Ocean Transportation Intermediary Requirements and Regulations

To become an ocean transportation intermediary, you'll need to comply with the Federal Maritime Commission's (FMC) regulations.

The FMC requires intermediaries to register and obtain a license, which costs $1,100 and is valid for 5 years.

To register, you'll need to provide personal and business information, as well as a description of your services.

The FMC also has rules governing advertising and solicitation, including requirements for disclosure of services and fees.

An OTI, or Ocean Transportation Intermediary, is a company or individual that facilitates the movement of goods across oceans. Regulated by the Federal Maritime Commission (FMC) in the United States, they act as intermediaries between the shipper and the carrier.

OTIs can be categorized into two main types: Freight Forwarders and Non-Vessel-Operating Common Carriers (NVOCCs). A Freight Forwarder arranges the shipment of goods on behalf of shippers, choosing the best carrier for the transport and handling documentation.

Freight Forwarders perform a range of activities, including preparing and processing documentation, and managing the safe movement of goods using a NVOCC or a VOCC. They must be licensed by the FMC and submit proof of financial responsibility for payment of any claims that may arise while handling shipments.

NVOCCs, on the other hand, do not own vessels but operate similarly to carriers by issuing their own bills of lading and leveraging shipping contracts they have with actual ship owners. A NVOCC's business involves buying a specific volume-based freight from the shipping line and selling it to the BCOs or other customers.

To provide a seamless journey for goods across international waters, OTIs manage the logistics, documentation, and regulations involved in ocean transport. They help ensure that shipments are delivered safely and efficiently, and that all necessary documents are in order.

Here are the two main types of OTIs, with their key characteristics:

To become an Ocean Transportation Intermediary (OTI), you'll need to meet certain requirements. A qualifying individual must have at least three years of demonstrable OTI experience, gained in the United States, and be an officer of the applicant's corporation, the sole proprietor, or a partner in a partnership.

You'll need to submit electronically or print out and complete Form FMC-18: Application for a License as an Ocean Transportation Intermediary. This form requires the qualifying individual's experience and other business details. Submit the form and the required license application fee to get started.

Here's a step-by-step guide to the application process:

Note that the Federal Maritime Commission requires a valid OTI license to advertise or hold out to act as an OTI.

Becoming an OTI requires a strong understanding of the functions and responsibilities involved. As an OTI, you'll play a crucial role in the logistics chain, providing essential services to shippers.

One of the key functions of OTIs is documentation and compliance. This involves preparing and submitting shipping documents accurately and on time, in compliance with international laws. This includes export/import documentation, bills of lading, customs paperwork, and more.

OTIs also assist shippers in selecting the most suitable carriers and negotiating the best rates. This requires navigating fluctuating market conditions and finding the right balance between cost and quality.

Cargo tracking and management is another critical function of OTIs. They provide visibility and tracking services to manage shipments and keep abreast of their status throughout the journey.

OTIs often offer insurance and risk management services to mitigate risks associated with ocean freight. This ensures that clients' goods are protected throughout the shipping process.

Here are some of the essential services provided by OTIs:

To become an OTI, it's essential to understand these functions and responsibilities. By providing these essential services, you'll be able to help shippers navigate the complex logistics chain and ensure their goods are delivered safely and efficiently.

To become an Ocean Transportation Intermediary (OTI), you'll need to meet certain requirements. A qualifying individual must have at least three years of demonstrable OTI experience and be an officer of the applicant's corporation, the sole proprietor, or a partner in a partnership.

To qualify, the individual's experience must have been gained in the United States. This is a crucial step in the application process.

To apply for a license as an OTI, you'll need to submit electronically or print out and complete Form FMC-18. This form is a requirement for all applicants.

You'll also need to submit the required license application fee along with the form. This fee is a necessary part of the application process.

Here's a summary of the application process:

By following these steps and meeting the requirements, you can become a licensed OTI and start offering your services to businesses and individuals.

As an OTI, you'll be responsible for handling various tasks, including documentation and compliance. This involves ensuring all shipping documents are prepared accurately and submitted timely in compliance with international laws.

You'll also need to assist shippers in selecting the most suitable carriers and negotiating the best rates. This includes navigating fluctuating market conditions to secure the best deals.

To provide excellent service, you'll need to offer cargo tracking and management services. This will give shippers visibility into the status of their shipments throughout the journey.

Insurance and risk management are also crucial aspects of an OTI's duties. You'll need to offer shipping insurance products to mitigate risks associated with ocean freight.

Here's a breakdown of the key duties of an OTI:

As a licensed freight forwarder, you'll also need to comply with specific regulations. For example, you'll need to provide your principal with a complete breakout of your charges and a true copy of any underlying document or bill of charges pertaining to your invoice.

You'll also need to transmit a copy of your invoice for services rendered to the person paying those charges. This ensures transparency and compliance with laws and regulations.

A licensed freight forwarder's duties also include providing a detailed breakout of the components of all charges assessed and a true copy of each pertinent document relating to these charges. This information should be available upon request from the principal.

To become a licensed ocean transportation intermediary (OTI), you'll need to go through a straightforward application process. First, you must appoint a qualifying individual who has at least three years of demonstrable OTI experience and has gained that experience in the United States. This individual will be an officer of the applicant's corporation, the sole proprietor, or a partner in a partnership.

The qualifying individual's experience is crucial, and it must be gained in the United States. This ensures that the individual has a deep understanding of the OTI regulations and can effectively manage the business.

To start the application process, you'll need to submit Form FMC-18: Application for a License as an Ocean Transportation Intermediary. This form must be submitted electronically or printed out and completed. You'll also need to submit the required license application fee.

To help you navigate the application process, here's a summary of the steps for US-based NVOCCs and freight forwarders:

Note that the application process is similar for non-US based NVOCCs, but they must establish a presence in the United States, such as an unincorporated branch office.

To become a licensed US-based NVOCC or freight forwarder, you'll need to go through the application process. First, you must appoint a qualifying individual who has at least three years of demonstrable OTI experience and is an officer of the applicant's corporation, the sole proprietor, or a partner in a partnership.

The qualifying individual's experience must have been gained in the United States. This is a crucial step, as it ensures that the person in charge has the necessary expertise to handle ocean transportation intermediary duties.

To start the application process, you'll need to submit Form FMC-18: Application for a License as an Ocean Transportation Intermediary. You can either submit it electronically or print it out and complete it by hand. Along with the form, you'll need to submit the required license application fee.

Here's a summary of the application process steps:

Once you've submitted the application, the Federal Maritime Commission will conduct an investigation to verify the accuracy of the information provided, the integrity and financial responsibility of the applicant, and the character of the applicant and its qualifying individual.

The Federal Maritime Commission (FMC) plays a crucial role in regulating ocean transportation intermediaries. It sets forth regulations providing for the licensing and registration of persons who wish to carry on the business of providing intermediary services.

To be licensed by the FMC, an ocean transportation intermediary must meet certain requirements, including financial responsibility for payment of any claims that may arise while handling shipments. This is a requirement for both freight forwarders and NVOCCs offering services in the USA.

A freight forwarder, for instance, must be licensed by the FMC and submit proof of financial responsibility to handle shipments safely and efficiently. Similarly, a NVOCC must also be licensed by the FMC and publish its rate tariff as part of its regulatory process.

Here's a breakdown of the consequences of not complying with the FMC's regulations:

Note that each day of a continuing violation constitutes a separate violation, and the penalties can add up quickly. It's essential for ocean transportation intermediaries to understand the scope of the FMC's regulations and comply with them to avoid any penalties or fines.

To operate as an ocean transportation intermediary, you need to meet specific licensing and financial responsibility requirements.

Ocean freight forwarders must furnish evidence of financial responsibility in the amount of $50,000.

To ensure financial responsibility, you can provide a bond, proof of insurance, or other surety in a form and amount determined by the Federal Maritime Commission.

If you're an NVOCC, you'll need to furnish evidence of financial responsibility in the amount of $75,000.

Registered NVOCCs, on the other hand, must furnish evidence of financial responsibility in the amount of $150,000.

A group or association of ocean transportation intermediaries can also establish financial responsibility, with a minimum of $3,000,000 in aggregate.

If multiple individuals operate under a common trade name, each person must provide separate proof of financial responsibility.

However, if you exclusively transport used household goods and personal effects for the Department of Defense or federal civilian executive agencies, you may be exempt from these requirements.

Here's a breakdown of the financial responsibility requirements for different types of ocean transportation intermediaries:

To ensure compliance, OTIs must provide proof of financial responsibility, which can be in the form of a bond, insurance, or other surety. The amount of financial responsibility required varies depending on the type of OTI, with freight forwarders needing $50,000, NVOCCs needing $75,000, and registered NVOCCs needing $150,000.

OTIs must also maintain accurate records, including general financial data, types of services by shipment, receipts and disbursements by shipment, and special contracts. These records must be kept for a period of five years and be readily available to the Commission.

OTIs can obtain proof of compliance by consulting the Commission's website, www.fmc.gov, or by using another procedure set forth in their tariff. The Commission will publish a list of OTIs who have met all of their applicable licensing, registration, tariff, and financial responsibility requirements on its website.

A common carrier cannot knowingly and willfully accept cargo from or transport cargo for an NVOCC that doesn't have a published tariff as required by 46 U.S.C. 40501 and part 520 of this chapter, and a bond, insurance, or other surety as required by 46 U.S.C. 40902 and this part.

To verify an NVOCC's compliance, a common carrier can consult the Commission's website www.fmc.gov or use any other procedure set forth in the carrier's tariff.

A common carrier that uses the Commission's website to verify an NVOCC's compliance is deemed to have met its obligations under 46 U.S.C. 41104(a)(11), unless the carrier knew the NVOCC was not in compliance.

The Commission publishes a list of ocean transportation intermediaries who have met their applicable licensing, registration, tariff, and financial responsibility requirements on its website, www.fmc.gov.

This list is updated on a periodic basis and includes a separate list for NVOCCs.

As an ocean transportation intermediary (OTI), you're required to hold a valid license or registration with the Federal Maritime Commission. This is non-negotiable, as no person may advertise or hold out to act as an OTI unless they meet this requirement.

To maintain your OTI license, you must comply with various duties and responsibilities. For instance, you're prohibited from sharing forwarding fees or freight compensation with unauthorized persons, or permitting them to participate in the control or direction of your business.

You're also required to report certain information to the Commission, including any changes to your business operations or ownership structure. This ensures that the Commission has an accurate picture of your activities and can take enforcement action if necessary.

Here's a quick rundown of the key reporting requirements:

Make sure to stay on top of these reporting requirements to avoid any issues with your OTI license. It's also essential to understand your financial responsibility requirements, which vary depending on the type of OTI services you offer. For example, ocean freight forwarders must furnish evidence of financial responsibility in the amount of $50,000, while NVOCCs must furnish evidence of financial responsibility in the amount of $75,000.

Each licensed or registered NVOCC and each licensed ocean freight forwarder must maintain records and books of account in an orderly and systematic manner.

These records can be kept in either paper or electronic form, but they must be readily available in usable form to the Commission. The electronically maintained records must be no less accessible than if they were maintained in paper form.

The recordkeeping requirements are independent of the retention requirements of other federal agencies.

Each licensed freight forwarder must maintain general financial data for a period of five years, including a current running account of all receipts and disbursements, accounts receivable and payable, and daily cash balances.

This financial data must be supported by appropriate books of account, bank deposit slips, canceled checks, and monthly reconciliation of bank statements.

A separate file must be maintained for each shipment, which includes a copy of each document prepared, processed, or obtained by the licensee.

This includes each invoice for any service arranged by the licensee and performed by others, with respect to such shipment.

A record of all sums received and/or disbursed by the licensee for services rendered and out-of-pocket expenses advanced in connection with each shipment must be maintained.

This record must include specific dates and amounts, and must be kept for a period of five years.

A true copy, or if oral, a true and complete memorandum, of every special arrangement or contract between a licensed freight forwarder and a principal, or modification or cancellation thereof, must be maintained.

This record must be kept for a period of five years.

OTI fees and compensation can be a bit tricky to navigate, but it's essential to understand the rules. No licensed freight forwarder can share their compensation or freight forwarding fee with a shipper or any of their affiliates.

A licensed freight forwarder may not render freight forwarding services free of charge or at a reduced fee in consideration of receiving compensation from a common carrier. However, they can offer reduced fees for recognized relief agencies or charitable organizations.

In-plant arrangements between a freight forwarder and their principal must be reduced to writing and clearly outline all services provided, compensation, and details of the arrangement. This helps ensure that the arrangement is not an artifice for payment or other unlawful benefits.

Freight Forwarding Fees and Compensation is a crucial aspect of international trade, and understanding the rules and regulations surrounding it can help you avoid costly mistakes. Licensed freight forwarders are not allowed to share any compensation or freight forwarding fee with a shipper, consignee, seller, or purchaser, or an agent, affiliate, or employee thereof.

A licensed freight forwarder may place an employee or employees on the premises of its principal as part of the services rendered, but this arrangement must be reduced to writing and identify all services provided by either party. The arrangement must also set forth all details concerning the procurement, maintenance, or sharing of office facilities, personnel, furnishings, equipment, and supplies.

A freight forwarder's duties include providing notice of shipper affiliation, either by identifying itself as such or including a notice on its office stationery and billing forms. The notice must state that the company is a shipper or seller of goods in international commerce or is affiliated with such an entity, and must provide a general statement of its business activities and those of its affiliates upon request.

A licensed freight forwarder is not allowed to withhold any information concerning a forwarding transaction from its principal, and must comply with the laws of the United States and exercise due diligence to assure that all information provided to its principal or provided in any export declaration, bill of lading, affidavit, or other document is accurate. This includes providing a complete breakout of its charges and a true copy of any underlying document or bill of charges pertaining to the licensed freight forwarder's invoice upon request.

Here is a summary of the key points:

A licensed freight forwarder cannot share their compensation or freight forwarding fee with a shipper, consignee, seller, or purchaser, or an agent, affiliate, or employee thereof. This rule applies to anyone advancing the purchase price of the property or guaranteeing payment therefor, as well as anyone with a beneficial interest in the shipment.

A freight forwarder must clearly identify a receipt for cargo as such and make it distinguishable from a bill of lading. This is a requirement for all licensed freight forwarders.

A freight forwarder cannot offer to render freight forwarding services for free or at a reduced fee in exchange for compensation from a common carrier. However, they may do so for recognized relief agencies or charitable organizations, as long as it's designated in the tariff of the common carrier.

A licensed freight forwarder can place an employee on the premises of their principal as part of their services, but only if it's done in writing and meets specific requirements. These requirements include detailing all services provided, compensation, and procedures for administration.

Here's a summary of the key points:

As an OTI, it's essential to have the right bonding and insurance in place to protect your business and clients' goods. An ocean freight forwarder who offers services in the USA must be licensed by the FMC and submit proof of financial responsibility for payment of any claims that may arise while handling the shipments.

If you're an NVOCC, you'll need to publish your rate tariff as part of your regulatory process, and this tariff must be open for public inspection. This includes showing all freight rates, surcharges, classifications, rules, and practices between all points or ports on your service routes.

OTIs often offer shipping insurance products to mitigate risks associated with ocean freight. This ensures that clients' goods are protected throughout the shipping process.

If you're an Ocean Transportation Intermediary (OTI) facing a license denial, revocation, or suspension, it's essential to understand the hearing procedures involved.

You'll need to submit your hearing request to the Commission's Secretary, as per the regulations.

The Commission's Secretary is the point of contact for all hearing requests related to OTI license denials, revocations, or suspensions.

The hearing will be adjudicated under the procedures set forth in subpart X of part 502 of this chapter.

This means you can expect a formal process with clear rules and guidelines to ensure a fair outcome.

In the United States, a freight forwarder must be licensed by the FMC and submit proof of financial responsibility for payment of any claims that may arise while handling shipments.

To register as an OTI, you'll need to meet the FMC's requirements, which include publishing your rate tariff for public inspection.

A US-based NVOCC must publish its rate tariff as part of its regulatory process, showing all freight rates, surcharges, classifications, rules, and practices between all points or ports on the NVOCC's service routes.

This means you'll need to provide detailed information about your rates and services, making it easier for shippers to compare and choose the best option.

If you're a foreign-based NVOCC, you'll need to comply with the FMC's regulations, including submitting proof of financial responsibility and publishing your rate tariff.

This ensures that you're held to the same standards as US-based NVOCCs, providing a level playing field for shippers.

Here's a summary of the key requirements for registering as a US-based NVOCC:

As an ocean transportation intermediary, navigating OTI claims and disputes can be a complex and time-consuming process.

Claims against OTIs can arise from a variety of issues, such as cargo damage or loss, delays, or non-delivery.

OTIs may dispute claims if they believe the cargo was properly handled or if the shipper failed to provide accurate documentation.

In such cases, it's essential to have a clear understanding of the OTI's liability and the terms of the bill of lading.

The OTI's liability typically depends on the type of cargo and the level of care required for its safe transportation.

For example, if the cargo is high-value or perishable, the OTI may be held to a higher standard of care.

The OTI's liability may also be limited by the terms of the bill of lading, which can specify the maximum amount the OTI is responsible for in the event of a loss or damage.

Choosing an OTI requires careful consideration of several key factors. Licensing and certification are essential, so make sure the OTI is licensed by the FMC or respective governmental authority.

Experience and expertise are also crucial. Opt for companies with substantial industry experience that offer specialized services tailored to the specific nature of your cargo.

A wide network and strong relationships with carriers can give you a better negotiating position, so choose an OTI with a strong network and good relationships with carriers.

Modern OTIs should offer technology solutions for real-time tracking and efficient handling of documentation. This can save you time and reduce the risk of errors.

Here are the key considerations in a concise format:

By carefully evaluating these factors, you can find the right OTI for your business needs.