The authors previously reported that on or about February 27, 2019, the Ministry of Transport (“MOT”), PRC dropped formal application approval procedures and insurance (in the U.S., the China bond) requirements for all NVOCCs, including U.S. NVOCCs. While the MOT dropped the tedious application requirements and insurance (and bond) requirements for NVOCC registration, it

In the last year or so, it has become clearly evident to us that ocean carriers are treating European and other forwarders differently than how they deal with U.S. forwarders, creating a distinctly competitive disadvantage for U.S. ocean forwarders, NVOCCs and Customs brokers. The bottom line activity is that ocean carriers are creating beneficial sell rates to “forwarders”, usually in ocean carriers’ tariffs, for use exclusively by European forwarders located in certain locations in Europe and elsewhere (not the U.S.). We are using the term “forwarders” here in the U.S. sense. But for our narrative here, the European forwarder, located in Europe and other locations[1], will dispatch cargo from Europe based on lump sum rates formulated from the sell rates offered to them by the ocean carriers, but will not hold out as NVOCCs, nor issue house bills of lading. Many of these forwarders are neither licensed nor registered with the FMC as NVOCCs. In fact, U.S. forwarders under the current definition of “forwarders” could similarly issue lump sum rates under the current FMC regulations for export transport from the U.S. Unfortunately, the ocean carriers, probably sensitive to U.S. regulatory structures do not provide U.S. forwarders similarly competitive rate structures for exports from the U.S. or for inbound traffic controlled by U.S. consignees. But also, more egregiously, if a U.S. forwarder, who also may be an NVOCC/Customs broker, controls import cargo to be shipped to the U.S. on a “collect” basis, the U.S. Ocean Transportation Intermediary (“OTI”) may have to “purchase” a favorable rate from the unlicensed, unregistered forwarder in Europe who does have the benefit of the competitive rate, even though it may not be a licensed or registered NVOCC.  The question: Is this legal? After discussing this with FMC officials, the answer is, “Probably.”
Continue Reading Ocean Transportation Intermediaries’ U.S. Regulatory Scheme: European Ocean Freight Forwarders and Freight Pricing

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.

Continue Reading China MOT Ends NVOCC Registration Applications and Insurance Requirements for Chinese and U.S. NVOCCs

shipping containers

On September 22, 2018, Bill (SB-1402) was signed into law in California to become effective January 1, 2019. That law will make a “Customer” that engages or uses “a port drayage motor carrier” jointly and severally liable with that port drayage motor carrier if that carrier is listed on the Internet Web site maintained by the Division of Labor Standards Enforcement. This ominous list will identify port drayage motor carriers which have been found liable to a “port drayage driver” for unsatisfied court judgments, assessments, orders, decisions, or awards, for port drayage services performed for which the drivers have not been paid or expenses for which they have not been reimbursed, plus damages, penalties, and interest.

The reason why this Bill is not as tentative as it sounds is that The California Labor Commissioner’s Office, Division of Labor Standards Enforcement, has awarded in excess of $45 million in unlawful deductions from wages and out-of-pocket expenses to more than 400 drivers, and that drivers have seen little of those awards.
Continue Reading Shippers, NVOCCs, Ocean Carriers, And Other Port Players to Be Liable to Port Drayage Drivers Under New California Legislation Effective January 1, 2019

WHEN? The Federal Maritime Commission by Final Rule issued July 19, 2018 took final rules to simplify freight pricing requirements for Non-vessel Operating Common Carriers (“NVOCCs”) by establishing changes to Negotiated Rate Arrangements (NRAs) and NVOCC Service Arrangements (NSAs). These new Rules become effective August 22, 2018.
Continue Reading New FMC Regulations Effective August 22, 2018