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FMC Tariff Rules

What is an FMC Tariff Rule?

An FMC Tariff Rule is a rule that :

 - in any way changes, affects, or determines
 - any part or total of the freight rates or charges
 - for ocean freight transportation

that are charged by Vessel-Operating Common Carriers (VOCCs) or Non-Vessel-Operating Common Carriers (NVOCCs).

FMC Tariff Rules must be published in an FMC Tariff. Examples of common Tariff Rules are Bunker Adjustment Factor (BAF), Peak Season Surcharge (PSS), and General Rate Increase (GRI).
 
Non-Vessel-Operating Common Carriers (NVOCCs) and Vessel-Operating Common Carriers (VOCCs) must publish all rules that apply to their ocean freight services as Tariff Rules to comply with U.S. Federal Maritime Commission (FMC) regulations. 

Read on to learn more about Tariff Rule Key Points and Limitations. 
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 Quick Law Links
U.S. Shipping Act: 46 U.S.C. § 40501
FMC Regulations 46 C.F.R. §§ 520.3520.4(d)

  Tariff Rule
       Key Points

Vessel-Operating Common Carriers (VOCCs) and Non-Vessel-Operating Common Carriers (NVOCCs should be aware of the following Tariff Rule key points.: 

  ALL CHARGES & TERMS
NVOCCs and VOCCs must ensure all charges and terms that affect their ocean freight rate prices are reflected in their Tariff Rules and kept up to date.

  CLEAR & CONCISE
Tariff Rules should be clear and concise leaving no question as to which freight rates or cargoes the rules will apply to. 

   RULE OVERRIDE
Freight rates may be exempt from certain Tariff Rules by noting that the rate is not subject to the rule, e.g., "Not subject to Peak Season Surcharge (PSS)." 

  NO AGREEMENT REQUIRED
When Tariff Rules are used to apply charges to ocean freight rates, shipper agreement is not required. Tariff Rules may apply upon publication in an FMC Tariff in accordance with FMC regulations. 

  Tariff Rule
        Limitations

Tariff Rules do have some limitations to consider especially regardin timing and rate increases.:

    30 DAYS' NOTICE
Tariff Rules may be reduced at any time, but new Tariff Rules or amendments that increase cost to shippers generally require 30 days' notice.

 RULE CHARGES
Unless a freight rate is exempt from a Tariff Rule, any charges contained in the Tariff Rule must be applied.  

  RULE APPLICATION
Tariff Rules in effect on the date cargo is received at the origin listed on the applicable Bill of Lading are the rules that apply to the shipment. 

   NRAs & RULE APPLICATION
Tariff Rules in effect on the date cargo is received at the origin listed on the applicable Bill of Lading are the rules that apply to the first shipment and any additional shipments moved under an NRA.
 All surcharge or assessorial amounts applicable to an NRA are fixed once the first shipment is received by the NVOCC for transportation.


 An amendment and new shipper customer agreement to the amended NRA is required before applying updates to surcharges and assessorial.

  Why use Tariff Rules?  

Tariff Rules should be considered for: 

 - applying assessorials, additional charges, and surcharges to rates,
 - adjusting ocean freight rates to move with the market, and 
 - NVOCCs and VOCCs with centralized pricing strategies where standardized rates and surcharges are offered to most shippers.

   APPLYING UPDATE SURCHARGES TO RATES
Easily update all your offered freight rates to apply a surcharge by filing the surcharge in a Tariff Rule. Rather than updating each rate offered, by filing a single Tariff Rule, a surcharge may apply to all rates. See below for a simple Tariff Rule example. 

Documentation Charge: 
This charge applies to both FCL and LCL cargo. 
 US$ 100.00 per Bill of Lading

  RATES CAN MOVE WITH THE MARKET
Tariff Rules allow freight rates to move with the market. By filing surcharges that fluctuate in Tariff Rules, NVOCCs and VOCCs may offer freight rates that are dynamic. For example, if an NVOCC quotes a shipper an ocean freight rate subject to its Bunker Adjustment Factor (BAF) Tariff Rule, no matter when the shipper ships the current BAF will apply to the rate.

See below for an excerpt of a Bunker Adjustment Factor (BAF) Rule. To keep the BAF rate current, this rule would be updated every month, as needed. 

Bunker Surcharge - Full Container Load: US West Coast

Except as otherwise provided, the following shall be assessed on all cargo as follows:

Effective 01Dec2021 thru 31Dec2021 
 To: US West Coast Destinations
     US$ 156.00 per 20' container
     US$ 312.00 per 40' container
     US$ 312.00 per 40B (High Cube Container)

When using Tariff Rules keep the following considerations in mind.: 

  KEEP WATCH ON THE 30-DAY CLOCK
A disadvantage of Tariff Rules that NVOCCs and VOCCs should be aware of is the regulation against increases to costs on less than 30 days' notice. Whenever a Tarff Rule will result in an increase in ocean freight cost to shippers a 30-day notice is required. Due to this required notice period, many NVOCCs and VOCCs keep high charges filed in Tariff Rules to apply on a future date. By keeping a high rate on file in the Tariff Rule, NVOCCs and VOCCs can react to the market with the correct rate.

Using the same example as above, by adding high charges effective January 1st, any charge lower than the future high charge may be filed in the Tariff Rule and go into effect immediately on January 1st.  

Bunker Surcharge - Full Container Load: US West Coast
Except as otherwise provided, the following shall be assessed on all cargo as follows:

Effective 01Dec2021 thru 31Dec2021
 To: US West Coast Destinations
     US$ 156.00 per 20' container
     US$ 312.00 per 40' container
     US$ 312.00 per 40B (High Cube Container)

Effective 01Jan2022
 To: US West Coast Destinations
     US$ 5000.00 per 20' container
     US$ 5000.00 per 40' (8'6")container
     US$ 5000.00 per 40B (High Cube Container)

In the above example, a 30-day interval between updates to charges is anticipated. The interval for updates however can be tweaked to meet market needs. In the past, quarterly updates to many charges was the norm. Over the past few years however many NVOCCs and VOCCs began to update charges monthly. In volatile markets, a high charge may be on file for every single day and reduced daily, as needed. 
 
   EXCEPTION TO THE 30-DAY CLOCK
There is one exception to this 30-day notice period. The exception applies when a new charge is outside the control of the NVOCC or VOCC. Examples of such charges, are newly imposed terminal surcharges or updated canal tolls that are implemented on less than 30-days' notice.

A good example of this type of fee is the recently announced
Congestion Dwell Fee. These dwell fees which were to be applied to inbound containers at the Port of Los Angeles and Port of Long Beach were originally intended to be imposed by on less than 30-days' notice. 

  PUBLIC VIEWING 
Tariff Rules must be publicly published in an FMC Tariff which is accessible online in the form and manner required by FMC regulations. 
 
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   How can DPI help? 

Since 1975, DPI has helped organizations comply with U.S. Federal Maritime Commission (FMC) regulations.

Our expert staff is ready to assist NVOCCs and VOCCs with Tariff Rules. We offer members the following services:

- FMC Tariff Rule Filing and Compliance Review and
- FMC Regulation Consultation.  

Speak with your account representative or request a consultation by clicking on the button below. 
What we offer

   FMC Tariff Publication - Rules 

NVOCCs and VOCCs must publish and maintain a tariff listing all charges, classifications, rules, and practices applicable to their U.S. ocean freight services. U.S. Federal Maritime Commission (FMC) tariff regulations require that tariffs meet detailed formatting, record-keeping, and access requirements.  

DPI has published 
thousands of tariffs for clients all over the world. When you publish your tariff with DPI, we ensure more than just basic compliance with FMC tariff regulations. Our multilingual staff will recommend cost-effective tariff filing strategies and will be available to answer all your FMC-related questions.

Our secure online cloud database provides 24/7 access to your FMC tariff and makes requesting updates easy and efficient. 

For new NVOCCs and VOCCs, we will publish a tariff that provides all FMC required rules, the full text of your Bill of Lading, and commonly used commercial regulations. 

If you have an existing tariff and would like to switch to our services, we can also assist.  

Our fees for initial tariff rules publication and annual tariff data base maintenance fee are very reasonable. We charge nominal filing fees per new or revised filing. For our full price list, click here
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What we offer

   FMC Regulation Consulting 

DPI offers customized guidance to Members that require bespoke compliance assistance. DPI’s expert staff regularly work with organizations to draft customized Tariff Rules and give advice on FMC compliance.

No matter your question, feel free to reach out to our staff. While most Member questions are answered free of charge, should your question require in-depth consulting, we will quote you a consultation fee.

Our fees are $120/hour for FMC Practitioner consulting and $60/hour for non-Practitioner assistance. 
Request a consultation by clicking on the button below.
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