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Special Quest Edition
April 1, 2008
FMC ruling forbids OTIs to use unlicensed agents
The Federal Maritime Commission (FMC) issued an order stating that licensed ocean transportation intermediaries (OTIs) may not use unlicensed and unbonded agents to provide non-vessel operating common carrier (NVOCC) and ocean freight forwarder services.
A Texas-based OTI filed a petition with the FMC to authorize the use of unlicensed agents to perform OTI services on behalf of licensed OTIs in the United States, which is not permitted under current FMC regulations. Existing regulations require companies in the United States acting as OTIs to obtain a license from the FMC before beginning OTI operations. The petition sought a declaratory order to be effective industry-wide.
The petition proposed that unlicensed agents would provide ocean transportation services in the name of a licensed OTI, including, but not limited to:
- Marketing of import and export OTI services
- Booking cargo with vessel-operating common carriers
- Preparing shipping documents
- Issuing a house bill of lading
- Accepting import cargo shipments for delivery to consignees or other designated parties
- Arranging for delivery of cargo for export shipments
- Any other activities generally performed by OTIs.
According to the FMC, the request to use unlicensed agents to perform OTI services does not involve the elimination of an unnecessary regulatory burden, but instead seeks the exemption of a category of entities performing OTI services from licensing and bonding requirements. The FMC denied the petition, and stated that granting the petition would “seriously undermine the Congressionally-imposed requirement for licensing and bonding of NVOCCs and freight forwarders.” Since Congress first required freight forwarder licensing and bonding in 1961, the FMC has consistently rejected utilization of unlicensed agents to provide OTI services.
The FMC is also not aware of any legislative history or case law indicating that Congress intended to distinguish between those acting as OTIs who must be licensed and bonded and those providing OTI services who could avoid the license and bonding requirements. OTIs often contract with third-party logistics providers to provide specific services at origin and destination as part of the overall transportation services offered. The FMC stated that restrictions would not adversely affect OTIs from entering into arrangements with unlicensed companies such as those providing trucking services.
To view the FMC’s order in full, please
click here.
In the event that your company performs any one of the seven activities as noted above and requires an OTI bond, please contact Avalon for assistance. Avalon’s underwriting specialists are responsive to your needs. We keep the process simple and take into account the different aspects of your operation. To obtain our OTI bond application and requirements, please
click here.
For further information, contact Andriana Davis, Product Manager at Avalon’s corporate headquarters. Andriana Davis can be reached at
(847) 700-8087 or at
adavis@avalonrisk.com. Please do not hesitate to contact one of our nine regional offices throughout the United States. To view a directory of Avalon’s
office locations, please visit our Web site at
www.avalonrisk.com.
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