FMC Issues Final Rule to Boost Transparency, Access to Carrier Charges
The Federal Maritime Commission finalized several changes to its rules for carrier automated tariffs, including one that would bar carriers from charging a fee to access their tariff systems and others that aim to increase transparency around certain “pass-through” charges assessed to shippers. The FMC also abandoned a proposed change that would have required the documentation for a broader range of containers to include the name of all non-vessel operating common carriers with touchpoints to that cargo, a proposal that faced strong opposition from multiple trade groups and logistics companies.
The final rule, released Dec. 29 and effective Feb. 1, was issued about 19 months after the FMC first proposed changes designed to make transactions and fees between carriers and shippers more transparent (see 2205090006). In public comments, trade groups and companies told the commission that several of the proposed changes were either unnecessary or would have placed too heavy a burden on industry (see 2207110024) and 2206210026), but most supported a measure that will require common carriers to provide free access to their tariff systems.
The FMC said it believes “cost barriers” to tariff access are “contrary to the goal of ensuring the availability of shipping information.” It also said the existing requirement for carriers to publish their tariffs is outdated. “[A]dvances in technology since the regulation was implemented over two decades ago mean that free tariff access is now reasonable,” the FMC said.
The commission also added language to specify that it will revoke the license of any NVOCC or suspend the registration of any foreign unlicensed NVOCC that fails to “maintain a tariff.” This could apply to NVOCCs that publish a tariff after first being licensed, but later allows the tariff to “lapse and fall out of compliance.”
Another change adopted by the final rule will allow NVOCCs to cross-reference certain aspects of other carriers’ terms in their tariffs when charging a shipper certain “pass-through” fees originally assessed by the ocean carrier, a change meant to give shippers more visibility into where certain charges originate. The change also could allow shippers to track when and how those charges may increase.
The FMC noted that some commenters objected to the proposal because it would place too “great” a burden on NVOCCs to list all named ocean carrier surcharges in their tariffs and provide links to each of those fees. In the final rule, the commission clarified that NVOCCs don’t need to publish the ocean carrier name or name of the carrier tariff, and can instead publish “a list of names which may encompass a category of charges.” The name “Bunker Surcharge,” for example, may include any “Low Sulphur Fuel Charges” and "Fuel Recovery Surcharges,” the FMC said.
The commission also made other changes to clarify what types of charges NVOCCs can pass through to their shippers. One change will be an “option” to pass through general rate increases imposed by the ocean carrier, a decision made by the FMC after trade groups representing the forwarding industry said rate increases should be treated the same as other “rapidly changing and proliferating VOCC charges.”
In another clarification, the FMC said NVOCC fees should be “separate and distinguished” from pass-through charges originally assessed by the ocean carrier. In its proposed rule, the commission said the regulations governing pass-through charges are not meant to “allow a markup of charges above what the third party has billed,” although several commenters said NVOCCs should be allowed to charge a “nominal” fee to “recover the cost of the outlay of charges assessed by an outside entity.”
The FMC said it agreed that NVOCCs are “entitled to receive compensation for services provided, including a fee for the advance payment of charges on behalf of its customer.” But the commission’s "intent in this regard is to ensure it is clear what service charges are being charged to the shipper, rather than allowing the NVOCC to simply mark up the charges assessed by the VOCC.”
The commission decided not to follow through with a proposed change that would have revised its definition of co-loading to mean only “the act of combining of less-than-container-loads (LCL) of cargo.” It also eliminated a proposal that would have added more requirements to container documentation by forcing full container load shipments to be annotated with the name of all NVOCCs associated with the cargo.
The FMC originally said this proposal was designed to help beneficial cargo owners ensure they had all the information they needed to contact any NVOCC that may have control of their freight, but commenters said the requirement would be overly burdensome and serve little purpose.
The FMC also noted that companies opposed the idea because requiring them to disclose to their clients the names of all other NVOCCs they work with could have an “impact on their competitive commercial interests.” NVOCCs also don’t always know the names of all other NVOCCs that may handle the shipment “before it reaches a final master NVOCC” that contracts with the ocean carrier, the commission said.
But the FMC did note that a similar requirement already applies to co-loaded cargo, and said the final rule will change those regulations to clarify “the types of relationships that are allowable for the co-loading of cargo among NVOCCs.” For co-loading under carrier-to-carrier relationships and shipper-to-carrier relationships, the FMC said “each NVOCC will issue its house bill of lading for its portion of the cargo and act as carrier to its own customer.”
The rule also makes a range of other changes to the FMC’s regulations for carrier automated tariffs, including by updating certain citations, clarifying when the regulations are “expressing a requirement or obligation,” clarifying language for certain definitions and more.