Ocean Transportation Intermediary (OTI)

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Overview

Current FMC regulations require ocean transportation providers operating in the US as a NVOCC or freight forwarder obtain an OTI license before starting operations.

The FMC has two primary types of OTI licenses:

- OTI Ocean Freight Forwarder

- OTI NVOCC

     

    Establishing Your QI

    Each company planning to obtain an OTI license must have a Qualifying Individual (QI) on staff. If you plan on applying for an OTI license, you must have at least one official in your company that has a minimum of three years of experience working for an FMC licensed USA ocean freight provider (NVOCC, ocean forwarder, or ocean carrier). The QI can serve for only one licensed carrier. To qualify as the QI, the selected company official will need three references that will validate the selected QI's experience. Each reference will have to provide proof to the FMC of their experience with the selected QI. You will also be subjected to a background check. You can see a current list of OTI licensed carrier at the FMC's web site.

     

    OTI License Details

    Each applicant for an OTI license will be subject to the public record and notices for those applying will appear in the federal register. As stated at the top of this page, there are two primary types of OTI licenses. To obtain a license, you must go through the application process. Then, once approved, you will need to obtain a bond. The amount of the bond will depend on the license you received. The third item requires that you complete a form FMC-1 notifying the FMC of the location of your online tariffs. That's where TDS's Tariff Link™ Web can help you. Check it out here. The only remaining thing is to go ahead and file your tariffs. We can help with that process and help you stay in compliance. You can also learn more on the FMC website here.

    Ocean Freight Forwarder

    The bond requirements for this OTI license is $50,000.00. If you hold this license, you can operate as an agent of a NVOCC. The NVOCC must maintain their own bond and tariff filings. The second option under this license is to operate as an ocean freight forwarder. If you operate as an ocean freight forwarder, you cannot issue a bill of lading or have a mark up on the freight charged you by the ocean carrier. In addition to the bond, you must also add $10,00.00 per branch office located in the US.

    NVOCC

    One main distinction between these two license types is the ability to issue a bill of lading, but you cannot collect commissions from ocean carriers. The bond on this type of license is $75,000.00. In addition to the bond, you must also add $10,00.00 per office location in the US. All freight rates charged under the bill of lading must be contained within your FMC tariff. We make this process easy by providing a friendly online service for filing tariffs. Check it out here.

    Once approved, you may operate according to your tariffs. You must maintain your tariffs with the FMC and maintain the detailed rates used on your bill of lading. The OTI NVOCC must follow the FMC regulations.

    Foreign based NVOCCs

    There is no requirement for an OTI license. You must demonstrate financial responsibility (bond) and maintain a current FMC-1. If you ship to and from the US and issue a bill of lading, then you must, however, follow all FMC requirements. For additional information, visit the FMC web site questions section.

     

    OTI Bond Overview *

    The regulations for required bonds proving financial responsibility are contained in 46 CFR Part 515, Subchapter B, Subpart C. You can review these complete regulations on the FMC web site here. For your convenience, we have copied the pertinent sections from the FMC's web site here:

    "Subpart C -- Surety Bond Requirements; Claims Against Ocean Transportation Intermediaries

    § 515.21 Financial responsibility requirements

    (a) Form and amount. Except as otherwise provided in this part, no person may operate as an ocean transportation intermediary unless that person furnishes a bond, proof of insurance, or other surety in a form and amount determined by the Commission to insure financial responsibility. The bond, insurance or other surety covers the transportation-related activities of an ocean transportation intermediary only when acting as an ocean transportation intermediary.

    (1) Any person operating in the United States as an ocean freight forwarder as defined by §515.2(o)(1) shall furnish evidence of financial responsibility in the amount of $50,000.

    (2) Any person operating in the United States as an NVOCC as defined by §515.2(o)(2) shall furnish evidence of financial responsibility in the amount of $75,000.

    (3) Any unlicensed foreign-based entity, not operating in the United States as defined in §515.3, providing ocean transportation intermediary services for transportation to or from the United States, shall furnish evidence of financial responsibility in the amount of $150,000. Such foreign entity will be held strictly responsible hereunder for the acts or omissions of its agent in the United States.

    (4) The amount of the financial responsibility required to be furnished by any entity pursuant to paragraphs (a)(1) or (a)(2) of this section shall be increased by $10,000 for each of the applicant's unincorporated branch offices."

    Reference: 46 CFR Part 515 | The Federal Maritime Commission (FMC). (n.d.). Retrieved from http://www.fmc.gov/46_cfr_part_515.aspx

     

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    *Note: these regulations can change. They are reproduced here as a convenience to our customers.

We Meet all FMC Requirements

Tariff Data Systems, as required by the FMC, has made provisions within Tariff Link™ to help your company stay in compliance with your tariff filings.

PENALTIES

The FMC has staff dedicated to tariff enforcement at every major port in the US. What happens if you do not maintain compliance? The FMC has strict requirements for filing. If you are not in compliance, you may have to stop providing your services, which will have a significant effect on your profitability when shipping to the US.

The penalties for noncompliance are steep and accrue daily per offense. Depending on how the FMC investigators classify the penalty, it could be as high as $40,000.00 (and can change) per offense per day. You don't want to risk that type of expense. Keep your tariff reporting current.

FMC Regulations & Resources

The FMC came into the forefront of maritime regulations in 1961. The FMC is charged with the enforcing the regulatory provisions of shipping laws within the US. You can read the current shipping provisions here.

Additional resources for you to become familiar with FMC regulations and practices:

FMC web site

The FMC Reading Room (online)

Regular news releases from the FMC

Common questions and answers