1. FMC
Regulations and NRA’s
ver

2. FMC (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. 06/19/13
Rev. 06/19/13

3. FMC (Federal Maritime Commission)
Tariff is what a licensee (VOCC, NVOCC) files with FMC
There are two parts to a tariff:
Rates – ocean selling rates quoted and billed to customers
Rules – rules/conditions that FMC licensee must conducts business in accordance to, including but not limited to:
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 a tariff?

4. FMC (Federal Maritime Commission)
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:
DOOR rate: prior to loading at shipper’s facility
CY rate: prior to cargo delivered to container yard
RAIL rate: prior to cargo delivered to rail/ramp
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)
What is tariff rates?

5. FMC (Federal Maritime Commission)
Effective dates:
FMC (Federal Maritime Commission)
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
When will new rates and amendments go into effect?

6. FMC (Federal Maritime Commission)
Commodity
Origin
Port of Loading
Port of Discharge
Destination
Service Type
Rate Basis
Currency
Container Size
Container Type
Minimum BOF (if applicable)
Rate Notes
Effective Date
Expiration Date
FMC (Federal Maritime Commission)
What is required information to file rate?

7. 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).

8. 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.

9. Other cases: FMC FINES NVOCC’s $477,500
On investigating, the NVOCC’s were found to have:
undercharged on tariffs
provided incorrect cargo description
inflated cubic measurements of certain cargo to obtain discounted rates from ocean carriers
engaged in unlawful access to service contract rates.

10. 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

11. FMC - Penalties for Non-Compliance
$6, for each unpublished tariff
$30, for each willful violation
Each day of continuing violation is considered a separate offense

12. FMC (Federal Maritime Commission)
Send quotation to customer
FMC (Federal Maritime Commission)
Quotation accepted by customer
New rates filed in FMC tariff
After rates go into effect, load/move shipment
High level flow of quotation, filing and billing process
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

13. FMC (Federal Maritime Commission)
Tariff rate filing is extremely rigid
Rates once filed takes 30 days for amendment to take effect
Cannot quote different rates to different customers for the same port pair, service and commodity
Alternative to tariff rate filing: NRA
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
Indicating on HBL and all shipping documents that shipment is moved pursuant to an NRA
Submitting application to FMC
Oversea agents quoting on behalf of N/VOCC are boune to the same procedure and requirements
Developing internal procedure for systemic and robust recordkeeping of all NRA’s
FMC (Federal Maritime Commission)
Alternative to tariff rate filing?

14. FMC (Federal Maritime Commission)
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
How NVOCC’s can benefit from NRAs?

15. FMC (Federal Maritime Commission)
Add NRA Notice to some of our business documents that relate to quote and rates
HBL
Invoices/Debit Notes
signature
Develop NRA Rules Tariff
Publish NRA Rules Tariff on UFL’s website
File Form No. 1 with FMC
Procedure to keep good written record (such as s) showing rates quoted and acceptance by customers
Procedure to ensure billing to customers is same as accepted rates
FMC (Federal Maritime Commission)
What WCT needs to do to start using NRAs?

16. FMC (Federal Maritime Commission)
General guidelines:
FMC (Federal Maritime Commission)
Quotation must be done by “writing” which can be electronic
Quotation should be specific to Origin/Destination
Quotation should be specific to commodity and quantity unit(s) involved
Communication must reflect clear acceptance by shipper/consignee/co-loader/agent of rates/charges quoted
NRA’s must contain actual rates/charges invoiced to customer
Quotation communication must include NRA Notice
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
Recordkeeping (for shipments moved under NRAs):
NRAs and related records must be kept for 5 years
NRAs are subject to FMC inspection
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
Quotation process and recordkeeping for shipments moved under NRA

17. FMC (Federal Maritime Commission)
Attached is a detail procedure for invoking NRA exemption
Quotation process and recordkeeping for shipments moved under NRA
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

18. FMC (Federal Maritime Commission)
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
Quotation process and recordkeeping for shipments moved under NRA

19. FMC (Federal Maritime Commission)
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
Quotation process and recordkeeping for shipments moved under NRA
YES
YES NO
YES