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Sunday, August 18, 2019

Maritime Logistics Professional

Becoming an Ocean Transport Intermediary (OTI)

Posted to Mario Bruendel's Blog (by on October 22, 2018

Mario Bruendel, CEO of XportForwarding

The first barrier to entry for exporting goods on a global scale was to figure out how to be able to independently facilitate the transfer of cargo on the behalf of a shipper (someone who produces a product to be exported) via a vessel owning commercial carrier (VOCC). In other words, we had to learn how to become an Ocean Transport Intermediary (OTI) or a “Non-Vessel Owning Commercial Carrier” (NVOCC). To be clear, becoming a OIT or NVOCC is not a requirement for a shipper to export their goods internationally. In fact, any existing freight forwarder can provide this function as a primary service offering. That said, if becoming an OTI is something you want to pursue, the following will hopefully make that process as simple a possible! 

Step 1 – Getting a License: For U.S. based companies, there are two types of licenses that you should consider. The first is to get a NVOCC license. The second is to get an ocean freight forwarder license. If the company is not based in the U.S., then these licenses are still required to do business in the U.S., but you will either have to register with, or be licensed by, the Federal Maritime Commission.

The difference between the two is primarily the ability to issue a bill of lading for a customer or shipper. The NVOCC can issue a bill of lading where as an ocean freight forwarder cannot. In both cases, each license will allow you to book passage for cargo with a commercial carrier. One note is that the NVOCC can book passage for people too. Also, the NVOCC will require a larger surety or bond to become licensed (see below) and will have to go through more steps to get licensed.

To qualify for a license, the applicant has to have at least three years of experience working for another licensed NVOCC/freight forwarder. If you don’t have three years of experience, then one of the founders of your company who does have the needed experience can be appointed as a qualifying individual and can get a licensed. NOTE: a person may not hold more than one license at any given time.

Step 2 – Getting The License: There are four steps that you must accomplish to get a license. These steps are non-negotiable for anyone wanting to independently ship cargo internationally on their own behalf. These steps are…

1. Apply for a Federal Maritime Commission (FMC) account

2. Fill out and file, along with supporting documentation, the OTI application (Form FMC-18) with the FMC. There is a fee to file the application of $250. It usually takes to the FMC approximately two or three months to grant a license.

3. Obtain a bond after the application is approved. For a NVOCC, a $75,000 bond is required. For a freight forwarder, only a $50,000 bond is required.

4. (For NVOCC’s only) File a “Common Carrier Tariff and MTO Schedule Registration Form.” This is otherwise known as a Form FMC-1 and it is a public location where your public tariffs will be made accessible online.

5. (For NVOCC’s only) File you tariff with the FMC

In general, the steps outlined require a standard of excellence and proof to get a FMC license to ship cargo. This is done as much for safety as it is to regulate the industry to try and ensure fair and reasonable business practices. It is not reasonable for every shipper to get a license, nor is it needed. In most cases, it is much simpler and easier for a shipper to leverage an existing NVOCC or ocean freight forwarder.