INTERNATIONAL MOVING: NAVIGATING FMC REQUIREMENTS AND SERVICES

By Jennifer M. Gartlan, Federal Maritime Commission

U.S. domestic moving companies often seek to expand their business portfolios by offering international moving services. Invariably, such shipments involve ocean transportation between U.S. and foreign ports, and domestic moving companies are often surprised to learn that arranging for such moves requires an Ocean Transportation Intermediary (OTI) license from the Federal Maritime Commission (FMC). This article will discuss FMC licensing requirements, recent trends and challenges involving international moving, and dispute resolution services available to moving companies at the FMC.


FMC OTI License Requirements

The FMC is an independent federal regulatory agency. Its statutory and regulatory authority is derived from the Shipping Act of 1984 (the Shipping Act), 46 U.S.C. §§ 40101-41309. The agency regulates the international ocean transportation of cargo between U.S. and foreign ports, including inland transportation that is included in a through bill of lading. As such, it is separate and distinct from the Federal Motor Carrier Safety Administration (FMCSA), which regulates U.S. interstate household goods moves via truck.

Pursuant to FMC regulations, a domestic mover in the U.S. that offers international moving services must be licensed with the FMC and bonded. This means that even if a company merely advertises international moving services then subcontracts all or a portion of that move to another company, it still must be licensed as an OTI and bonded prior to advertising such services.

There are two types of OTIs: (1) a Non-Vessel-Operating Common Carrier (NVOCC); and the (2) Ocean Freight Forwarder (OFF). Generally speaking, an NVOCC purchases space onboard a vessel for resale to its customer. The NVOCC serves as the shipper in relationship to a vessel operator while serving as a carrier to its shipper customer. It issues its own house bill of lading and publishes rules and rates tariffs. It is also required to maintain a bond of $75,000.

In contrast, an OFF serves as the agent to the shipper. It may book or remit payment for a shipment, but as an agent, the OFF does not issue a bill of lading nor does it publish a tariff. Further, because it is merely the agent of the shipper, all shipping documentation is issued in the name of the shipper principal. The OFF is required to maintain a bond of $50,000.

Domestic moving companies may apply for an OTI license by submitting a form FMC-18. Specific guidance and instructions for filing the application online are available at: http://www.fmc.gov/resources/how_to_apply_for_oti_license.aspx. The current fee for filing an OTI application online is $250. As part of the application process, an applicant must designate a corporate officer, partner or sole proprietor (depending on its business structure) as the Qualifying Individual (QI). Essentially a QI is a person with three or more years of demonstrable OTI experience in the U.S. trade. The application process also involves a background and reference check. Once the application is approved, the applicant must provide proof of financial responsibility (i.e,. surety bond information) to the Commission's Bureau of Certification and Licensing. In addition, if the company is licensed as an NVOCC, it must file a tariff registration form (FMC-1) with the Commission's Office of Service Contracts and Tariffs, designating the location on the internet where the NVOCC's schedule of rates and charges may be found.

Parties seeking additional information on the application process may contact FMC's Bureau of Certification and Licensing directly either via email at oti@fmc.gov or phone at 202-523-5843.


Common Trends and Challenges, and Dispute Resolution

The issue of FMC licensing is of particular importance when examining common trends and challenges within the industry. For example, a recurring problem involves the acceptance of cargo from unlicensed or failing OTIs. Aside from the fact that accepting cargo from unlicensed NVOCCs is prohibited by the Shipping Act, there are also practical commercial considerations. For example, some unscrupulous unlicensed entities undercut licensed OTIs by offering predatory rates to attract business, and then charge the consumer double or triple the amount of the quote provided. Licensed OTIs then illegally accept shipments from these unlicensed companies who in turn fail to remit payment to the licensed OTI. The licensed OTI is then held responsible to the vessel operator and/or others in the logistics chain for rates as well as charges such as demurrage and per diem. Even where the licensed OTI has identified the underlying shipper customer of the unlicensed OTI, there have been situations where customers, having previously paid the unlicensed company, simply choose to walk away from the shipment rather than pay again to have the licensed company retrieve the cargo, thus leaving the licensed OTI mired in a loss-making financial dispute with others in the logistics chain.

The scenario described above can readily be avoided if licensed OTIs ensure that any moving company that requests services is FMC-licensed and bonded. It is also advisable to verify periodically that companies that have previously booked shipments are still licensed, as there have been various instances where a company whose license has been revoked by the FMC has attempted to continue to book shipments through licensed OTIs. Companies may verify status online at http://www2.fmc.gov/oti/. OTIs also can contact either the FMC's Bureau of Certification and Licensing or the Office of Consumer Affairs and Dispute Resolution Services (CADRS) to address any questions about licensing status.

Even when dealing with a licensed OTI, issues may arise. For example, some licensed entities may run into financial difficulty. Therefore, it may be advisable for the licensed OTI to avoid taking multiple shipments from any one OTI without prepayment especially when there are past payment issues with a particular company. Generally speaking, there is no FMC prohibition on requiring an OTI to tender cash payment prior to shipping cargo.

Another general trend involves consumer and moving company disputes involving rates. Whereas domestic moving companies generally charge by the weight of the cargo (i.e., number of pounds transported), international shipment rates are generally assessed by the amount of cubic volume shipped. Further, international shipments are often shrink-wrapped, braced and palletized for shipment, which adds additional volume. Unlike FMCSA, whose regulations specifically address rate quotation practices, such as requiring on-site surveys, there is no such requirement in international ocean shipping. Many companies provide estimates via online computer calculators or phone estimates which often fail to provide an accurate estimate of the goods shipped leading to an increase in the rate and inevitably a dispute with the consumer. As such, it may be advisable to provide a quote based upon an onsite inspection of the goods where feasible. A detailed list of the goods inventoried should be created and signed by the customer as there have been some cases where consumers add additional items post-quote.

While some of the common trends discussed above may be avoided, disputes may still arise between industry participants. The FMC differs from the FMCSA in that private parties may file a formal complaint for reparations before the FMC for violations of the Shipping Act. This is essentially a private party administrative lawsuit, where resolution may be both time-consuming and costly. Further, as with most litigation, such action may further damage vital commercial relationships between disputing parties that may need to continue doing business with one another in the future.

As a means to assist parties to preserve relationships and settle prospective or pending litigation matters, the FMC established CADRS to provide voluntary and confidential alternative dispute resolution services such as the use of ombuds and mediation to assist disputing parties resolve their regulatory and commercial ocean shipping disputes. A particular benefit of these services is that parties can utilize CADRS' services to resolve real-time shipping disputes. Whereas parties in litigation may have to wait months or years to obtain monetary damages, parties can use ombuds or mediation services to facilitate the timely release or delivery of cargo. For example, a dispute often encountered by CADRS is where a possessory lien is exercised by one OTI against cargo on the basis of a pre-existing financial dispute over a prior unrelated shipment. In such situations, CADRS can work with the parties to secure release of the current shipment, while providing mediation to resolve the underlying financial dispute.

Another benefit of CADRS' services is that the parties participating in an ombuds or mediation matter control the settlement outcome, which may allow solutions that transcend monetary damages. For example, as part of a settlement, a consumer might agree to modify or update a previously negative review of a moving company on an online forum once a satisfactory solution is implemented. Alternatively, an OTI that is seeking to enhance business opportunities with another OTI or vessel operator could address those needs within the context of an ombuds or mediation matter within CADRS.

There are no charges for CADRS services, which are provided electronically, telephonically or in person, depending on the needs of the parties. For more information regarding CADRS' services and to explore tools to assist with negotiation generally, please visit http://www.fmc.gov/bureaus_offices/consumer_affairs_and_dispute_resolution_services.aspx

To request additional information or to obtain assistance with resolving a dispute, please contact CADRS either via email at complaints@fmc.gov or phone at 202-523-5807.

September 2016 - CMSA Communicator