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FMC Proposed Change to Co-Loading Documentation Could Burden Industry, Companies Say

A Federal Maritime Commission proposal that would require container documentation to include the names of all non-vessel operating common carriers in a shipping transaction would create too large of a burden on industry, two logistics companies said in comments this month. One company said it wouldn’t be able to comply with the change, forcing it to regularly violate the regulation.

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The proposal, included in the FMC’s May rule on potential changes to its rules for Carrier Automated Tariffs, 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 will “better serve beneficial cargo owners,” the FMC said (see 2205090006). “This information is critical to the BCO,” the commission said in its rule, “particularly in cases of failure to perform by the NVOCC with which the BCO contracted to transport its cargo.”

Although the FMC’s “intention on facilitating the transparency to provide the BCO with a path for escalation is admirable,” the change could create too heavy an “administrative burden” on some companies, said Yang Ming Marine Transport, a Taiwanese container shipping company. The burden could cause “documentation delays” because the information would need to be added manually unless the house bill of lading is revised “to incorporate such necessary fields,” Yang Ming said.

The change also risks causing companies to breach “business partner confidentiality,” the company said. Yang Ming said some NVOCCs may use the information on the documentation to “go directly to the BCO instead of through other NVOCCs’ arrangements.”

“Even if the BCO has full transparency on NVOCCs utilized under a specific shipment,” the company added, “it is more than likely that the BCO would still need to channel its requests, disputes, etc. through the HBL issuing party, especially many foreign-based NVOCCs may have no point of contact/contact person in the US.”

Kintetsu World Express, a Japanese freight forwarding company, also objected to the proposal, saying it wouldn’t be able to comply. “It will automatically create violations beyond our control,” the company said, adding that “we really don’t know how many other NVOs are involved.”

“This is especially true since the Covid lockdown, whereby everyone was [choked] for vessel, space and equipment but pressured by BCOs to move cargo nonetheless,” Kintetsu said. “The situation gave rise to a sudden explosion of so-called agents who, at the very core, were acting as NVOCCs but without the proper FMC credentials to operate in the commerce of the United States.” The company said the agents were “somehow able to get space/equipment and move the cargo when no one else could” and sold the space and equipment to “NVOs who in turn sold to other NVOs.”

“No FMC registration/license, no FMC bond, no FMC Tariff, no bills of lading, just pocket the profit free of liabilities, risks, and compliance to any USA regulations,” the forwarder said. “There could be up to 5 different such parties involved in one shipment, almost half of whom fly under FMC’s radar.”

Instead of requiring the documentation to be annotated with all the names of NVOCCs, Kintetsu said the BCOs’ “need” for transparency” would be “better addressed with a simple instruction to the NVO prior to the beginning of a shipment’s lifecycle.” The instruction would say: “I don’t want you to coload with any NVOs. If you coload, I’ll take my business elsewhere.”

The National Customs Brokers & Forwarders Association of America asked the commission to extend the June 9 public comment deadline for the proposed rule by 30 days because it was still gathering feedback from its members. The FMC didn't officially extend the deadline, but it will still accept "late-filed comments," a spokesperson said June 21.