NITL, intermediaries tell FMC: Allow NVO contracts
The National Industrial Transportation League, the National Customs Brokers and Forwarders Association of America and the Transportation Intermediaries Association have urged the U.S. Federal Maritime Commission to allow non-vessel-operating common carriers to sign service contracts with their customers.
In a joint comment sent to the FMC, the three industry groups, which represent shippers and intermediaries, defined seven principles which they believe will help the agency reach the right decision on petitions filed last year by NVOs.
Under the Ocean Shipping Reform Act of 1998, vessel-operating common carriers (VOCCs) are allowed to sign confidential service contracts with their customers, whereas NVOs are prohibited from signing such contracts with shippers and must work under public tariff arrangements.
Last year, the National Customs Brokers and Forwarders Association of America, United Parcel Service, BAX Global and C.H. Robinson Worldwide petitioned the FMC asking for exemptions from public tariff-filing requirements, or for the right to enter into ocean service contracts with customers.
The joint comment, issued Monday by the National Industrial Transportation League, the National Customs Brokers and Forwarders Association of America and the Transportation Intermediaries Association includes seven “common principles” that, the organizations believe, will help guide the FMC “in rendering a decision which recognizes the ability of the agency to grant an exemption for qualified NVOCCs to enter into contracts with their customers.”
One of the principles of the three trade associations states that the FMC “should permit all qualified NVOCCs to have service contracting authority and should consider whether service contracts between NVOCCs and shippers should be subject to all of the existing rules and requirements applicable to VOCC service contracts.”
The three trade associations believe that the FMC has the authority under the Ocean Shipping Reform Act of 1998 to grant an exemption allowing NVO contracts with shippers.
Another of the common principles states that the FMC’s exemption authority was liberalized under the Ocean Shipping Reform Act of 1998 to enable the agency to reduce unnecessary regulatory burdens. “The FMC should exercise that authority unless the exemption would substantially reduce competition or be detrimental to commerce,” it adds.
Moreover, the common principles say that granting exemptions that broadly permitted confidential contracting between NVOs and their customers and reduced tariff publication burdens “would have a pro-competitive impact on the industry and would facilitate commerce.”
The three trade associations asked the FMC to initiate a rulemaking proceeding to determine how to apply its exemption authority to broadly authorize confidential contracting between NVOCCs and their customers.
The statement of common principles notes that contracting is “the preferred means of conducting ocean transportation services between VOCCs and shippers” because it allows for more flexible and customized business arrangements. NVOs should have the same opportunity to offer contracts to their customers, the statement says.
The statement of common principles reiterate the National Customs Brokers and Forwarders Association of America’s view that the administrative costs incurred by NVOs to publish tariffs “far exceed any consumer benefits,” since “very few customers” rely on published tariffs to obtain NVO pricing information.
Peter Gatti, executive vice president of the NIT League, said that the common principles “are designed to assist the agency in recognizing that it has the ability to take into account the changes that have evolved in today’s transportation industry.”
“Both users and service providers should be afforded the opportunity to engage and do business as is recognized in most all other industries today,” he added.
The shipping industry has moved from a system of common carriage to contract carriage, the statement of common principles says.
The three trade associations expect to each submit separate comments to the FMC in this proceeding. Late last year the FMC extended the comment period on the NVO petitions to Jan. 16.
One uncertain aspect of a potential exemption by the FMC is whether all NVOs or only certain NVOs would be allowed to sign service contracts. Major U.S. NVOs have suggested that the right to enter into service contracts should be limited to large NVOs or NVOs that are affiliated with shipping lines.
The National Customs Brokers and Forwarders Association of America has already criticized the proposal to allow different rights to NVOs depending on their size.