Now that you know why NVOs are required to file tariff rates, I thought it might be useful to know when these rates are required to be filed. Many folks believe that tariff rates may be filed as late as the vessel sailing date. Prior to the intermodal age, that may very well have been true. Today, however, NVOs have access to a variety of intermodal transport options which impact the date on which rates are required for filing to be compliant with FMC regulations. How so, you say? Let's explore the regulations and see how the transportation itself affects the date of the rate filing.
46 CFR Part 560 is entitled "Carrier Automated Tariffs" and outlines the do's and don’ts of an on-line tariff's content. Specifically, under Part 520.7 Tariff Limitations, the regulations require that:
(c) Applicable rates. The rates, charges, and rules applicable to any given shipment shall be those in effect on the date the cargo is received by the common carrier or its agent including originating carriers in the case of rates for through transportation.
English translation: The only legal rate that may be applied to cargo covered on any bill of lading is a rate that is filed and effective on (or before) the date on which the NVO takes possession of the cargo at the first point or port of origin in accordance with its corresponding bill of lading.
That's a mouthful! In case you missed it, the date of the vessel sailing does not govern the timing of the rate filing. On the contrary, the cargo routing itself, the place of receipt to be named on the NVO's HBL and the date of cargo receipt by the NVO (or his agent) at that first point or port dictates the date by which a rate must be filed for legal application on a given shipment. For this reason, intermodal transportation is a major factor in the timing of rate filings.
So, for CFS-to-CFS shipments, guess what? It's the date when the cargo arrives at the originating Container Freight Station. What about shipments originating at a Railramp? Same answer: The date when the cargo is delivered for transport to the Railramp. How about Door moves? Almost the same answer: The date when the loaded container or other cargo is removed from the Shipper's or Vendor's door. Notice that the sailing date is not mentioned in any of these circumstances because the transportation is based on groupage or consolidation service and/or involves an intermodal move combining motor and/or rail and ocean.
For port-to-port shipments, on the other hand, I suppose that the vessel sailing date would suffice, but technically the date of the filing should be the date on which the loaded container, breakbulk cargo, ro-ro equipment, etc., was received at the steamship line's port, gate and/or terminal facility. Remember, as an NVO, you would be taking possession of the cargo in advance of the sailing and, therefore, the effective date of the rate would have to correspond with the date on which the cargo arrived at the carrier's facility described above.
The only exception to this effective date rule is the consolidation or assembling of cargo from multiple vendors or suppliers by the NVO for the account of a single consignee at destination. Most tariffs contain a Rule and/or a Rule containing a Clause which reads substantially as follows:
When Carrier assembles part lots received on different days into a single shipment for carriage on a single Bill of Lading, the entire shipment will be transported at the applicable rate and subject to the applicable Rules, Provisions and Assessorial Charges lawfully in effect on the date the last component part of the assembled shipment was received by the originating Carrier.
Lest it go without saying, these limitations apply equally to export cargo and import cargo. It does not matter if the cargo is received in Chicago or Chittagong, Hong Kong or Houston, Seattle or Stockhom. The ONLY legal rate that can be applied is the rate that is filed and effective in the tariff on the date when the NVO takes possession of the freight according to the HBL or contract of carriage. If a rate is not filed when the freight is received, and the cargo is freighted using the rate anyway, upon official audit, it would be discovered and considered a violation of your tariff. I know you know what that means, don't you? Fines and penalties.
In closing, let me say that we're talking about the receipt of freight in accordance with an HBL to be issued by an NVO for transportation between a specified origin port or point to a specified destination port or point. I realize that today many of NVOs are also Freight Forwarders. I'm not knocking Freight Forwarder's to be sure! Freight Forwarders are a essential partner in the logistics chain and deal with arranging the whole transportation package including packing, inland freight, inspections, container loading, container drayage, consular work, letters of credit and stacks of documentation. The list is endless and varies by country of origin or destination as well as by the Incoterms governing the shipment.
When the Freight Forwarder is also the NVO, however, it is sometimes difficult to identify where the forwarding portion stops and the "carrier" portion begins. What parameters of the transport itself and the rates and surcharges are required to be included in the rate filing?
Hmmmm? That’s a very good question. Perhaps I’ll answer it in my next blog!