FMC Approves Tariff Exemption for NVOs

FMC Approves Tariff Exemption for NVOs

The Federal Maritime approved rules Wednesday that would exempt non-vessel-operating common carriers from the legal requirement to use published tariffs as the basis for rate-making.

The new regulation will allow NVOs to negotiate “rate arrangements” with customers. The commission will publish the final draft on Feb. 23, and it will take effect in mid-April, 45 days after it is published in the Federal Register.

The rules, approved on a 3-1 vote, will only apply to some 3,400 NVOs licensed and bonded by the commission. Foreign NVOs, including those with FMC bonds, will still be obligated to maintain tariffs. Chairman Richard A. Lidinsky Jr., said the commission will launch an inquiry on extending the rule to foreign NVOs, which should take about a year.

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NVOs still will be required to publish tariffs online and make them available for free. Companies will be able to negotiate a rate with a customer or quote a tariff rate, as long as it includes the information in its rules. NVOs also will be able to apply a negotiated rate to multiple shipments from the same shipper.

NVOs have tried to get tariff exemption for 20 years. They argued tariffs are a costly drag on business and unnecessary since NVOs in practice are flexible already in the rates they quote. The commission’s action is the result of a petition filed in 2008 by the National Customs Brokers and Forwarders Association of America.

Some believe the agency hasn't gone far enough. "Today's vote by the FMC, while well intended, continues to shine a spotlight on an agency out of touch with market realities and more interested in preserving their own jobs," said Robert Voltmann, president of the Transportation Intermediaries Association. "Several hundred billion dollars of transportation service is conducted without filed rates or government regulation. Ocean transportation should be equally free of antiquated government regulation." 

Lidinsky and commissioners Rebecca F. Dye and Michael A. Khouri approved the change. Commissioner Joseph E. Brennan voted no, keeping up vigorous opposition which he started last year.

Brennan said the commission is overstepping its congressional authority: when Congress approved the Ocean Shipping Reform Act in 1998, it explicitly said NVOs must keep tariff rates.

“Maybe the NVOs want to be able to raise their rates immediately at all times and keep all their rates secret. That is not surprising – if I were an NVO, maybe I’d like to do that,” Brennan said. “They should go to Congress and ask for the statute to be changed.”

"Today's vote by the FMC, while well intended, continues to shine a spotlight on an agency out of touch with market realities and more interested in preserving their own jobs," said Robert Voltman, president of the Transportation Intermediaries Association. "Several hundred billion dollars of transportation is conducted without filed rates or government regulation. Ocean transportation should be equally free of antiquated government regulation."

-- Contact R.G. Edmonson at bedmonson@joc.com.