Ocean Transportation Intermediary (OTI) Bonds

Let Avalon keep you in compliance.


If you’re arranging ocean transportation, let Avalon provide your required OTI bond. The Federal Maritime Commission requires all ocean forwarders and NVOCCs to register with the agency and post proof of financial responsibility to guarantee compliance with the Ocean Shipping Reform Act and FMC regulations.

  • U.S. Ocean Freight Forwarder – $50,000 bond.
  • U.S. NVOCC – $75,000 bond. If you’re shipping to or from China, you will also need to obtain the FMC’s supplemental China Rider.
  • Non-U.S. domiciled, unlicensed NVOCC – $150,000 bond. Avalon is the exclusive provider of the FIATA Group Bond Programme.

Actual Penalty Examples

Read about sample penalties that companies were forced to pay because they did not comply with FMC regulations.

  $22,000 penalty

$22,000 penalty
Failure to obtain license, bond or tariff


An NVOCC based in Hong Kong, allegedly accessed another OTI's service contract and utilized the services of an unlicensed NVOCC, as destination agent in the United States for shipments made under this service contract, in violation of section 515.3 of the FMC’s regulations. The unlicensed NVOCC allegedly violated the Shipping Act by failing to have a license, proof of financial responsibility, or a tariff at the time it performed these services for the Hong Kong based NVOCC. In settlement of these allegations, the Hong Kong based NVOCC and the unlicensed NVOCC collectively paid $22,000.


  $7.9 million penalty

$7.9 million penalty
Maximum penalty, misuse of contracts, no valid bond


A Hong Kong shipping company has been ordered by the FMC to pay a civil penalty of US$7,900,000. The company has also been ordered to cease and desist from operating as an NVOCC serving the United States. According to an FMC Docket, this company violated the Shipping Act by misuse of service contracts with several ocean carriers, and by operating as an NVOCC without a valid bond for over six months. The civil penalty of US$7,900,000 in this case was based on $22,500 for each of 120 violations of section 10(a) (1) and $25,000 for each of 208 days (September 4, 2002 to March 31, 2003) that the company continued to operate as an OTI/ NVOCC without a surety bond, in violation of section 19(b) (1) of the 1984 Act. These penalties are close to the maximum allowed by law.


  $90,000 penalty

$90,000 penalty
Failure to obtain license, bond or tariff


Two companies (Companies A and B) are located in Spain both operate as freight forwarders. A third company (Company C), based in New York, served as the U.S. collection agent, and as consignee or notify party for shipments handled by Company A. These three companies have common owners and/or officers. It was alleged that the three companies acted as an ocean transportation intermediary (OTI) in the U.S. foreign trades without an NVOCC bond, a tariff and an OTI license. It was also alleged that these companies unlawfully accessed the service contract of an ocean carrier in order to obtain transportation at less than the applicable rates and charges of the carrier. The three companies paid FMC a total sum of $90,000.


  $45,000 penalty

$45,000 penalty
Failure to obtain license, bond or tariff


A company in Mexico City, Mexico previously held itself out as a VOCC in the U.S. trades, but does not operate any vessels in the U.S. trades. It was alleged that this company violated the Shipping Act by operating as an OTI without license, bond, or tariff and by failing to provide transportation services in accordance with the routes, rules, and rates set forth in its published tariff. In compromise of these allegations, this company made a payment of $45,000.


  Revocation of NVOCC operations

Revocation of NVOCC operations
Customer complaints


In 2006, a U.S. court prohibited a group of defendants from acting as NVOCCs after the FMC received more than 250 consumer complaints stating that the companies: failed to deliver the cargo and refused to return pre-paid ocean freight; lost the cargo; charged the shipper for marine insurance which they never obtained; misled the shipper as to the whereabouts of cargo; charged the shipper an inflated rate and withheld cargo until that rate was paid; and failed to pay the common carrier. In many cases, the shipper was forced to pay another carrier or warehouse a second time in order to have the cargo released. The FMC decided to seek injunctive relief to enjoin the Defendants from conducting unlawful activities pending the completion of the FMC’s formal investigation.

In response to the court’s ruling, the FMC Chairman stated: “We are pleased that the court acted so promptly in granting the preliminary injunction. Shippers have a right to expect that companies providing ocean transportation services are licensed and bonded in accordance with the Shipping Act. We are committed to ensuring that such companies are in compliance with the law in both FMC proceedings and, when necessary, in federal court."

NVOCCs are required to hold a license issued by the FMC and to have a tariff publicly available for inspection. Non-vessel-operating common carriers operating in the United States must demonstrate their financial responsibility by providing a bond, proof of insurance or other surety in the amount of $75,000. These requirements are designed to protect the public from the egregious behavior described above.



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