RANCHO MIRAGE, Calif. — Cargo consolidators worked tirelessly several years ago to seek an alternative to posting their tariffs, but the option given to non-vessel-operating common carriers does not appear to be very popular.
The Federal Maritime Commission in 2011 used its exemption authority to allow NVOs to use negotiated rate arrangements in lieu of the posted tariff. However, a recent survey revealed that only 25 percent of NVOs polled are making use of NRAs.
Richard Roche, NVOCC committee chairman of the National Customs Brokers and Forwarders Association of America, told that organization’s annual conference that many NVOs feel the use of NRAs does not produce significant cost savings. Furthermore, the record-keeping requirements “don’t mirror business practices,” he said.
Cargo consolidators, also known as NVOs, purchase space on container vessels and then resell the slots to smaller shippers at rates that are more favorable than if the cargo interests booked directly with carriers. NVOs for years complained that they were saddled with certain requirements that did not apply to ocean carriers.
The use of NRAs as an alternative to the posted tariff can be advantageous for NVOs, Roche said. For example, there is no requirement to file a 30-day notice for a rate change.
However, 75 percent of the NVOs queried said they do not use NRAs. One complaint of NVOs involves the “acknowledgement” requirement in which the shipper must acknowledge in writing that it agrees to the use of the NRA.
Ed Greenberg, NCBFAA general counsel, said that rather than being required to acknowledge the validity of the NRA in a separate statement, a possible solution might be to include in the NRA language stating that use of the NRA to ship cargo serves as an acknowledgement.
Greenberg alerted NVOs of other changes that could take place in their industry depending upon what happens to an FMC notice of proposed rule-making on regulations covering ocean transportation intermediaries.
The proposed OTI changes appear to stem from the hundreds of complaints the FMC receives each year involving the shipment of personal household goods overseas, especially by U.S. residents who ship household goods to family and friends in Latin America and the Caribbean.
While such abuses might actually occur, it appears the FMC is positioning itself to scrutinize the activities of all NVOs, even those that do not participate in the shipping household goods, Greenberg said.
The FMC is also looking into possible changes in the licensing of NVOs. Those changes could involve a requirement for NVOs to periodically renew their licenses and pay a fee when doing so. Greenberg said he has never received a satisfactory answer from the FMC as to why the agency is considering such changes.