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Role
Of The Freight Forwarder
Since the Ocean
Shipping Reform Act (OSRA) of 1998, which amended the Shipping Act
of 1984, went into effect, we have been given some new terminology,
which can be confusing. Ocean
Freight Forwarder. Non-Vessel
Operating Common Carrier (NVOCC).
Ocean Transportation Intermediary (OTI).
With the exception of the terminology the role of the Ocean
Freight Forwarder has not changed.
While
the ocean freight forwarder is an OTI, an NVOCC is also an OTI. Even though both entities are called OTIs, there is a
substantial difference between the two.
Each must have a separate license and each must have a
separate bond. Both are
licensed by the Federal Maritime Commission (FMC), and the FMC
requires the bond so it can rectify any negligence or willful error,
which the OTI refuses to correct.
In 1946 the U.S.
Supreme Court ruled that the Ocean Freight Forwarder is an agent of
the exporter. Recently
the exporter is referred to as the principal party in interest (PPI)
on an export shipment. Prior
to 1946 some international trade participants considered the ocean
freight forwarder to be a private contractor rather than an agent of
the exporter/PPI. As an
agent of the PPI, the ocean freight forwarder must have a limited
power of attorney (POA) to legally act as the agent. Therefore it is most important to be sure the ocean freight
forwarder is licensed, bonded and insured and is fully familiar with
needs and requirements of the cargo and the principal.
In a recent article
in an international trade publication it was noted that a principal
sued an ocean freight forwarder for loss, when a refrigerated
container of wine arrived at the port of unloading frozen solid.
Although the freight forwarder made all the arrangements for
the temperature control of the wine in the reefer container, the
freight forwarder was not acting as an NVOCC or as a carrier of any
kind. The freight
forwarder made all the proper arrangements for the temperature
control in the reefer container, but the carrier either erred in
providing the wrong temperature setting, or the carrier’s
equipment malfunctioned. The
PPI did not insure the shipment, nor did the PPI instruct the
freight forwarder to insure the shipment.
Obviously there was not enough communication between the two
parties.
It is critical for
the owner of the international cargo and the ocean freight forwarder
to be in complete agreement as to how the freight will be handled
BEFORE the cargo moves. Waiting
until later will either lead to losses or lawsuits or both.
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Generalized System Of Preferences (GSP)
GSP
is a system whereby our U.S. Government provides for elimination of
import duties on cargo coming into the U.S. from GSP countries.
Our U.S. Government confers this GSP designation on certain
countries which are considered to be developing countries, and which
countries we want to help by letting their commodities into our
country without the detriment of a customs duty on those
commodities. This gives
the GSP developing countries an advantage over competing
industrialized nations whose identical commodities come into the
U.S. with the added cost of customs duties.
The idea is to help the developing countries bring their
populations into a better standard of living.
With elections in the U.S. coming up in November
politicians are scurrying around trying to decide whether some
countries should be eliminated from the GSP list.
Some politicians argue that countries like Brazil and India
are becoming very industrialized and that they should no longer have
the advantage of GSP. Others
argue that, while they are becoming more industrialized, they still
have a very huge portion of their populations in severe poverty.
Still others argue that it is not the level of
industrialization, or whether the U.S. continues its GSP policy with
them, because these countries do not use this GSP monetary advantage
to improve the lot of their populations in poverty.
There is a growing concern in this country that our
politicians will delay GSP decisions, especially if they are up
for reelection, until it is too late to get the legislation done
prior to the GSP expiration.
That has happened too frequently in recent years.
GSP expiration would put an immediate duty on all former
GSP qualified cargo. What
we don’t need is another disruption in our international trade.
Global Thoughts To Ponder
Many people are predicting that global warming will melt the
ice caps and increase the levels of the oceans. Will increased ocean levels eliminate the need for dredging
of harbors, because the ports will automatically have more draft?
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