Modification of the tariff-filing requirements for cargo consolidators that will take effect on April 18 may not give non-vessel operating common carriers everything they wanted, but NVOs should be better capable of responding more quickly to fluctuating market conditions.
"I don't know if this is going to be the kind of change you want. You still have a tariff," Cameron Roberts, founding partner of the law firm Roberts and Kehagiaras in Long Beach, told the Los Angeles Customs Brokers and Freight Forwarders Association.
Ever since ocean carriers were relieved of the cost and burden of filing rate tariffs with the Federal Maritime Commission, NVOs have wanted the same benefits. After seeking comments from the trade, the FMC last month published in the Federl Register its final rules for what it terms "negotiated rate agreements" between NVOs and their customers.
The rules indeed relieve NVOs of the requirement to publish the rate portion of their tariffs. Rather, NVOs and their customers will engage in negotiated rate agreements. The NRAs are binding agreements subject to specific terms detailed by the FMC.
While most NVOs are pleased with this change, they must still publish the rules portion of their tariffs, Roberts said. The rules tariffs specify the terms and conditions governing shipments.
NVOs must seek competent advice on the complex environment of NRAs and avoid any infractions that could result in fines, or worse, losing the privilege of signing rate agreements with customers, Roberts said. An NVO that loses this privilege will have to compete for market share with other NVOs that follow the rules and can deal with customers through the more efficient NRAs, he said.
Neither NVOs nor shippers should have been blindsided by the new rules, said Ronald Murphy, managing director of the FMC in Washington. The FMC conducted a comment period and attracted more than 40 responses from the trade. Surprisingly, not one shipper or shipper organization representative commented on the proposed rules, Murphy said.
The use of NRAs should allow NVOs to be more nimble and respond quickly to the cyclical rate fluctuations that occur in the ocean shipping trades. This also carries a danger in that some shippers in the new environment will play one NVO off against another to get lower rates, Roberts noted.
Overall, though, the development gives NVOs that are prepared for the new environment the flexibility to operate more efficiently in today's fast-paced transportation marketplace. "This is the opportunity you've been asking for. Don't blow it," he said.
--Contact Bill Mongelluzzo at email@example.com.