shipping containersIronically, during the current China/U.S. tariff turmoil, the Ministry of Transport (MOT), Peoples Republic of China’s (PRC’s) is leading the deregulatory trend in ocean shipping as applicable to Non-vessel Operating Common Carriers (“NVOCCs”). The MOT has quietly deregulated burdensome registration application procedures for Non-vessel Operating Common Carriers (“NVOCCs”) from on or about February 27, 2019. The MOT has dropped formal application registration and insurance requirements for all NVOCCs, including U.S. NVOCCs. It is our understanding that as of now the prior registration certificates issued by MOT have no regulatory function or value. Currently, the requirements for registering NVOCCs has been substantially simplified as noted below. Until now, without the aforementioned Certificate U.S. NVOCCs could not issue their house bills in the U.S./China trade lanes without risk of substantial sanctions and penalties. However, also note that the NVOCC requirement by the Shanghai Exchange for filing rate ranges remains in place.

From on or about October 1, 2010, the Peoples Republic of China’s (PRC’s) Ministry of Transport (MOT) implemented Non-Vessel Operating Common Carrier (NVOCC) Freight Filing Rules referred to as Circular No. 40.   Since then until now, U.S. NVOCCs needed to apply to register with the MOT, and to show proof of “insurance” or of cash security deposits of up to RMB 800,000 or U.S. $125,000. Current MOT registrations for U.S. NVOCCs are now void and will require a simpler registration format to be described below. The application for the initial and renewal of the registration process was a burdensome one for U.S. NVOCCs which involved:

a) an application form in Chinese;

b) a feasibility study report;

c) certified and authenticated U.S. corporate documentation by states, the State Department and the Chinese consulate;

d) Power of Attorney and Agreements with Chinese liaison persons;

e) bill of lading language had to conform to MOT requirements and in many instances the terms and conditions were required to be modified, and

f) evidence of the “insurance” or of the cash security deposits of up to RMB 800,000 or U.S. $125,000.

The latter “insurance”/”security deposit” requirement was met in the U.S. as a result of agreements between the Federal Maritime Commission (“FMC”) and the MOT which allowed U.S. NVOCCs to increase their FMC bond by a China rider to raise the U.S. bond to the MOT requisite levels. These riders appear to be no longer required.

From our China sources, it appears that the registration process can now be handled by the U.S. NVOCC’s Chinese agents via a much simpler procedure at the province levels. At this time we are only aware of the MOT link in Shanghai as being able to process these applications for both domestic and foreign NVOCCs, including U.S. NVOCCs. The following is the applicable MOT link for this registration: http://wtis.mot.gov.cn/syportalapply/login . It appears that the MOT is not handling these initial registrations as renewals, but rather as new registrations. Nor are these being considered applications, but it is our opinion that all information requested must be provided in order for the registration to be accepted. The information being requested at this time is very basic corporate information.

It is our understanding that the Chairman of the FMC and other Commissioners may be soon meeting with MOT officials which we believe will lead to at least a formal recognition by the FMC that it will not be accepting China bond riders as they have been in the past. We will be keeping track of the MOT and FMC process to insure that the processes as we now understand them are being implemented, or if other matters will require attention.