Negotiated Rate Arrangement Exemption
Guidance for NVOCCs on How to Use Negotiated Rate Arrangements
Effective April 18, 2011, licensed Non-Vessel-Operating Common Carriers (NVOCCs) can now take advantage of an exemption from the tariff rate publication requirements of the Shipping Act and the FMC’s regulations if they use a negotiated rate arrangement (NRA). To do so, an NVOCC must meet the conditions described below. (Final Rule 76 FR 11351; Correction 76 FR 19706)
What are NRAs?
NRAs are written and binding arrangements between a shipper and a licensed NVOCC to provide specific transportation service for a stated cargo quantity, from origin to destination, on and after a stated date or within a defined time frame. If an NVOCC uses NRAs and meets the conditions below, it does not have to publish its rate in the tariff it makes available to the public.
What Steps Must I Take to Use NRAs?
Follow these five steps to use NRAs that comply with the FMC’s rule:
- Be licensed by the Federal Maritime Commission: The NRA rule currently applies only to NVOCCs who hold a valid license from the FMC. If you do not have an NVOCC license from the FMC you can apply for one.
- Post notice in tariff and bills of lading: An NVOCC wishing to use NRAs must post a prominent notice in its tariffs and bills of lading or equivalent shipping documents for shipments moving pursuant to an NRA. (Note that an NVOCC does not have to amend its Form FMC-1 to provide notice it is using NRAs. The FMC withdrew that requirement before the NRA rule went into effect.)
- End all tariff access charges: An NVOCC wishing to use NRAs must also provide the public with free electronic access to its tariffs that contain the rules governing shipments. Unless specifically exempted by this rule, all Commission rules for tariffs, including requirements to provide historical data, access date capability, and current tariff location information in Form FMC-1, continue to apply.
- Agree to an NRA in writing before receiving the cargo: An NVOCC and its shipper customer must agree to the NRA and memorialize it in writing before the relevant cargo is received by the NVOCC or its agent (including the originating carrier in the case of through transportation). An email or other written electronic communication is acceptable if it shows assent of both the NVOCC and the shipper.
- Keep your NRA documentation on file for 5 years: An NVOCC must retain documentation of the agreed rate for a period of five years, and must make that documentation available promptly to the Commission upon request. Failure to keep or timely produce original NRAs and associated records and written communications will disqualify an NVOCC from the exemption and may result in a Commission finding of violations of the Shipping Act.
Where do I Find More Information or Guidance?
A link to the full text of the Commission’s NRA Rule is provided below, and is located at 46 C.F.R. §§ 532.1-532.91.
46 C.F.R. PART 532 – NVOCC Negotiated Rate Arrangements
If after consulting the rule, you have additional questions, please contact: