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A free market victory

By Patrick Burnson, Executive Editor
February 18, 2011

The Federal Maritime Commission took several steps yesterday to reduce regulatory burdens and bring cost savings and flexibility to the shipping industry and the customers they serve.

Chief among the achievements, though, was the lifting of rate-tariff publication requirements for Non-Vessel-Operating Common Carriers:

The Commission voted 3-1 to issue a final rule that will relieve more than 3,300 licensed Non-Vessel-Operating Common Carriers (NVOCCs) from the costs and burdens of publishing in tariffs the rates they charge for cargo shipments.

As we have noted in this column before, the Shipping Act gives the Commission authority to grant exemptions from its requirements if doing so will not result in substantial reduction in competition or detriment to commerce.

The final rule will be issued by February 23, and NVOCCs who follow its conditions will be relieved of rate publication requirements 45 days after the rule is published in the Federal Register. According to comments filed with the Commission, this action could save each of these businesses up to $200,000 per year.

The final rule establishes an instrument called a negotiated rate arrangement. Licensed NVOCCs who enter into negotiated rate arrangements with their customers will be exempted from the requirement of publishing their rates in tariffs if they meet conditions that include:

• NVOCCs would continue to publish rules tariffs containing terms and conditions governing shipments;
• NVOCCs would be required to provide those rules to the public free of charge;
• Rates charged by NVOCCs must be agreed to and memorialized in writing by the date cargo is received for shipment; and
• NVOCCs must retain documentation of the agreed rate for a period of five years, and must make that documentation available promptly to the Commission upon request.

“After a year of work and many years of debate, the Commission has provided thousands of dollars per year in cost savings to these critical U.S. supply chain businesses and the hundreds of thousands of exporters and importers they serve,” said FMC Chairman Richard A. Lidinsky, Jr.

We could not agree more.

About the Author

Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).

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