The 1998 Ocean Shipping Reform Act mandated that non-vessel-operating common carriers publish the services that they offer and make sure the information is electronically accessible, and NVOs have been fighting the burdensome process ever since.
Non-vessel-operating common carriers have never liked publishing and maintaining tariffs. In fact, they the process downright burdensome, even pointless at times, since their customers don’t even access them.
But the 1998 Ocean Shipping Reform Act made it a requirement for NVOs to publish the services that they offer to the container-shipping public and make sure the information is accurate and electronically accessible.
Once a new NVO receives its license from the U.S. Federal Maritime Commission, it must immediately file a tariff registration form (FMC-1), which notifies the agency of the location of the NVO’s electronically accessible tariffs. A small NVO may spend upwards of $20,000 a year publishing and maintaining its public tariffs, while this activity could easily cost a large NVO as much as $200,000 annually.
NVOs have repeatedly voiced their dislike of tariff publishing for more than 15 years. The FMC acknowledged in a September 2001 report, The Impact of the Ocean Shipping Reform Act of 1998, that NVOs “view tariffs as burdensome because they retain the pre-OSRA format, which includes publication and maintenance of all rate line items. NVOCCs also are of the opinion that they are disadvantaged because most of the active VOCC (vessel-operating common carrier) rates are contained in confidential service contracts, and therefore NVOCCs are precluded from reviewing them.”
The FMC added that NVOs believe removing the tariff publication requirement completely would “put them on equal footing with VOCCs.”
While the topic of ending NVO tariff publication has continued to resurface over the years, the FMC has taken little action to follow through on terminating this activity. Most NVOs also know better than to disregard their tariff publishing responsibility, as they could be penalized by the agency.
According to the FMC, there are 5,253 NVOs both licensed and registered per the FMC-1 filings. Of these firms, 329 self-publish their tariffs, while 4,924 use third-party tariff publishers. However, the end to tariff publishing may be closer than ever before.
Earlier this year, Acting FMC Chairman Michael Khouri ordered the formation of a Regulatory Reform Task Force to identify burdensome, unnecessary and outdated directives, and recommend how they should be remedied. Tariff publishing would certainly fall within the task force’s purview.
Khouri has been an avid supporter of abolishing tariff publishing as far back as early 2010, when he joined the commission. That year, a proposed rulemaking was published by the FMC that called for an end to tariff publishing requirements. Not a single shipper voiced support for tariff publishing in written or oral testimony to the commission. According to Khouri, one tariff publisher even admitted to the FMC that “no one is really looking at these published tariffs.”
But the FMC never reached a final rule on the subject, and tariff publishing has since continued.
Even now, Khouri expresses his desire for the commission to use its exemption authority under the Shipping Act to abolish tariff publishing.
In testimony before the House Transportation and Infrastructure Committee on April 4, he told lawmakers that immediate relief for the container shipping industry could be achieved by bringing tariff publication requirements to an end.
“Continuing to mandate thousands of tariffs be published that do not reflect real conditions in the market and have minimal, if any, use by industry participants…is a requirement and expense that regulated entities could be relieved of under the exemption authority provided to the commission by Congress,” he said.
A day later in New Orleans, while speaking to the National Customs Brokers and Forwarders Association of America, Khouri commented, “Where and how does the filed rate doctrine fit with 21st century container shipping practices? The answers get weaker and weaker.”
On Capitol Hill, there are bills in both the House and Senate that include language suggesting an end the FMC’s tariff publication requirement.
Rep. Duncan Hunter, R-Calif., in May introduced to the House Transportation and Infrastructure Committee the 2017 Federal Maritime Commission Authorization Act (H.R. 2593), while similar legislation (S. 1119) was proposed in the Senate Commerce Committee by Sen. Deb Fischer, R-Neb.
One of the issues with the Senate bill, however, is that its Coast Guard reauthorization contains controversial language regarding the Vessel Incidental Discharge Act (VIDA). Those discussions are holding up the FMC authorization since it is part of the Coast Guard reauthorization bill, said Carlos Rodriguez, who has represented NVOs on regulatory matters as a Washington-based attorney since 1978.
“There is a provision in the bills to remove the requirement that carriers must accept cargo only from OTIs who have both appropriate tariffs and bonds,” Rodriguez, a partner with Husch Blackwell, further explained in a June 20 blog post. “Under the proposed House and Senate versions of the bill, the only remaining requirement is that an OTI have appropriate bonds. The tariff requirement is specifically removed.”
NVOs are watching this recent activity in the FMC and on Capitol Hill with great interest and optimism that tariff publishing may finally go the way of the horse-drawn buggy.
“In this click-of-the-mouse, instant posting world, many things change quickly,” said Peter Gruettner, president of Lakewood, Calif.-based Extra Logistics. “I believe if the service provider and consumer have issues with one another, they will remedy themselves, or face losing business or non-payment.
“Let the market decide what the consumer deems to be fair and reasonable, as they will pay the fair and reasonable purchase price based on the figure on their invoice, not in a tariff,” he said.
Compliance 360: Goodbye to NVO tariff publishing?
