FMC: Intermediaries must obtain bonds sooner
The U.S. Federal Maritime Commission has shortened the time period within which an ocean transport intermediary applicant must file proof of financial responsibility.
Applicants will have only 120 days, instead of two years, to furnish proof after the FMC approves their application, otherwise the application will be considered invalid.
The commission said the change is necessary for two reasons. “First, if applicants illegally provide OTI services in the two years following approval, but before procurement of financial responsibility, the statutory goal of protecting the shipping public is frustrated. Second, applicants’ inability or unwillingness to procure financial responsibility may indicate questionable financial integrity, a key factor in establishing an applicant’s fitness to perform OTI activities,” the FMC explained.
The FMC said its staff had found the majority of new applicants obtain surety bonds within 120 days or less, and that therefore the shorter period was “unlikely to burden OTI applicants.”
The FMC said that it had received only two comments when it proposed the change. One was from the Transportation Intermediates Association, whose members include OTIs, or freight forwarders and non-vessel-operating common carriers. The other was from the National Industrial Transportation League, which represents shippers.
The rule is to go into effect Nov. 5. Applications prior to that date will be subject to the old, two-year time limit.