U.S. FMC to Re-Examine Contracting Rules

The U.S. Federal Maritime Commission is considering changes to rules covering contracts that govern most ocean container shipments to and from the United States,  the Journal of Commerce reports.

The FMC plans later this year to propose changes to shipper-carrier service contracts and non-vessel-operating common carrier service arrangements. The proposals would seek to “clarify, update, encourage leveraging technology, and provide regulatory relief where possible.”

Since the Ocean Shipping Reform Act of 1998 ended the requirement that service contract terms be publicly posted, the vast majority of U.S. container shipments have moved under contracts.

The FMC said its plan to seek comment on service contract rules was in response to an executive order from President Obama calling for federal agencies to review their existing regulations to find ways to make them more effective and less cumbersome.

Non-vessel-operating common carriers have been clamoring for the FMC to revisit complex regulations affecting NVOs’ contracting. The FMC received diverse industry comments after the National Customs Brokers and Forwarders Association of America’s filed a petition in 2012 asking the FMC to lift “unnecessary, burdensome rules” governing NVOCC contracting.

The FMC in 2004 loosened the reins on NVOs by allowing them to enter service arrangements that permit individual contracts with customers. The commission in 2011 authorized a different kind of contract, NVOCC rate arrangements.

Unlike NVOCC service arrangements, these don’t have to be published. However, they cannot include credit and payment terms, rate methodology, minimum quantities, dispute forum selection or arbitration clauses, or other non-rate economic issues. NRAs also cannot be amended during their terms to negotiate individual contracts with customers, and NVO rate arrangements.

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