To me, the answer is simple: An Non-Vessel-Operating Common Carrier (NVOCC/NVO) is a common carrier. A common carrier is like a public utility which files its electricity or natural gas rates with the local or state utility board. Similarly, an NVO is required to make its rates available to the general public in the form of a tariff, filed electronically, so that all “like” shippers of the same commodity moving between the same port or point pair are charged the same rate. Discrimination based on the commodity or the shipper or the transportation alone is not allowed.
For example, you would expect the local utility company to charge you and your neighbor the same amount for units of electricity because you live in the same subdivision and own similarly-sized houses. That would be fair, wouldn’t it? Now imagine that you neighbor owns a 12-unit apartment building. You have one (1) housing unit to pay for but, in this second example, he has twelve (12) units. Would it be fair that you both pay the same price since the apartment building is so much larger? I wouldn’t think so based on size or the “volume” of the building. Even though he may pay a lower price than you, his bill will be higher than yours because of the number of units that his utility bill covers.
These examples explain the concept of common carriage. Now, let’s explore more deeply why NVOs are required to file rates by reviewing at the statutory definition of a common carrier:
46 CFR § 515.2 Definitions.
(f) Common carrier means any person holding itself out to the general public to provide transportation by water of passengers or cargo between the United States and a foreign country for compensation that: (1) Assumes responsibility for the transportation from the port or point of receipt to the port or point of destination, and (2) Utilizes, for all or part of that transportation, a vessel operating on the high seas or the Great Lakes between a port in the United States and a port in a foreign country, except that the term does not include a common carrier engaged in ocean transportation by ferry boat, ocean tramp, chemical parcel tanker, or by a vessel when primarily engaged in the carriage of perishable agricultural commodities……..
In this definition, it is clear that a common carrier -- including an NVOCC -- provides transportation by water of goods in exchange for being monetarily compensated for the cargo carried on its Bills of Lading as well as assuming liability for the safe delivery to destination of those goods. Like the old song “Love & Marriage”, you can’t have one without the other meaning that an NVO cannot issue Bills of Lading without also taking responsibility and being compensated, i.e., charging freight and assessorial charges, for the cargo.
Certain commodities are excepted from filing as follows:
46 CFR § 531.10 Excepted and exempted commodities.
(a) Statutory exceptions. NSAs for the movement of the following, as defined in section 3 of the Act (46 U.S.C. 40102) and § 530.3 or § 520.2 of this chapter, are not subject to the conditions of this exemption:
(1) Bulk cargo (...means cargo that is loaded and carried in bulk without mark or count in a loose unpackaged form, having homogeneous characteristics. Bulk cargo loaded into intermodal equipment, except LASH or Seabee barges, is subject to mark and count and is, therefore, subject to the requirements of this part).;
(2) Forest products;
(3) Recycled metal scrap;
(4) New assembled motor vehicles; and
(5) Waste paper or paper waste.
(b) Commission exemptions. The following commodities and/or services are not subject to the conditions of this exemption:
- Mail in foreign commerce. Transportation of mail between the United States and foreign countries.
- Department of Defense cargo. Transportation of U.S. Department of Defense cargo moving in foreign commerce under terms and conditions approved by the Military Transportation Management Command and published in a universal service contract. An exact copy of the universal service contract, including any amendments thereto, shall be filed with the Commission as soon as it becomes available.
For all other goods moving between the U.S. and foreign countries – export or import, freight and assessorial charges can ONLY be applied when rates and surcharges are filed by NVOs:
- In freight tariffs;
- As NSAs filed on SERVCON with the Federal Commission (FMC); or
- As NRAs accepted in writing by customers in accordance with the shipper-agreed INCOTERMS.
Rates filed in these three (3) ways are the ONLY legal rates that may be charged by an NVO. Notice that Carrier-to-Carrier agreements between NVOCCs used for co-loading purposes are not included in the list. If a rate is not filed described above, the NVO will not have applied its tariff compliantly and may be subject to fines and penalties.
Just a thought: It’s not a function of profit. If you’re issuing a “House” Bill of Lading, a rate must be filed for all non-excepted commodities. Period. The FMC is not interested in how savvy your company is about making money. Your company has a responsibility to follow the regulations, especially if you want to be successful in having your OTI license renewed in three (3) years.