What is The Role of the Federal Maritime Commission in Global Shipping
The Federal Maritime Commission (FMC) was established in 1961 to serve as a regulator for four liner shipping groups and American importers and exporters.
Even though the FMC abbreviation did not become official until August 12, 1961, its origins can be traced back to World War I. The Kennedy administration collaborated with Congress to establish the Federal Maritime Commission, which would oversee the activities of shipping companies.
The goal was to separate the governing bodies in charge of the United States Merchant Marines and international shipping companies. The FMC now governs the latter, which aims to regulate US ocean commerce.
FMC's Role in Ocean Freight
As you can see, the Federal Maritime Commission, or FMC, plays an important role in ocean freight. Its mission is to ensure a competitive and dependable international ocean transportation supply system that not only benefits the American economy but also protects the public from deceptive or unfair practices.
The FMC has adapted to all the changes in international ocean transportation that have occurred since its inception. They have worked tirelessly to create a fair and efficient environment for exporters and importers while protecting the American people.
To that end, they regulate the activities of Ocean Transport Intermediaries, or OTIs, which include ocean freight forwarders and non-vessel operating common carriers.
Ocean freight forwarders are those who dispatch shipments from the United States via a common carrier, whereas an NVOCC is a common carrier that does not operate ocean transportation vessels. Simply put, an NVOCC is a shipper who works with an ocean common carrier.
Requirements for Licensing
The FMC has strict licensing requirements. Before performing any services in the United States, all OTIs must be licensed. This licensing requirement means that a company must be registered with the Federal Maritime Commission to buy or sell sea freight services to or from the United States.
If an agent is not licensed or registered with the FMC, they are not permitted to use their sea freight services or any NVOCC service in the United States. These unlicensed agents are only permitted to act as booking agents or freight forwarders.
The Federal Maritime Commission retains the authority to levy fees and penalties as defined by its regulatory authority. Penalties may be imposed if there are violations involving customer fees and compensation received by ocean freight operators from carriers.
The FMC has completed settlement agreements that resulted in the recovery of nearly $1,000,000 in civil penalties. These agreements covered eight non-vessel operating common carriers as well as unlicensed entities that did business.
Here are some of the violations they cited:
Companies from China in the United States obtained transportation at a lower cost by abusing service contracts.
In exchange for a fee, operators in the United States in Hong Kong allowed other NVOCCs access to their service contracts. A non-vessel operating common carrier in the United States accepted cargo from other transportation intermediaries that did not have published tariffs, bonds, or other required sureties.
The Federal Maritime Commission, or FMC, is the ocean freight regulator, ensuring that the system is fair and competitive while protecting the public from unfair practices. They must adhere to licensing requirements and regulations. They reserve the right to levy fees and penalties otherwise.
Are the Federal Maritime Commission's decisions legally binding?
The FMC's arbitration decisions are binding on all parties. However, the commission has nonbinding alternative dispute resolution methods. These include providing an ombudsman service and mediation, which assists parties in negotiating business and regulatory matters.
Who are the members of the Federal Maritime Commission?
Five commissioners serve staggered five-year terms on the Federal Maritime Commission. The president appoints the commissioners, who must be confirmed by the United States Senate.
The FMC ensures that ocean transportation services are competitive and efficient for the shipping public by:
· Examining and monitoring agreements between ocean common carriers and marine terminal operators (MTOs) serving the United States' foreign ocean-borne trades to ensure that they do not result in significant increases in transportation costs or reductions in transportation services.
· Maintaining and reviewing confidentially filed service contracts to protect shipping from negative consequences
· Provides a forum for exporters, importers, and other shipping public members to seek relief from ocean shipping practices or disputes that impede commerce flow.
· ensuring that common carrier tariff rates and charges are published in automated tariff systems and made available to the public electronically.
· Monitoring government-owned or controlled carriers' rates, charges, and rules to ensure they are just and reasonable.
· Taking action to address unfavorable conditions in US-foreign shipping trades caused by foreign governments or business practices
The FMC protects the public from financial harm and contributes to the integrity and security of the United States supply chain and transportation system by doing the following:
· Assisting in the resolution of disputes involving cargo, personal or household goods, or disputes between cruise ship operators and passengers
· Investigating and ruling on complaints about common carrier, MTO, and Ocean Transportation Intermediaries (OTI) rates, charges, classifications, and practices that violate the Shipping Act of 1984
· Licensing OTIs with appropriate personality and financial responsibility
· Identifying and holding accountable regulated entities for mislabeling cargo shipped to or from the United States
· Ensuring that cruise lines maintain financial responsibility for paying claims for personal injury or death, as well as compensating passengers for failure to complete the cruise
Avoiding FMC & Other Penalties
Most of the unwanted penal costs arise when you face an unforeseen situation in shipping. For example, festive congestion at the port. You can avoid these overheads by planning your routes.
Digital-first NVOCCs like ECU360 give you access to advance sailing schedules and let you plan your shipping. After shipping, you can also track your shipment in real time on the platform. Such digital advantages allow you to optimize your shipping costs both as a carrier and a shipper.
