FMC Proposes Rule Changes for NVOCC Rate and Service Arrangements

Transportation Update

Date: November 30, 2017

On November 29, 2017, the Federal Maritime Commission (FMC) issued a Notice of Proposed Rulemaking (NPRM) to provide greater flexibility in and deregulate NVOCC Service Arrangements (NSAs) and Negotiated Rate Arrangements (NRAs). The NPRM stems from a petition for rulemaking filed by the National Customs Brokers and Forwarders Association of America (NCBFAA) on April 16, 2015 and a subsequent Request for Comment published by the FMC on April 28, 2015.

The NCBFAA’s petition sought a rulemaking proceeding to eliminate provisions under 46 CFR part 531 completely or, alternatively, to eliminate the filing and essential terms publication requirements for NSAs. In addition, the petition sought to expand the existing NRA exemption under 46 CFR part 532 to allow for the inclusion of economic terms beyond rates into NRAs. On August 2, 2016, the FMC granted the petition but delayed its initiation until the completion of a separate rulemaking proceeding that also involved amending portions of part 531 related to NSAs.

After review of the comments filed in response to its Request for Comment, the FMC is proposing to:

  • Remove the NSA filing and publication requirements under 46 CFR part 531.
  • Permit NVOCCs and shippers to modify NRAs under 46 CFR part 532 at any time.
  • Permit the act of booking cargo to be considered as acceptance of a rate under the terms of an NRA. Written notice to that effect must be incorporated in each NRA or amendment for an NVOCC to utilize this form of acceptance.

The FMC is inviting further public comment, particularly from shippers currently using NRAs, on how expanding the NRA exemption to allow inclusion of non-rate economic terms may impact their commercial business operations. Non-rate economic terms could include:

  • Service amendments
  • Per-package liability limits
  • Provision of free time, detention or demurrage charges
  • Provisions for arbitration, dispute resolution or forum selection
  • Minimum volumes or time/volume rates
  • Liquidated damages
  • Credit terms and late payment interest
  • Service guarantees and/or service benchmarks, measurements and penalties
  • Surcharges, GRIs or other pass-through charges from the carriers or ports
  • Rate amendment processes
  • EDI services

Comments are due on or before January 29, 2018.

FOR MORE INFORMATION

For more information, please contact:

Karyn A. Booth
202.263.4108
Karyn.Booth@ThompsonHine.com

Madeline J. Sisk
202.263.4178
Madeline.Sisk@ThompsonHine.com

Jason D. Tutrone
202.263.4143
Jason.Tutrone@ThompsonHine.com

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgement of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel.

This document may be considered attorney advertising in some jurisdictions.

© 2017 THOMPSON HINE LLP. ALL RIGHTS RESERVED.