FMC Approves NVOCC Service Arrangements Rulemaking

Thursday, December 16, 2004
The Federal Maritime Commission announced that it would issue a Final Rule in Docket No. 04-12, Non-Vessel-Operating Common Carrier Service Arrangements, 46 CFR Part 531, to exempt non-vessel-operating common carriers (NVOCCs) from the publication requirements of the Shipping Act of 1984, subject to certain conditions. The Final Rule will allow NVOCCs and their affiliates to offer NVOCC Service Arrangements, or NSAs, to their shipper customers. NVOCCs will now be permitted to agree, on a confidential basis, with their shipper customers on the terms and conditions of service. Cargo moved under NSAs will be exempt from the tariff publication requirements of the Shipping Act.

The Final Rule permits NVOCCs acting as carriers to offer NSAs to non-NVOCC shippers. The Commission found that, in light of recent judicial determinations, it must limit the exemption in such a way in order to meet the substantive requirements of its exemption authority under section 16 of the Shipping Act of 1984 to ensure against substantial harm to competition. The Final Rule will become effective on January 19, 2005.

In filed comments, numerous individual NVOCCs and NVOCC trade associations urged the Commission to act as expeditiously as possible to grant the proposed relief. Chairman Steven R. Blust remarked, "The Rulemaking will provide shippers with a broader range of service options, and greater opportunities for integrated supply chain solutions. I am confident that, as the use of NSAs develops over time, they will ultimately lead to greater competition and a more efficient shipping industry."

(HK Law)

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