FEDERAL MARITIME COMMISSION UPDATES Thursday, October 11, 2012 10:30 a m – 11:30 am

1. FEDERAL MARITIME COMMISSION UPDATES Thursday, October 11, 2012 10:30 am – 11:30 am

2. VERN W. HILL Director, Bureau of Certification and Licensing JENNIFER M. GARTLAN Deputy Director, Office of Consumer Affairs & Dispute Resolution Federal Maritime Commission

3. Roadmap • Unique Challenges Associated with International Moving • Federal Maritime Commission (“FMC”) Jurisdiction • Licensing Requirements for International Movers • Tariff Publication Requirements and Negotiated Rate Agreements • Prohibited Practices and Enforcement • Dispute Resolution Options • Fact Finding 27 and Future Commission HHG Initiatives

4. International Moving: Common Challenges • Multiple Actors in the Logistics Chain • One-time Shippers • Packing Issues • Delays due to LCL Consolidation • Import and Export Regulatory Requirements • Port Related Issues (e.g. Demurrage, Surcharges) • Documentation Issues • Communication Issues • Different Regime for Loss and Damage (i.e. COGSA) • Marine Insurance Issues

5. Jurisdiction • Statutes and Regulations Applicable to International Movers: • Shipping Act of 1984, as Amended • 46 CFR 500 • Jurisdiction: Shipments of HHGs that travel between the US and foreign destinations via ocean (including intermodal transportation)

6. FMC Jurisdiction • FMC doesnot exercise jurisdiction over military or GSA HHG shipments • FMC doesnot have criminal jurisdiction • FMC doesnot have jurisdiction over: • Air shipments • Maritime shipments between the U.S. and another U.S. state or territory (e.g. Puerto Rico to NY, CA to HI)

7. Licensing for International Movers

8. OTI License Required When: • Any entity in the US that provides FF or NVOCC services • Foreign based NVOCCs are not required to obtain a license, but must file an FMC-1 and hold a $150k bond

9. Licensing Exceptions • Shippers whose primary business is the sale of merchandise • Vessel Operators that perform FF services for cargo under the their own B/L • Ocean Freight Brokers • Entities that exclusively transport HHGs for US military or federal civilian executive agencies • Agents, employees or branch offices of a licensed OTI

10. Types of Licenses • Freight Forwarders • Non-Vessel Operating Common Carriers (NVOCCs)

11. Comparing FFs vs. NVOCCs FF NVOCC Common carrier status under FMC regulations Serves as a shipper to the ocean common carrier Serves as carrier to its shipper customer(s) Normally listed as the shipper on the vessel operator’s Master Bill of Lading • Not a common carrier • Serves as an agent to the shipper • Does not issue a bill of lading • Must identify the shipper on vessel operator’s bill of lading: • John Doe is listed as the shipper • “FF as agent for John Doe”

12. How to Obtain a License • Complete and file a Form FMC-18 available at http://www.fmc.gov/forms_and_applications.aspx • Obtain and provide FMC with proof of financial responsibility in the following amounts: • FF: $50k • NVOCC: $75k • Additional Branch Offices require additional $10k per office • NVOCCs must file a Tariff Registration Form FMC-1

13. Tariff Publishing and Tariff Alternatives

14. Tariff Publishing Requirements • NVOCCs and vessel operators must publish a tariff that has: • Rates, charges, and rules for each shipment • Copy of the bill of lading • Rates: • Rate increases no less than 30 days’ notice • Reductions effective on date of publication • No retroactive publication

15. Tariff Publishing Alternatives • Negotiated Rate Agreements (NRAs) • NVOCC Service Arrangements (NSAs)

16. NRAs

17. What Must NVOCCs Do to Use NRAs • Be Licensed with the FMC • Post Notice in Tariff and B/Ls • End all Tariff Access Charges • Agree to an NRA in Writing Before Receiving Cargo • Keep NRA Documentation for 5 Years

18. Regulatory Enforcement

19. Enforcement Overview • Shipping Act • Licensing Requirements • Tariff and Service Contract Requirements • Prohibited Practices • Regulatory • Augmentation of Statutory Requirements • NSA and NRA Requirements

20. Common HHG Violations • Performing OTI Services without a License • Providing Transportation for an unlicensed OTI • Providing OTI Services not in accordance with a Tariff • Failure to establish, observe, and enforce just and reasonable regulations and practices relating to or connected with receiving, handling, storing, or delivering property.

21. Consequences for Regulatory Violations • Civil Penalties: • Up to $8,000 per violation if not knowing and willful • Up to $40,000 per violation if knowing and willful • Suspension of Tariff • Injunction to prevent violation of the Shipping Act (particularly helpful to shut down unlicensed entities)

22. Dispute Resolution at the FMC

23. Formal Adjudication of Disputes • Parties can file suit at FMC for Shipping Act violations • Remedies: • Reparations • Injunction (Court-based)

24. Alternative: CADRS • Independent • Neutral and Confidential • Practical, Real Time Solutions • Cost Savings • Enhanced Business Relationships • Experienced Neutrals with Industry Knowledge

25. Services Provided by CADRS • Education and Outreach • Small Claims • ADR Services: • Rapid Response and Ombuds • Facilitation • Mediation • Binding Arbitration

26. Binding Arbitration vs. Mediation Binding Arbitration Mediation Voluntary participation Confidential Rules Based and Adjudicative Limited to legal issues Arbitration decision issued by arbitrator(s) Award is final • Voluntary participation • Confidential • Rules Based and Adjudicative • Limited to legal issues • Arbitration decision issued by arbitrator(s) • Award is final

27. Advantages of Using CADRS • Faster, Easier, Less Formal, Than Litigation • Less Costly • Confidential; Avoids Publicity • Creative, Practical Solutions • Better for On-going Relationships • Minimize Risk • Parties Retain Control of Outcome • Little to Lose

28. Types of Cases FY 2012

29. Examples of Issues Encountered • Delays • Missing Shipments • Release and Receipt of Cargo • Cargo damage • Volume Disputes • Rates and Surcharges (e.g. detention and demurrage) • Cancellation Fees • Documentation Issues • Communication Issues

30. Obtaining Assistance Office of Consumer Affairs & Dispute Resolution Services (202) 523-5807 compliants@fmc.gov

31. Fact Finding 27 Potentially Unlawful, Unfair, or Deceptive Ocean Transportation Practices Related to the Movement of Household Goods or Personal Property in U.S.-Foreign Oceanborne Trades

32. Background • 2005-2009: 2,500 HHG consumer complaints received • June 23,2010: The Commission issued an Order of Investigation to: • Develop a record on the nature and scope of the problem presented by potentially unfair, unlawful, or deceptive practices in the shipping of household goods or personal property in U.S.-foreign oceanborne trade; and • Provide recommendations for further Commission action, including any policies, rulemaking proceedings, etc. • April 15, 2011: Final Report Issued (Public) • May 12, 2011: Commission adopted FF 27 Final Report Recommendations • September 30, 2011: Commission staff issued progress report to Commission re: implementation of recommendations

33. Recommendations • Educating the Consumer • Enhancing Consumer Experience • Consumer Protection

34. Highlights: Consumer Education • Development of consumer education materials • Development of consumer resource website • Plan to use social media to further outreach initiatives • Outreach to Lead Source Providers to ask for assistance in educating consumers • Encourage FMC licensed/registered movers to link websites to Commission website

35. Highlights: Enhancing Consumer Experience • Collaboration with industry stakeholders, partners, and other government agencies to develop best practices and model forms to reduce problems • Development of FMC appropriate guidance documents to provide best practices and model forms • Conduct outreach to HHG trade associations and arrange for ongoing information sharing and development of best practices

36. Highlights: Consumer Protection • Collaboration with other government agencies to enhance protection for shippers • Provide mediation/arbitration for HHG disputes • Development requirements for a voluntary best practices HHG Program • Enhanced enforcement procedures

37. Get Involved! • Website Linkage • Outreach Initiatives • Best Practices and Model Forms • Collaboration and Information Sharing • Use CADRS for your dispute resolution needs

38. Questions?

39. Thank You Vern Hill, Director, Bureau of Certification and Licensing (202) 523-5787, vhill@fmc.gov Jennifer M. Gartlan, Deputy Director, Office of Consumer Affairs & Dispute Resolution Services (202) 688-0244, jgartlan@fmc.gov

40. FEDERAL MARITIME COMMISSION UPDATES Thursday, October 11, 2012 10:30 am – 11:30 am