By Jennifer M. Gartlan, Deputy Director, Office of Consumer Affairs & Dispute Resolution Services, Federal Maritime Commission

The FMC’s Office of Consumer Affairs & Dispute Resolution Services (“CADRS”) receives numerous inquiries from ocean transportation intermediaries (“OTIs”) and the shipping public regarding OTI licensing requirements and nuances every year.  By way of background, ocean transportation intermediaries offering services in the international trade of the United States must be FMC licensed or registered and bonded.  The Commission offers two types of licenses: 1. Non-Vessel Operating Common Carrier (“NVOCC”) with a U.S. office; and 2. Freight Forwarder (“FF”).  Under current licensing requirements, NVOCCs must have a $75,000 bond.  FF’s must maintain a $50,000 bond.  In addition, NVOCCs without a U.S. office may register with the FMC and must maintain a $150,000 bond.  

IAM recently provided CADRS with a list of questions posed by its members.  Upon consultation with the Bureau of Certification and Licensing and the Bureau of Enforcement, below are the answers to the questions posed:

1.    Can a domestic mover without an FMC license in the US advertise that they can handle international moves?

Generally, a domestic mover in the US cannot offer to provide international moving services by ocean without an FMC OTI license.    

2. Can a domestic mover without an OTI license book an international move, invoice the shipper and then subcontract the move after origin services are performed to an FMC licensed forwarder?

No.  The domestic mover must have an OTI license to offer international services, book the shipment, and invoice the shipment in its own name. Subcontracting would be considered an illegal transaction, which could subject both the unlicensed and the licensed companies to civil enforcement action and penalties.

3.  Who is allowed to invoice a shipper or its company for an international door to door move?

Invoices for an international door-to-door move should be issued in the name of the FMC-licensed OTI that is performing the move.

4.  Can an agent for a van line advertise for international shipments, book the job, invoice shipper and then subcontract the move after origin service to its van line HQ?

If the van line does not have an OTI license, the transaction would be illegal in its entirety.

If the van line is licensed and the advertising is in the name of the licensed van line, the transaction would appear to be permissible. The use of the term “subcontract” in the question suggests the reverse of the typical agency arrangement.  Generally, an agent, the unlicensed moving company, works on behalf of a licensed company and all actions it takes are attributed to the principal, i.e., the licensed company.  The agent would not be subcontracting with the principal for all or a portion of the move—it would be performing moving activities on behalf of the licensed entity.  The licensed company would have to be responsible for the shipment in its entirety (e.g., liability for loss and damage).  The shipper would have to know that they are working with the licensed entity, and all documents would have to be in the name of the licensed entity (e.g. shipping quotes, contracts, bills of lading, etc.).

With respect to performing origin services, the agent may be able to perform origin services such as estimates, packing, and transporting the shipment to warehouse for consolidation on behalf of the van line.  However, the activities of the agent may be subject to local, state, and federal safety and commercial trucking statutes and regulations.

5.  Can an agent for a van line advertise for international shipments, book the job, invoice shipper and then subcontract the move after origin service to a licensed FF?

If the van line does not have an OTI license then the transaction in its entirety would be prohibited.

If the van line is a licensed OTI, then all of activities conducted must be in the name of the licensed OTI and the OTI is responsible for the shipment.  Furthermore, while it might be permissible for a licensed company (through its agent) to book with a forwarder, it cannot book the shipment with a forwarder that is related to the principal OTI for purposes of obtaining brokerage.

6.  What can a licensed forwarder do that a licensed NVOCC cannot and vice versa?

7.  What is the difference in the paperwork between a FF and an NVOCC with an international move?

 8.  If a company has an NVOCC and a FF license what paperwork is it meant to produce for an international move?

Generally, a company licensed as both an NVOCC and FF should not be acting as both on the same shipment.  As such, if the company is providing NVOCC services, it should be issuing its own house bills of lading and related documents.  If acting as a FF, then it can help prepare bills of lading on behalf of the vessel operator, but would not be issuing its own bills of lading.  Both entities though would be responsible for preparing or obtaining and maintaining the types of documents set forth in question 9.

9.  What type of documents must NVOCCs and FFs retain?

Under the Commission’s regulations, FFs are required to maintain the following paperwork for a period of 5 years:

• General financial data: all receipts and disbursements, accounts receivable and payable, and daily cash balances bank deposit slips, canceled checks, and monthly reconciliation of bank statements

• Shipment files: separate file maintained for each shipment containing a copy of each document prepared, processed, or obtained by the FF, including each invoice for any service arranged by the licensee and performed by others, with respect to such shipment. (Examples include but are not limited to:  bills of lading, booking confirmations, delivery orders, packing lists, manifests, dock receipts, trucking invoices, commercial invoices, bills of sale, freight invoices, customer invoices, inventories of personal effects, documentation of shipment measurements, internal emails, etc.)

• Receipts and disbursements by shipment:  a record of all sums received and/or disbursed by the FF for services rendered and out-of-pocket expenses advanced in connection with each shipment, including specific dates and amounts.

• Copies of contacts or memoranda summarizing every agreement with a principle shipper.

With respect to NVOCCs, there has been some confusion regarding mandatory record keeping requirements.  The FMC’s Final Rule, recently adopted, seeks to clarify that NVOCCs are required to maintain the same types of records as FFs: (i.e. general financial data, shipment files, receipts and disbursements, and contracts).  FMC regulations also require NVOCCs to maintain copies of NSAs, amendments and related materials as well as NRAs for a period of 5 years. Further, while the FMC does not require agency agreements to be in writing, the Commission would expect to see copies of written agency agreements that are reduced to writing along with any written co-loading agreements that an NVOCC may have.

10. How should foreign registered OTIs renew their registration to comply with 46 CFR 515.19(d)?

It is anticipated that the FMC will introduce an electronic renewal method of renewing registration.  Under this plan, the foreign-registered OTI would receive notice within 60 days of the renewal date requesting the entity to confirm whether there are no changes to the current registration information and requesting refilling of the Form FMC-65 if there is a change in the company’s registration information