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The Federal Maritime Commission (FMC), the agency regulating international ocean transportation, requires Ocean Transportation Intermediaries (OTIs) to provide proof of financial security in the form of an FMC-48 surety bond.
Federal Maritime Commission Bond: Terminology Guide
FMC: Federal Maritime Commission
- The FMC is a federal agency in the United States that regulates marine transportation and commerce between US organizations and foreign countries. They are responsible for monitoring and licensing all ocean-based shipping.
OTI: Ocean Transportation Intermediary
- Broad term for NVOCCs or OFFs. Must obtain license by the FMC.
→ NVOCC: Non vessel operating common carriers
→ OFF: Ocean Freight Forwarder
Because business expansion has caused many companies to act as both, OFFs and NVOCCs have become virtually synonymous terms over the years.
Why do I need an FMC bond?
Because OTIs provide various international ocean transportation services, the Federal Maritime Commission require OTIs to purchase a surety bond as proof of financial security. If you provide any of the services listed below, you’ll need to purchase an OTI bond.
How much does a federal maritime commission bond cost?
The premium you’ll pay for your OTI bond will vary because these bonds require underwriting. FMC bond cost also depends on the amount of bond coverage required for your particular occupation. SuretyBonds.com makes sure our customers do not overpay for their bonds.
Ocean Freight Forwarders
OFFs are U.S.-based companies or individuals who provide these services:
- Organize international cargo movement
- Arrange shipments from the U.S. via common carriers for shippers
- Handles all documentation and related duties for the shipments
OFFs must become licensed and submit proof of financial security via a surety bond. The bond must provide $50,000 of coverage, with an additional $10,000 of coverage for each U.S. unincorporated branch office.
Non-Vessel-Operating Common Carriers
NVOCCs fulfill these roles:
- Common carriers that provide ocean transportation but do not own or operate the vessel
- Issues their own house bills of lading or comparable document
- Work with vessel-operating common carriers as shippers
U.S. based NVOCCs need to obtain a license, a surety bond and publish a tariff. A published tariff details the actual rates, charges, classifications, rules, regulations and practices of a common carrier(s). Licensed NVOCCs, whether they are in the U.S. or internationally, must carry a $75,000 bond plus $10,000 per each U.S. unincorporated branch office. Unlicensed, non-U.S.-based NVOCCs must carry a $150,000 bond.
OTI License Qualifications
Applicants for an OTI license must meet these qualifications:
- Have at least three years of demonstrable OTI experience. If applying for a U.S.-based license, OTI experience must have been earned in the U.S. For non U.S.-based license, OTI experience can be earned outside of the U.S.
- Must be a partner, officer, or sole proprietor of the applying business
What’s the fine print?
There are a few details you should be aware of before applying for an FMC bond:
- Your OTI bond can be cancelled with 30 days written notice to the FMC. If the bond is canceled, the OTI’s license will be revoked – OTIs cannot operate without active acceptable proof of financial responsibility.
- Both OFFs and NVOCCs can submit their bond in a group using Form FMC-69, or individually using Form FMC-48. This bond ensures that OTIs comply with the Shipping Act of 1984 and FMC regulations. If the OTI violates provisions, the bond can be used to pay fines, proven claims and judgments against the OTI.