Transcript FMC_Regulations_and_Ocean_Logistics - U

FMC
REGULATIONS AND NRA’S
ver. 20130619
FMC (Federal
Maritime
Commission)
Who are they?
The Federal Maritime Commission
(FMC) is the independent federal agency
responsible for regulating the U.S.
international ocean transportation
Rev. 06/19/13
Rev. 06/19/13
system for the benefit of U.S. exporters,
importers, and the U.S. consumer.
FMC (Federal
Maritime
Commission)
 Tariff is what a licensee (VOCC, NVOCC) files
with FMC
 There are two parts to a tariff:
1.
Rates – ocean selling rates quoted and billed to
customers
2.
Rules – rules/conditions that FMC licensee must
conducts business in accordance to, including but
not limited to:
What is a tariff?
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Application of rates including currency
Definition of heavy lift
Definition of extra length
Min. BL charges
Payment of freight charges - prepaid, collect allowed for listed
countries
Bill of Lading conditions (consistent with terms on back of HBL)
Hazardous cargo
How overcharge claim should be filed and handled
Definitions and Symbols
GRI's
FMC (Federal
Maritime
Commission)
What is tariff
rates?

Tariff rates are the ocean selling rates we bill to customers

Rates for both U.S. import and export shipments need to
be filed

Minimum rate validity is 30 days; validity can be longer
depending on how steady/regular the business is

Rates filed must be in effect based on the service type. eg:

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DOOR rate: prior to loading at shipper’s facility

CY rate:
prior to cargo delivered to container yard
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RAIL rate:
prior to cargo delivered to rail/ramp
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PIER rate:
prior to cargo delivered to pier
What is a DOOR rate?

Pick up or inland cartage charge is included in the Ocean Freight
Rate

eg. 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)
When will new
rates and
amendments go
into effect?
Effective dates:
•
New Rate filing – activated on the same day of
filing
•
Rate change filing –
•
•
that results in lower or no change in cost to
shipper – same day
•
that result in higher cost to shippers – 30
days
Rate 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 first
FMC (Federal
Maritime
Commission)
What is
required
information to
file rate?

Commodity

Origin

Port of Loading
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Port of Discharge
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Destination
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Service Type
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Rate Basis
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Currency
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Container Size
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Container Type

Minimum BOF (if applicable)
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Rate Notes

Effective Date

Expiration Date
Case #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).
Case #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.
Other cases: FMC FINES NVOCC’s $477,500
 On investigating, the NVOCC’s were found to
have:
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undercharged on tariffs
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provided incorrect cargo description
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inflated cubic measurements of certain cargo to obtain
discounted rates from ocean carriers
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engaged in unlawful access to service contract rates.
Other cases: FMC FINES NVOCC’s $477,500
• AE Eagle America – Jamaica, NY - $87,500.00
• Ba-Shi Yuexin Development dba Bus Logistics – Alhambra, CA -
$85,000.00
• Ocean Marine Shipping – Cummings, GA - $70,000.00
• SES Intl Express – Inglewood, CA - $62,500.00
• MB Logistics Intl – Jamaica, NY - $50,000.00
• Sinotrans Logistics – Alhambra, CA - $50,000.00
• Cargo Alliance – Monterrey Park, CA - $40,000.00
• Orion Cargo Services – Newark, NJ - $32,500.00
FMC - Penalties for Non-Compliance
 $6,000.00 for each unpublished tariff
 $30,000.00 for each willful violation
Each day of continuing violation is considered a
separate offense
FMC (Federal
Maritime
Commission)
High level flow
of quotation,
filing and
billing process
Send quotation to customer
Quotation accepted by customer
New rates filed in FMC tariff
After rates go into effect,
load/move shipment
Invoice customer based on
quotation
•Rates in quotation, tariff and on invoices must match,
down to line item level
•Examples of non-compliance:
•Moved/loaded shipment prior to rates becoming effective
•Filed door-rate to customer but invoice shows a pickup
charge
•No effective bunker filed in tariff but customer is billed
for bunker
FMC (Federal
Maritime
Commission)
Alternative to
tariff rate
filing?
 Tariff rate filing is extremely rigid
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Rates once filed takes 30 days for amendment to take effect
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Cannot quote different rates to different customers for the
same port pair, service and commodity
 Alternative to tariff rate filing: NRA
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NRA stands for NVOCC Negotiated Rate Arrangement

NRA’s do not need to be filed with FMC

An NRA structure needs to be set up properly, including:

Indicating the use of NRA’s in the rules tariff
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Indicating on HBL and all shipping documents that
shipment is moved pursuant to an NRA
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Submitting application to FMC
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Oversea agents quoting on behalf of N/VOCC are boune to
the same procedure and requirements
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Developing internal procedure for systemic and robust
recordkeeping of all NRA’s
FMC (Federal
Maritime
Commission)
How NVOCC’s
can benefit
from NRAs?
•
UFL/WCT benefits from NRAs by being able to offer
different special/promotional rates to individual direct
customers and co-loaders
•
These rates don’t have to be filed, and quoted rates are
not restricted to existing filed rates
•
Rates 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 changes
FMC (Federal
Maritime
Commission)
What WCT
needs to do to
start using
NRAs?

Add NRA Notice to some of our business documents that
relate to quote and rates
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HBL
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Invoices/Debit Notes

E-mail signature
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Develop NRA Rules Tariff
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Publish NRA Rules Tariff on UFL’s website
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File Form No. 1 with FMC
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Procedure to keep good written record (such as emails)
showing rates quoted and acceptance by customers
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Procedure to ensure billing to customers is same as
accepted rates
General guidelines:
FMC (Federal
Maritime
Commission)

Quotation must be done by “writing” which can be electronic
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Quotation should be specific to Origin/Destination

Quotation should be specific to commodity and quantity unit(s)
involved
Quotation
process and
recordkeeping
for shipments
moved under
NRA
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Communication must reflect clear acceptance by
shipper/consignee/co-loader/agent of rates/charges quoted
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NRA’s must contain actual rates/charges invoiced to customer
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Quotation communication must include NRA Notice
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Quotation should indicate duration quotation is good for

Rates/charges cannot be changed once cargo is delivered to pier or
yard or picked up by trucker depending on rate type
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Recordkeeping (for shipments moved under NRAs):

NRAs and related records must be kept for 5 years
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NRAs are subject to FMC inspection
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Must 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 penalty
FMC (Federal
Maritime
Commission)
Quotation
process and
recordkeeping
for shipments
moved under
NRA
Attached is a detail procedure for
invoking NRA exemption
When NRA regulations are applicable?
When quoting for shipments that:
•
will be moved under W.C.T.’s H/BL
•
W.C.T will invoice for Ocean Freight
•
not based on existing rates filed with FMC
FMC (Federal
Maritime
Commission)
Quotation
process and
recordkeeping
for shipments
moved under
NRA
NRA rules applicable?
Example….
UFL quoting for FOB shipments where UFL
provides door to port service
UFL quotes for EXWORK shipments where UFL
provides port to port service
UFL quotes for FCA shipments where UFL
provide door to port service
UFL quotes for FCA shipments where UFL
provides port to door service
FMC (Federal
Maritime
Commission)
Quotation
process and
recordkeeping
for shipments
moved under
NRA
NRA rules applicable?
Example….
UFL quoting for FOB shipments where UFL
provides door to port service YES
UFL quotes for EXWORK shipments where UFL
provides port to port service YES
UFL quotes for FCA shipments where UFL
provide door to port service NO
UFL quotes for FCA shipments where UFL
provides port to door service YES