FEDERAL MARITIME COMMISSION

UPDATESThursday, October 11, 2012

10:30 am – 11:30 am

VERN W. HILL

Director, Bureau of Certification and

Licensing

JENNIFER M. GARTLAN

Deputy Director, Office of Consumer

Affairs & Dispute Resolution

Federal Maritime Commission

Roadmap

• Unique Challenges Associated with International Moving• Federal Maritime Commission (“FMC”) Jurisdiction• Licensing Requirements for International Movers• Tariff Publication Requirements and Negotiated Rate Agreements• Prohibited Practices and Enforcement • Dispute Resolution Options• Fact Finding 27 and Future Commission HHG Initiatives

International Moving: Common Challenges

Multiple Actors in the Logistics Chain One-time Shippers Packing Issues Delays due to LCL Consolidation Import and Export Regulatory Requirements Port Related Issues (e.g. Demurrage, Surcharges) Documentation Issues Communication Issues Different Regime for Loss and Damage (i.e. COGSA) Marine Insurance Issues

Jurisdiction

• Statutes and Regulations Applicable to International Movers:• Shipping Act of 1984, as Amended • 46 CFR 500

• Jurisdiction: Shipments of HHGs that travel between the US and foreign destinations via ocean (including intermodal transportation)

FMC Jurisdiction

• FMC does not exercise jurisdiction over military or GSA HHG shipments• FMC does not have criminal jurisdiction• FMC does not have jurisdiction over:

– Air shipments– Maritime shipments between the U.S. and another U.S. state or territory

(e.g. Puerto Rico to NY, CA to HI)

Licensing for International Movers

OTI License Required When:

• Any entity in the US that provides FF or NVOCC services

• Foreign based NVOCCs are not required to obtain a license, but must file an FMC-1 and hold a $150k bond

Licensing Exceptions

• Shippers whose primary business is the sale of merchandise• Vessel Operators that perform FF services for cargo under the their own B/L• Ocean Freight Brokers • Entities that exclusively transport HHGs for US military or federal civilian

executive agencies• Agents, employees or branch offices of a licensed OTI

Types of Licenses

• Freight Forwarders• Non-Vessel Operating Common Carriers (NVOCCs)

Comparing FFs vs. NVOCCs

FF• Not a common carrier• Serves as an agent to the shipper• Does not issue a bill of lading• Must identify the shipper on vessel

operator’s bill of lading:• John Doe is listed as the

shipper• “FF as agent for John Doe”

NVOCC• Common carrier status under FMC

regulations• Serves as a shipper to the ocean

common carrier• Serves as carrier to its shipper

customer(s)• Normally listed as the shipper on the

vessel operator’s Master Bill of Lading

How to Obtain a License

• Complete and file a Form FMC-18 available at http://www.fmc.gov/forms_and_applications.aspx

• Obtain and provide FMC with proof of financial responsibility in the following amounts:– FF: $50k – NVOCC: $75k– Additional Branch Offices require additional $10k per office

• NVOCCs must file a Tariff Registration Form FMC-1

Tariff Publishing and Tariff Alternatives

Tariff Publishing Requirements

• NVOCCs and vessel operators must publish a tariff that has:• Rates, charges, and rules for each shipment• Copy of the bill of lading

• Rates:

• Rate increases no less than 30 days’ notice• Reductions effective on date of publication• No retroactive publication

Tariff Publishing Alternatives

• Negotiated Rate Agreements (NRAs)• NVOCC Service Arrangements (NSAs)

NRAs

What Must NVOCCs Do to Use NRAs

1. Be Licensed with the FMC

2. Post Notice in Tariff and B/Ls

3. End all Tariff Access Charges

4. Agree to an NRA in Writing Before Receiving Cargo

5. Keep NRA Documentation for 5 Years

Regulatory Enforcement

Enforcement Overview

• Shipping Act– Licensing Requirements– Tariff and Service Contract Requirements– Prohibited Practices

• Regulatory– Augmentation of Statutory Requirements– NSA and NRA Requirements

Common HHG Violations

• Performing OTI Services without a License• Providing Transportation for an unlicensed OTI• Providing OTI Services not in accordance with a Tariff• Failure to establish, observe, and enforce just and reasonable regulations and

practices relating to or connected with receiving, handling, storing, or delivering property.

Consequences for Regulatory Violations

• Civil Penalties: • Up to $8,000 per violation if not knowing and willful• Up to $40,000 per violation if knowing and willful

• Suspension of Tariff • Injunction to prevent violation of the Shipping Act (particularly helpful to shut

down unlicensed entities)

Dispute Resolution at the FMC

Formal Adjudication of Disputes

• Parties can file suit at FMC for Shipping Act violations

• Remedies:– Reparations– Injunction (Court-based)

Alternative: CADRS

• Independent • Neutral and Confidential• Practical, Real Time Solutions• Cost Savings• Enhanced Business Relationships• Experienced Neutrals with Industry Knowledge

Services Provided by CADRS

• Education and Outreach• Small Claims• ADR Services:

• Rapid Response and Ombuds• Facilitation• Mediation• Binding Arbitration

Binding Arbitration vs. Mediation

Binding Arbitration• Voluntary participation• Confidential• Rules Based and Adjudicative• Limited to legal issues• Arbitration decision issued by

arbitrator(s)• Award is final

Mediation• Voluntary participation• Confidential• Rules Based and Adjudicative• Limited to legal issues• Arbitration decision issued by

arbitrator(s)• Award is final

Advantages of Using CADRS

• Faster, Easier, Less Formal, Than Litigation• Less Costly• Confidential; Avoids Publicity• Creative, Practical Solutions • Better for On-going Relationships• Minimize Risk• Parties Retain Control of Outcome• Little to Lose

Types of Cases FY 2012

Examples of Issues Encountered

• Delays• Missing Shipments• Release and Receipt of Cargo• Cargo damage• Volume Disputes• Rates and Surcharges (e.g. detention and demurrage)• Cancellation Fees• Documentation Issues• Communication Issues

Obtaining Assistance

Office of Consumer Affairs & Dispute Resolution Services

(202) 523-5807

compliants@fmc.gov

Fact Finding 27

Potentially Unlawful, Unfair, or Deceptive Ocean Transportation Practices Related to the Movement of Household Goods or Personal Property in U.S.-Foreign Oceanborne Trades

Background

• 2005-2009: 2,500 HHG consumer complaints received• June 23,2010: The Commission issued an Order of Investigation to:

– Develop a record on the nature and scope of the problem presented by potentially unfair, unlawful, or deceptive practices in the shipping of household goods or personal property in U.S.-foreign oceanborne trade; and

– Provide recommendations for further Commission action, including any policies, rulemaking proceedings, etc.

• April 15, 2011: Final Report Issued (Public)• May 12, 2011: Commission adopted FF 27 Final Report Recommendations• September 30, 2011: Commission staff issued progress report to Commission

re: implementation of recommendations

Recommendations

• Educating the Consumer

• Enhancing Consumer Experience

• Consumer Protection

Highlights: Consumer Education

• Development of consumer education materials • Development of consumer resource website• Plan to use social media to further outreach initiatives• Outreach to Lead Source Providers to ask for assistance in educating consumers• Encourage FMC licensed/registered movers to link websites to Commission website

Highlights: Enhancing Consumer Experience

• Collaboration with industry stakeholders, partners, and other government agencies to develop best practices and model forms to reduce problems

• Development of FMC appropriate guidance documents to provide best practices and model forms

• Conduct outreach to HHG trade associations and arrange for ongoing information sharing and development of best practices

Highlights: Consumer Protection

• Collaboration with other government agencies to enhance protection for shippers

• Provide mediation/arbitration for HHG disputes• Development requirements for a voluntary best practices HHG Program• Enhanced enforcement procedures

Get Involved!

• Website Linkage• Outreach Initiatives• Best Practices and Model Forms• Collaboration and Information Sharing• Use CADRS for your dispute resolution needs

Questions?

Thank You

Vern Hill, Director, Bureau of Certification and Licensing

(202) 523-5787, vhill@fmc.gov

Jennifer M. Gartlan, Deputy Director, Office of Consumer Affairs & Dispute Resolution Services

(202) 688-0244, jgartlan@fmc.gov

FEDERAL MARITIME COMMISSION

UPDATESThursday, October 11, 2012

10:30 am – 11:30 am