Burden lifted

Burden lifted       'It's a very good day,' said Edward Greenberg, counsel to the National Customs and Brokers and Forwarders Association of America, upon leaving a Feb. 18 U.S. Federal Maritime Commission meeting.
      The FMC voted that day to initiate a rulemaking that would relieve non-vessel-operating common carriers from the costs and burdens of publishing in tariffs the rates they charge for cargo shipments. In a 3-1 vote, the commission decided to grant this exemption to licensed NVOs.
      The FMC based its decision on a NCBFAA petition filed on July 31, 2008. The agency received numerous comments in 2008 and at the request of the NCBFAA included a supplemental comment period from Jan. 5 to Jan. 21. NVOs have argued for years that publishing rate tariffs were of no interest to shippers.
      'I believe this is one of the most significant commission actions since Congress passed the Shipping Act in 1984,' said FMC Chairman Richard A. Lidinsky Jr., in a statement.
      'The bottom line for me was jobs,' he said. 'In a bipartisan vote, the commission has provided thousands of dollars in cost savings to these critical businesses and the hundreds of thousands of exporters and importers they serve.'
      The Shipping Act gives the commission the discretion to grant exemptions, such as from tariff requirements, if doing so will not result in substantial reduction in competition or be detrimental to commerce.
      In addition to Lidinsky, Commissioners Rebecca F. Dye and Michael A. Khouri voted to grant the relief through a proposed rulemaking, while Commissioner Joseph E. Brennan opposed the action.
      'Under the current economic conditions, the commission must use its expanded exemption authority to simplify the business processes of American companies, put cash back into businesses, and generate additional American jobs,' Dye said.
      Khouri, in his first meeting since joining the FMC, noted the petition had been the subject of extensive public review and comment. 'It is broadly supported by the intermediary and shipper communities, as well as other federal agencies. The commission's action today will foster competition, provide a benefit to the shipping public, and be good for the economy.'
      In a statement, Brennan said he opposed the petition on the basis of both law and policy. He cited the Supreme Court case Marislin Industries U.S. Inc. v. Primary Steel Inc., 497 U.S. 116 (1990) as authority prohibiting the FMC from undermining the common carriage aspects of the Shipping Act that Congress explicitly retained when enacting the Ocean Shipping Reform Act in 1998. He also questioned the NCBFAA's claims that tariffs are rarely used to determine ocean-shipping rates, noting assertions by tariff publishers that their Web sites receive thousands of 'hits.'
      According to industry statements submitted to the FMC, small NVOs said they could easily save $10,000 to $12,000 a year without tariff rate publishing, while larger firms expect that amount to be in the 'six figures.'
      'We used to just consider it a cost of doing business,' said Dennis J. Rowles, president of DJR Logistics, a small Folcroft, Pa.-based forwarder, who estimated that he spent about $6,200 on tariff filing activities in 2009. 'Now, we realize it was a big waste of time and money.'
      Panalpina, in its Jan. 18 supplemental comments in support of the NCBFAA petition, noted in 2009 that its average monthly cost to publish rate tariffs was $15,000, a 30 percent increase over the previous year despite fewer shipments moving due to the economic recession.
      'As Panalpina acting as agent for Pantainer, we have conducted extensive training on a global basis to ensure our compliance to this regulation,' said Paulette Kolba, area export and ocean compliance manager. 'At the same time, especially in these trying times, our reduced workforce is spending valuable time filing and refiling rates; time that should be used to service our customers.
      'As for the cost, I can say that the amount of money that Panalpina as agent for Pantainer spent in 2009 on our tariff publishing fees, without even taking into consideration our administration costs, could have saved two or three operations positions in our organization,' she said.
      The commission will issue a proposed rulemaking in the Federal Register that relieves licensed NVOs from publishing rates in tariffs, while imposing several conditions that Lidinsky said would protect shippers, including:
      ' NVOs must still publish standard rules tariffs containing contractual terms and conditions governing shipments.
      ' NVOs must provide those rules to the public free of charge.
      ' NVO rates must be agreed to and memorialized in writing by the date cargo is received for shipment.
      ' NVOs will have to retain documentation of agreed rates and terms for each shipment for a period of five years, and must make that documentation available promptly to the commission on request.
      The National Industrial Transportation League, which represents many large shippers, backed the NCBFAA's petition. 'Tariff rate publishing is a make-work and costly matter to the NVOs,' said Peter Gatti, NIT League's executive vice president. 'The commission has been asked to adjust to market changes and that's exactly what happened here.'
      'With this petition we were not looking for total deregulation,' Greenberg said. 'It was a matter that shippers didn't use rate tariffs. So why bother having them?'
      The NCBFAA has been seeking tariff rate publishing relief since 2003. Greenberg praised the commission, especially its newest members ' Lidinsky and Khouri ' for their wherewithal to act on the petition. 'They're very bright and bring in a lot of energy,' he said.
      Dye has also been public in her support for ending the NVO tariff rate publishing requirement, highlighting this in speeches to industry groups in recent years.
      While NVOs have every reason to celebrate the FMC's decision, they should take this time to seriously familiarize themselves with the FMC's proposed rulemaking and understand the resulting outcome to their operations for compliance purposes and self-protection.
      'Our suggestion is for NVOCCs to be alert for the terms of the proposed rulemaking and participate in that process to insure the final rules reflect a realistic and practical approach,' wrote attorney Carlos Rodriquez, who represents freight forwarders and NVOs, in his OTI Corner newsletter.
      'Additionally, NVOCCs should be especially alert to instituting tariff rules which will provide them appropriate legal benefits,' he said. 'Tariffs, even rules tariffs, have the effect of law. Currently drafted tariff rules can be important in disputes between carriers and shippers.' ' Chris Gillis