The U.S. Federal Maritime Commission (FMC) has implemented changes to its service contract regulations. Effective 25Jun2020 the FMC service contract regulations in the U.S. Code of Federal Regulations, Title 46, Part 530 were amended as per FMC Docket 20-02 to remove the requirements for the publication of essential terms (ET) of service contracts. This simplifies the service contracting process for ocean carriers.
In Docket 20-02 FMC has made no changes to its requirements for service contract filing. Every new service contract and every service contract amendment must be filed with FMC’s SERVCON database and must include all provisions of the contract and accurate freight rates and charges. Service contracts must not be uncertain, vague or ambiguous and must not make reference to terms not explicitly contained in the service contract itself unless those terms are readily available to the parties and the Commission. The regulations continue to require each service contract to include a “certification of shipper status” wherein the contract shipper confirms its status as cargo owner, NVOCC, otherwise. When the certification identifies the contract shipper as an NVOCC the ocean carrier is required to obtain proof that such NVOCC has a published tariff and proof of financial responsibility (surety bond) as required by the Shipping Act and FMC regulations before signing the service contract.
The publication of this final rule culminates a process initiated by petition filed by the World Shipping Council at the Commission in 2018. After due consideration, the Commission declined this Petition’s request to exempt ocean carriers from the service contract filing requirements. However, the Commission approved the Petition’s request to remove the essential terms publication requirement. Docket 20-02 removes the requirement for the publication of five essential terms (ET) of each service contract, viz: origin; destination; commodity; minimum volume or portion; and duration (dates). Since May 1, 1999 ocean carriers have been required to publish these essential terms (ETs) for each service contract and provide online access to these ETs to the shipping public in the manner that was required by FMC. As of Jun 25, 2020, this is no longer required.
Earlier this year, in an effort to provide regulatory relief in light of the COVID-19 pandemic, FMC issued a temporary order to allow ocean carriers to file their service contracts with the Commission up to thirty (30) days after they are signed by the contract parties and effective. This temporary order was issued April 27, 2020 under FMC Docket No. 20-06 and is valid through December 31, 2020, but could be extended or made permanent. FMC’s decision to grant an extra 30 days to file new service contracts into FMC’s SERVCON database was similar to a decision it issued in 2017 that allows service contract amendments to be filed in SERVCON within thirty (30) calendar days after the effective date.