continually attempt to monitor this information, we do not guarantee its accuracy and are not responsible for any damages suffered by any party in reliance on it.

Distribution-Publications, Inc. A General Steamship Company

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SIGNALS™ the newsletter of Distribution-Publications, Inc. Vol. 3, No. 1, January 1, 1999