FMC Amends NVOCC Negotiated Rate Arrangements and Service Arrangements Rules

Transportation Update

Date: July 31, 2018

On July 19, 2018, the Federal Maritime Commission (FMC) issued a final rule in Docket No. 17-10 (Final Rule) amending its rules at 46 CFR Parts 531 and 532 governing Non-Vessel-Operating Common Carrier (NVOCC) Service Arrangements (NSA) and NVOCC Negotiated Rate Arrangements (NRA), respectively. The Final Rule becomes effective on August 22, 2018.

The Final Rule stems from a National Customs Brokers & Forwarders Association of America (NCBFAA) petition filed on April 16, 2015 in which NCBFAA requested a rulemaking to eliminate the NSA provisions in 46 CFR Part 531 in their entirety, or alternatively, eliminate the filing and essential terms publication requirements for NSAs. NCBFAA also asked the FMC to expand the NRA exemption in 46 CFR Part 532 to include economic terms beyond rates and to delete 46 CFR 532.5(e), which precludes any amendment or modification of an NRA after the initial shipment is received by an NVOCC or its agents. Furthermore, NCBFAA proposed expanding the NRA exemption in 46 CFR Part 532 to allow modification of NRAs at any time upon mutual agreement between NVOCCs and their customers.

On April 28, 2015, the FMC published a Notice of Filing and Request for Comments on the NCBFAA’s petition. After receiving a series of comments from industry stakeholders, the FMC issued the Final Rule.

With the Final Rule, the FMC removed the NSA filing and publication requirements for NVOCCs under 46 CFR Part 531. It also amended its rules under CFR Part 532 to:

  • permit NVOCC NRAs to be amended at any time and allow the inclusion of non-rate economic terms;
  • allow NVOCCs to provide for the shipper’s acceptance of the NRA by booking a shipment thereunder, subject to the NVOCC incorporating a prominent written notice to such effect in each NRA or amendment; and
  • include clarifying language to reflect the current treatment of third-party, pass-through assessorial charges and the enforceability of NRAs.

Following is a summary of the key differences between NSAs and NRAs in light of the changes made by the Final Rule.

Rates and terms:

  • NSAs must include terms listed in 46 CFR 531.6(a) and may include any other terms.
  • NRAs must include the rate, may include any applicable non-rate economic terms, and must include any applicable surcharges and assessorial charges not included in the rate, including pass-through charges.

Acceptance:

  • NSAs must be signed by the NVOCC and the shipper.
  • The shipper may accept NRA terms by signing the NRA; communicating acceptance in writing, including by email; or booking a shipment after receipt of the NRA terms, if the NVOCC has included the required notice.

Enforceability:

  • NSAs are binding upon signature of the parties.
  • NRAs are binding upon the shipper providing the NVOCC with the signed NRA, sending written communication accepting the NRA terms, or booking a shipment after receiving prominent notice in the NRA as to its acceptance.

Filing:

  • There are no filing requirements for NSAs or NRAs.

Publication:

  • There are no publication requirements for NSAs or NRAs.
FOR MORE INFORMATION

For more information, please contact:

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

Nicholas J. DiMichael
202.263.4103
Nick.DiMichael@ThompsonHine.com

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

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