FMC Issues Final Rule to Streamline NRA, NSA Procedures for NVOCCs

The Federal Maritime Commission on July 19 announced it will relax certain regulatory requirements for non-vessel operating common carrier (NVOCC) negotiated rate arrangements (NRAs) and NVOCC service arrangements (NSAs). An upcoming final rule will allow NRAs to be amended at any time and allow inclusion in NRAs of non-rate economic terms like liquidated damages, service standards, demurrage free time and detention. The final rule also removes filing and essential terms requirements for NSAs, and provides for the shipper’s acceptance of NRAs by booking a shipment.

Among areas of contention over FMC’s proposed rule, issued in November, was whether to require specific language in NRAs on acceptance by booking. In its final amendments, the FMC said it will recognize the shipper’s acceptance of an NRA’s terms, without signed agreement or written communication, if the shipper books a shipment after receiving the NRA terms and those NRA terms include a specific, boilerplate statement in bold and uppercase letters that booking constitutes acceptance.

The FMC’s decision to allow the incorporation of non-economic terms in NRAs will reduce administrative burdens and promote “greater efficiency, and increased competition,” the agency said. The final rule says FMC will allow “the full range of non-rate economic terms in NRAs.” Commenters had called for a variety of new terms to be allowed, including surcharges, credit terms, minimum volume commitments, demurrage, detention, per diem, free time, waiting time, penalties and/or incentives, service standards, EDI services, freight forwarder compensation, general rate increases (GRIs) or other pass-through charges from carriers or ports, dispute resolution, and rate amendment processes.

The agency’s decision to remove NSA essential terms and filing requirements, but still allow the NSAs as an option, will reduce costs and preserve choice while allowing use of NSAs for those that “prefer the extra formality and options.” FMC found that, “while rate and service provisions in NSAs may not be ideal for NVOCCs and shippers with lower shipment volumes, a considerable amount of cargo is currently transported under NSAs, and they have proven to be a valued contract model.“ The final rule takes effect Aug. 22.