Are You Risking Big Fines Due To Non-Compliance With FMC Tariff Filing and Publishing Rules?

FMC tariff filing and publishing is one of the most important steps for NVOCCs and freight forwarders when managing an ocean shipment moving to or from the United States. Failing to file the correct tariffs either knowingly or not can result in heavy fines and revocation of licenses. The fines for failing to comply can range from $5,000 USD to $25,000 USD or more.

FMC stands for the Federal Maritime Commission, which is a federal agency responsible for the regulation of ocean transportation for US importers, exporters and consumers. The FMC guidelines governing the ocean shipping process require the freight rates being charged by common carriers are filed and made public at the time of shipping. This process is applicable for all ocean shipments moving in or out of the country.

According to the FMC website, the main purpose of the commission is to protect the public from financial harm while contributing to the integrity and security of the U.S supply chain and transportation system. It also works to ensure competitive and efficient ocean transportation services. As it relates to ocean shipping, the organization is set up to make sure that the tariffs being charged by common carriers are correct and fair. The FMC also helps in resolving disputes, while investigating and keeping in check carriers and companies that may knowingly be taking advantage of shippers.

There are some types of cargo that can be exempted from filing. These include: forest products, paper waste, bulk cargoes, new assembled motor vehicles, agricultural perishables and recycled metal scrap. Also exempt from filing are tariffs under service contracts. A service contract is a written agreement where carriers agree to a certain service depending on the amount of volume the shipper commits to moving.  

Another exception for filling was developed by the commission in 2001 in which common carriers may enter into Negotiated Rate Agreements (NRA) with shippers. This allows more flexibility with the rates. For example, an NRA may be used for different types of cargo, or a carrier may decide when or where to use it.

On the other hand, when a rate is filled, they are valid for 30 days for the same cargo with same weight, quantity and exact ports. During those 30 days, rates for that recurring traffic cannot be higher – although lower rates are accepted within the same time period.

The process of filing tariffs is straightforward, but cumbersome. Logistics providers can electronically submit the information with the commission through their website by opening an account. Or, for companies having more volume, an online application like Catapult (www.gocatapult.com) is a more efficient option. The information required for filling includes the port to port information, weight, cargo classification and amount; if any of these change, a new rate has to be filled. Common carriers must be able to provide these filled rates for a period of 5 years if asked by federal authorities. 

Keeping clean and precise records of these tariffs is not just a good business practice, but required by U.S. law. Leveraging technology makes it simple to avoid the confusion of managing the tariff filing and publishing process.

Automating Your FMC Contracts

Ocean FMC contracts are difficult to manage. If you are a shipper, BCO, NVO, or Freight Forwarder you know this is true. Not only are the fees, surcharges, advisories, and contract addendum hard to understand and apply, each can seemingly change at the discretion of the carriers. Even the simplest ocean FMC contracts is a complicated mess – it’s the reality of international ocean shipping.

So what to do? There is a two part plan for overcoming the challenge.

First, you need an expert who REALLY understands ocean shipping to interpret your ocean FMC contracts verbiage and make sure all fees and other costs are understood and accounted for. This expert should also be connected enough in the industry to stay on top of the constant flow of new advisories, GRIs, and other surcharges that will inevitably come up.

Once you have your ocean FMC contracts in order, the next step is to make sure each rate is calculated accurately. There is technology to make this fast and simple, like Catapult’s QMS platform.

Attempting to calculate ocean shipping costs manually has severe limitations and freight rate automation through technology is a simple, cost effective solution. Prevent just one or two mis-rated shipments and the platform pays for itself. Beware however, not all rate management platforms are the same.

Here are 4 questions to ask when evaluating a freight rate automation system.
  • Can it handle ocean FMC contracts?
  • Is it able to receive automated feeds for managing surcharges?
  • Does it rely on a data entry clerk for making contract interpretations?
  • What’s the turnaround time for adding new contracts and making updates?
With Catapult QMS you get a turn-key solution and are covered across the board with a team of expert ocean analysts. Your contracts are correctly interpreted and all fees are applied accurately using best in class technology to manage both ocean FMC and non-FMC contracts. Check QMS out at www.gocatapult.com.