NCBFAA will ask FMC to end rate tariff publication

The National Customs Brokers and Forwarders Association of America plans to ask the U.S. Federal Maritime Commission to eliminate the requirement of mandatory rate tariff publication for non-vessel-operating common carriers.

The petition, which is still under development, will probably be filed in late May or June.

Peter Powell, chief executive officer of C.H. Powell Co. and one of the senior counselors at the NCBFAA, said the group had been considering making the petition for some time, but has held off while waiting for the commission to go to its stated five commissioners, because then you would have a majority vote one way or the other.

Powell noted the FMC has remained at four, with the nomination of Carl B. Kress as commissioner and renomination of A. Paul Anderson as chairman tied up in the Senate.

It does not appear they will reach the level of five, Powell said. So we have decided we are going to go ahead and file our petition. The decision was made at a meeting of the NCBFAA's forwarding committee in Orlando earlier this month.

Our postulate is that rates in tariffs are not used today because it is such a competitive and everchanging marketplace with the cost of fuel, etc. You quote a tariff rate that theoretically is in effect for at least 30 days, and it certainly may not be available. Generally it is a useless exercise to file tariff rates, he said.

He emphasized the request was only for tariff rates, not rules tariffs.

Terms and conditions of tariffs are still important, Powell said. But to file rates, and when you make a quote and you have to file a rate, you have to go through a process of filing with the FMC in your applicable tariff, when in fact no one is going to access that.

At least one commissioner, Rebecca Dye, indicated she thinks it is time for a discussion of the issue. In an address to the National Industrial Transportation League on April 8, she said, I think we should consider tariff publishing relief for NVOCCs as well as vessel-operating carriers. I am not prepared to endorse any particular approach today, but I believe the time has come to consider tariff reform.

The key word here is mandatory, said NCBFAA attorney Edward Greenberg. Because there may be a need for NVOs who want to have rate tariffs and continue to publish them. An example would be surcharges -- they may want to maintain some way of doing that or they may want to simply maintain rate tariffs. We are not saying you should necessarily do it, but it should be on a voluntary basis.

In any situation where there is a privately negotiated rate that is agreed to between the NVO and the shipper in writing, it should not be necessary to memorialize that in a rate tariff. That will be the relief that we are looking for, Greenberg said.

The request would be made on behalf on NVOs, but he noted the NCBFAA would not oppose the same publishing requirements being lifted for ocean carriers.

If the FMC agrees, Greenberg said there would not be any difference between the way NVOs and shippers interact today.

Nobody today ever reviews an NVO tariff, he said. What you would do is what you do today -- you call up or solicit an NVO or an NVO solicits you and you inquire what the rates are. If you were going to move a piano from Manhattan to Bremen, I can't imagine you would go and try and find out what a rate tariff would be for moving a piano. The empirical evidence is from both the shipper and NVOCC side that nobody, ever, accesses NVO tariffs.

He said the request has nothing to do with a desire for increased confidentiality, although I guess it is an indirect byproduct, he noted. There is nothing more confidential than an NVO tariff, because nobody ever looks at it. The fact that the rates may be memorialized in a tariff doesn't mean anything.

Greenberg and Powell said NVO traffic moves according to individually negotiated rates that change on a daily, if not hourly, basis that are adjusted according to supply and demand on different trades, steamship company rates, and surcharges that are frequently revised.

Shippers negotiate their rates with the NVOs and under the law, that rate is a binding rate between the shipper and the NVO. The NVO can't later go back to the shipper and say 'we negotiated a rate of $100, but my tariff says $125 and you have to pay the tariff,'  Greenberg said, noting the so-called 'filed rate doctrine' was eliminated by the Ocean Shipping Reform Act of 1998.

The rate that is negotiated is binding and the only thing that happens now is that after the rate is negotiated, the NVO still has to publish it in tariff form. What for It doesn't serve any purpose any longer, he added.

But if carriers don't file rate tariffs, they can be penalized by the FMC's Bureau of Enforcement.

You have an entire industry and huge cost that exists for compliance for something that no longer has any meaning, Greenberg said. To the extent that rates are dependent on a rate tariff, then fine. Then those can continue. But to the extent they don't, they should not.

Powell added: If somebody comes to you for a quote, that does not necessarily mean that you have the transaction. If you go through the quoting process and then file the rate to make it applicable and the shipment doesn't move, you've gone through an exercise in cost that is redundant and unnecessary.