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The Role of The Federal Maritime Commission

Updated on 02 Jan 2024
3 min read
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What is the FMC?

First of all, what does FMC stand for? The FMC acronym refers to the Federal Maritime Commission which was established in 1961 to serve as a regulator 4 liner shipping groups and American importers and exporters.

Even though the FMC abbreviation did not come to pass until August 12, 1961, the reasons it was established trace back to World War I. The Kennedy administration worked alongside Congress to establish the Federal Maritime Commission so that they** could establish regulations over the activities of shipping companies.**

The goal was to separate the governing bodies that oversaw the U.S. Merchant Marines and the international shipping companies. The latter is now governed by the FMC and aims to regulate U.S. ocean Commerce.

Role of the FMC in Ocean Freight

As you can see, the FMC, meaning the Federal Maritime Commission, plays an important role in ocean freight. Their mission is to ensure a competitive and reliable international ocean transportation supply system that not only supports the U.S. economy but also protects the public from any deceptive or unfair practices.

Since its inception, the FMC has adapted to all of the changes they have occurred relating to international ocean transportation. They have continuously worked to foster a fair and efficient environment for exporters and importers while protecting the American public.

To accomplish this mission, they regulate the activities of Ocean Transport Intermediaries, or OTIs, which include ocean freight forwarders and non-vessel operating common carriers.

Ocean freight forwarders are those that dispatch shipments from the U.S. through a common carrier while an NVOCC is a common carrier that does not operate the ocean transportation vessels itself. Simply put, an NVOCC is a shipper that has a relationship with an ocean common carrier.

Licensing Requirements

The FMC imposes specific licensing requirements. All OTIs must be licensed before they perform any services in the United States. This licensing requirement means that if a company wants to buy or sell sea freight services - whether it be to or from The United States - they must be registered with the Federal Maritime Commission.

If an agent is not licensed or registered with the FMC, they cannot use their sea freight services in the U.S., or any NVOCC service for that matter. These unlicensed agents can only act as a booking agent or a freight forwarder.

Fees and Penalties

The Federal Maritime Commission reserves the right to assess fees and penalties as defined within its regulatory authority. These Penalties may be assessed if there are violations relating to the fees charged customers and the compensation that the ocean freight operators receive from carriers.

The FMC has completed compromise agreements that have led to the recovery of almost $1,000,000 in civil penalties. These agreements involved 8 non-vessel operating common carriers and unlicensed entities that conducted business.

Here are a few examples of the violations they cited:

  • companies in China in the U.S. obtained transportation at lower rates by improperly utilizing service contracts
  • operators in the USA in Hong Kong allowed other NVOCCs to access their service contracts in exchange for a fee
  • a non-vessel operating common carrier in the U.S. accepted cargo from other transportation intermediaries that did not have published tariffs, bonds, or other required surety.

The Federal Maritime Commission, or FMC, serves as the regulator for ocean freight and ensures that the system is fair and competitive while protecting the public from any unfair practices. They have licensing requirements and regulations that must be followed. Otherwise, they reserve the right to assess fees and penalties.

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