Although many of the changes were expected, there were a few surprises in the amended freight pricing requirements for NVOCCs, writes international trade attorney Carlos Rodriguez.
The Federal Maritime Commission on Monday published final rules aimed at simplifying freight pricing requirements for non-vessel operating common carriers (NVOCCs).
Although many of the changes to negotiated rate arrangements (NRAs) and NVOCC service arrangements (NSAs) that go into effect Aug. 22 were expected, there were a few surprises.
The primary changes to NSAs include the expected elimination of two of the more burdensome FMC requirements: the filing of NSAs or amendments thereto in the commission’s electronic filing system and publishing of the essential terms of an NSA in a publicly viewable forum.
The NVOCCs rules tariff needs to reflect that the NVOCC utilizes NSAs. Still the regulator, the FMC requires that NSAs contain a unique NSA number of more than one, but less than 10, alphanumeric characters and a consecutively numbered amendment number of no more than three digits in length.
While an NSA is defined as a “written contract,” the commission makes it clear in an explanatory chart comparing NSAs and NRAs that these must be signed by the NVOCC and the shipper.
It is our opinion that these can be electronically signed pursuant to legally acceptable norms.
The bottom line is that with these changes, NSAs have essentially become run-of-the-mill contracts, with relatively few requirements in terms of public accessibility since they are no longer to be filed with a federal agency and essential terms no longer have to be published publicly. The rules tariff, however, still plays a regulatory role.
Meanwhile, as a result of the final rules, NRAs now more closely resemble NSAs in that they can include “noneconomic” terms not previously allowed, such as liquidated damages, volume commitments, credit terms and pass-through of accessorials without a specific reference to particular charges, among others. NRAs can also be readily amended under the new rules.
The most salient of the features distinguishing NRAs and NSAs is that the former can be entered into by a signature, an electronic or other communication indicating assent to the NRA by the shipper or acceptance by the shipper of the NRA by booking cargo provided that the NRA quotation has a prominent notice of that fact.
Despite FMC efforts to make them appear different, NRAs and NSAs are now much more difficult to tell apart.
In reviewing the FMC graphic charts, the differences between the two appear to be more in form than in substance.
There is still a stark reminder, however, that the FMC remains a regulatory body alive and well in the size and language of the commission’s notice to allow a booking to be an acceptance of the NRA. Somewhat surprisingly given the largely deregulated environment of modern shipping agreements, the FMC’s notice states in bold font and all uppercase letters, “THE SHIPPER’S BOOKING OF CARGO AFTER RECEIVING THE TERMS OF THIS NRA OR NRA AMENDMENT CONSTITUTES ACCEPTANCE OF THE RATES AND TERMS OF THIS NRA OR NRA AMENDMENT.”
From the industry’s perspective, these are welcome changes that bring ocean shipping more in line with how the commercial airline industry functions, the latter having been largely deregulated in the late 1970s.
Carlos Rodriguez is a Washington-based partner with the law firm Husch Blackwell LLP. He practices in the International Trade & Supply Chain group of the firm’s Technology, Manufacturing & Transportation industry team and can be reached via email at carlos.rodriguez@huschblackwell.com.
