New FMC Guidance on Complying with NVOCC NRA Exemptions
On April 18, 2011, the Federal Maritime Commission issued a guidance document on how to comply with the FMC’s final rule to exempt licensed non-vessel operating common carriers (NVOCCs) from the rate tariff publication requirements of the Shipping Act of 1984, if they agree to negotiated rate arrangements (NRAs) with their shippers.
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(The guidance says that NRAs 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 the conditions below, it does not have to publish its rate in the tariff it makes available to the public.)
(See ITT’s Online Archives or 03/02/11 news, 11030233, for BP summary of FMC’s March 2011 final rule.)
NVOCCs Must Follow 5 Steps to Use NRA Exemption which Took Effect April 18
The guidance states that for NVOCCs to take advantage of the NRA exemption which took effect April 18, 2011, they must follow the following five steps to use NRAs that comply with the FMC’s rule:
1) Be licensed by FMC. The NRA rule currently applies only to NVOCCs who hold a valid license from the FMC. Those who do not have an NVOCC license from the FMC can apply for one here.
2) Post notice in tariff and bills of lading. An NVOCC wishing to use NRAs must post a prominent notice in its tariffs and bills of lading or equivalent shipping documents for shipments moving pursuant to an NRA. (Note that an NVOCC does not have to amend its Form FMC-1 to provide notice it is using NRAs. The FMC withdrew that requirement before the NRA rule went into effect. See ITT’s Online Archives or 04/08/11 news, 11040819, for BP summary.)
3) End all tariff access charges. An NVOCC wishing to use NRAs must also provide the public with free electronic access to its tariffs that contain the rules governing shipments. Unless specifically exempted by this rule, all Commission rules for tariffs, including requirements to provide historical data, access date capability, and current tariff location information in Form FMC-1, continue to apply.
4) Agree to an NRA in writing before receiving cargo. An NVOCC and its shipper customer must agree to the NRA and memorialize it in writing before the relevant cargo is received by the NVOCC or its agent (including the originating carrier in the case of through transportation). An email or other written electronic communication is acceptable if it shows assent of both the NVOCC and the shipper.
5) Keep NRA documentation on file for 5 years. An NVOCC must retain documentation of the agreed rate for a period of five years, and must make that documentation available promptly to the Commission upon request. Failure to keep or timely produce original NRAs and associated records and written communications will disqualify an NVOCC from the exemption and may result in a Commission finding of violations of the Shipping Act.
(See ITT's Online Archives or 04/13/11 news, 11041331, for BP summary of FMC Commissioner Khouri speaking about the NRA rule at the NCBFAA conference.
See ITT's Online Archives or 02/09/11 news, 11020924, for BP summary of comments submitted by the trade on FMC's NRA proposed rule.)