Industry Takes Issue With FMC's Carrier Automated Tariff Proposals

Some of the Federal Maritime Commission’s proposed changes to its rules for Carrier Automated Tariffs (see 2205090006) are unnecessary and could place too heavy a burden on industry, two trade groups and a logistics company said in comments this month. The commenters were especially critical of a proposed change that would add more requirements to container documentation, and said they wouldn't support a proposal that would allow a non-vessel operating common carrier (NVOCC) to cross-reference the terms in a vessel-operating common carrier’s (VOCC) tariffs.

The National Customs Brokers & Forwarders Association of America said some of the changes could lead to “commercial complications” and “undercut the existing business practices” of NVOCCs. Although the FMC is looking to “promote transparency” in freight pricing, many of the proposals won’t have “any practical use to the shipper for the preponderance of their ocean freight movements,” the New York/New Jersey Foreign Freight Forwarders & Brokers Association (NYNJFFF&BA) said.

The comments were sent about one month after the comment period closed and after two logistics companies told the commission that the proposed change relating to co-loading documentation would lead to delays and compliance challenges (see 2206210026). That proposal would require the documentation accompanying co-loaded cargo or full container load shipments to be annotated with the name of all NVOCCs associated with the cargo, which the FMC said will “better serve” beneficial cargo owners (BCOs) by ensuring they have all the information they need to contact any NVOCC that may have control of their freight.

“This concept has no basis in reality,” the NYNJFFF&BA said. There is “no existing data that indicates that NVOCCs are somehow greater risks as carriers than any other ocean common carrier,” the group said. “What practical purpose will it serve to list all other NVOs involved in the cargo? The BCO can do nothing with that information.”

NCBFAA was similarly critical of the proposal, saying it would be “unduly burdensome” for NVOCCs and provide “little benefit” to shippers. It would “undermine the business” of NVOCCs by requiring them to disclose their business relationships to their shipper-customers, the association said. “These annotated invoices would identify friendly competitors and turn that business knowledge over to the shipper customer.”

The group also said the requirement would slow the operations of NVOCCs, “especially in transactions where goods are retendered to” multiple NVOCCs. “In fact, the requirement would be very burdensome for NVOCCs attempting to determine any and all NVOCCs in the transaction chain and having to annotate bills of lading accordingly,” NCBFAA said. The group urged the government to conduct a “regulatory impact analysis” on the impact of the requirement.

Mohawk Global Logistics voiced similar concerns, saying it has raised the issue with the FMC through NCBFAA counsel “several times” but hasn’t made much progress. “We should not be forced to disclose all the links in the chain we assemble. We do not believe we have an obligation to tell a BCO who we partner with,” Mohawk said. “In fact, the vast majority of BCOs do not want to know, or do not care.”

The logistics company and the two trade groups also warned against a proposal that would allow NVOCCs to cross-reference certain aspects of other carriers' terms in their tariffs. Even though the FMC’s proposal wouldn’t require mandatory cross-referencing, it could still be burdensome for both NVOCCs and shippers, NCBFAA said.

Cross-referencing would require NVOCCs to disclose their business relationships to their shipper-customers, the association said. “This disclosure poses a risk of undermining the existing business dynamics between VOCC, NVOCC, and shipper.”

The proposal could also create “various commercial complications,” the NCBFAA said, adding that even the “most experienced” NVOCC may struggle to navigate a VOCC tariff and must reach out to the VOCC sales representative to track and confirm charges. “These VOCC tariffs are not always user-friendly and can be challenging to identify the appropriate charge and its current status, NCBFAA said. “NVOCCs opting to cross reference a VOCC tariff would be faced with how to best present the information so that it is digestible for their shipper-customers.”

The change would also “not provide any material benefit to shippers,” NCBFAA said. Cross-referencing a VOCC charge in an NVOCC tariff could “frustrate shipper-customers who then try to parse through the VOCC tariffs,” the association said. “As shipper-customers struggle with tracking down charges, they will ultimately call on the NVOCCs to assist them with navigating the tariff.”

NYNJFFF&BA agreed, saying the proposal isn’t “operationally practical,” and will impose a new burden to list “clearly” any pass-through charges in the NVOCC’s tariff. “This will be extremely difficult as each VOCC uses a different terminology in identifying similarly based charges and then can introduce new charges,” the group said.

Mohawk said it has “no desire to purposefully introduce our clients [to] the VOCCs we use,” especially because VOCCs have “reduced our allocations while going after our own largest clients with their ‘newfound space’ for direct business.” The company said it’s “in a tough market today, and introducing our clients to the websites of our suppliers is not in our best interest.”

But Mohawk said it supported a separate FMC proposal to remove tariff access fees. While most carriers post the tariffs on their website, some are “better than others,” the company said. “On some occasions we cannot find what we are looking for because it is either not there, not there yet, or too deeply buried to be easily found.”

NYNJFFF&BA said a proposal that would allow the FMC to revoke an NVOCC’s license or suspend a foreign-based NVOCCs registration if it doesn’t update its tariffs would be “excessively harsh.” Although the group “recognizes the importance” of compliance with FMC regulations, it also said the tariffs are “quite complex” and sometimes may violate the regulations because of an “inadvertent error.” The FMC should instead issue a warning to NVOCCs with noncompliant tariffs to give them an opportunity to fix them. “The goal is to bring the industry in to compliance,” the group said.

An FMC spokesperson said the agency will consider feedback submitted after the June 9 comment deadline. The NCBFAA last month requested an extension to the comment deadline.