What is an ccean freight forwarder?
What is a NVOCC?
Step 1: Choose your business type and register your business
Step 2: Appoint a qualifying individual to management of your company
Step 3: Obtain the BMC-84 surety bond
Step 4: Purchase the required insurance
Step 5: Complete and submit the initial OTI license application
Step 6: Submit bond and insurance information when notified
Ocean freight forwarders must register with the Federal Maritime Commission (FMC). The FMC is a federal agency that is responsible for regulating the US international ocean transportation system for US exporters, importers, and consumers. The FMC offers two different licenses: Ocean Freight Forwarders (OFF) and Non-Vessel Operating Common Carriers (NVOCC).
An ocean freight forwarder is a logistical intermediary that arranges and coordinates the transportation of goods via ocean vessels for importers and exporters. They handle documentation, booking cargo space, customs clearance, and tracking, ensuring smooth international shipping and optimizing supply chain efficiency.
The tasks of an ocean freight forwarder serves as a pivotal link in the global supply chain, orchestrating the seamless movement of goods via ocean vessels for importers and exporters. Their responsibilities encompass a spectrum of vital tasks, from negotiating cargo space with shipping lines and consolidating shipments for optimal efficiency to meticulously preparing and processing a multitude of essential shipping documents. Beyond these administrative functions, ocean freight forwarders diligently navigate the intricate landscape of customs regulations and facilitate smooth customs clearance, sparing their clients from the complexities and potential pitfalls of international trade compliance. They harness their expertise to track and monitor cargo throughout its journey, expertly managing risks and contingencies while providing real-time updates to clients. These forwarders also play a pivotal role in supply chain optimization, coordinating logistics, warehousing, and distribution to ensure timely and secure delivery of goods. Ultimately, an ocean freight forwarder's multifaceted role extends far beyond transportation, acting as a trusted partner that empowers businesses to navigate the intricate global trade network with efficiency and precision.
In sum, an ocean freight forwarder is a linchpin of international commerce, orchestrating a symphony of logistical intricacies to streamline the movement of goods across oceans. Their expertise ranges from meticulous documentation and customs expertise to risk management and supply chain coordination, all aimed at delivering a reliable and efficient shipping experience for businesses engaged in the global marketplace.
Non-Vessel Operating Common Carriers (NVOCCs) are integral players in the realm of international shipping, facilitating the movement of goods across oceans with a blend of expertise and logistical finesse. Operating without owning their own vessels, NVOCCs specialize in orchestrating the intricate dance of cargo consolidation and booking space on ocean vessels. They adeptly gather shipments from diverse shippers, consolidating them into more efficient loads that maximize container capacity and minimize costs. NVOCCs then negotiate contracts with ocean carriers to secure cargo space, enabling businesses of varying sizes to access the global marketplace without the overhead of vessel ownership.
At the core of the NVOCC's role is a mastery of documentation and coordination. They deftly navigate the sea of paperwork involved in international shipping, ensuring compliance with customs regulations, securing necessary permits, and preparing essential shipping documents. By providing their clients with bills of lading, NVOCCs offer a seamless link between shippers, carriers, and the intricate web of international trade regulations. Beyond documentation, NVOCCs play a vital role in risk management, tracking cargo throughout its journey, anticipating potential disruptions, and offering solutions that keep the supply chain flowing smoothly. In essence, NVOCCs act as the invisible architects of global trade, using their expertise to weave together a tapestry of services that enable businesses to reach markets around the world.
Below we provide step-by-step instructions for how to obtain these two licenses for US-based business.
The first step is to choose your business type. Most ocean freight forwarders are one of the following business structures: sole proprietorship, partnership, LLC, or corporation. Sole proprietorships offer simplified management and direct control, yet they may have limited access to resources and could expose owners to unrestricted personal liability. Partnerships provide shared decision-making and resource pooling, but disagreements and shared liabilities can emerge. Limited Liability Companies (LLCs) offer liability protection and tax versatility to members, though administrative demands and longevity may have constraints. Corporations provide limited liability protection for shareholders and access to capital markets, but they entail intricate regulations and the potential for double taxation.
To register your business, you must follow the instructions of the local or state government you operate in. if you are either a sole proprietorship or general partnership, you must file a fictitious name with your local government if you choose not to use your legal name as the business name. If you are a limited partnership, LLC, or corporation, you must file Articles of Incorporation/Organization to the Secretary of State of your state.
A qualifying individual is an individual with 3 years of Ocean Transportation Intermediary (OTI) experience. This means that they have work with or as either an ocean freight forwarder or non-vessel operating common carriers.
The second step is to make a qualifying individual as part of management of your business. Each business structure has a different requirement for the qualifying individual’s position:
The qualifying individual also must have gained experience in the United States.
The third step is for ocean freight forwarders to obtain a $75,000 BMC-84 surety bond and NVOCCs to obtain a $50,000 bond.
The BMC-84 bond serves as protection for carriers and shippers, safeguarding them against potential financial losses caused by the actions of a broker or forwarder. If the broker or forwarder fails to fulfill their contractual obligations, carriers and shippers have the option to file a claim against the bond to seek compensation.
Acquiring your BMC-84 freight broker bond is easy with SuretyNow. Just complete a brief 3-minute form, and you can expect a prompt response within the hour. Your bond will be swiftly delivered to you via email or traditional mail.
The next step is purchase the required insurance for your ocean freight forwardering business. The following insurance policies are needed to obtain the license:
There is no specific minimum amount of insurance coverage for each policy.
The next step is to complete and submit the initial license application. The application requires you the fill out the following information:
To submit the application, you must make an account on the Federal Maritime Commission official website. You must apply online, unless you make a waiver request in writing to Director, Bureau of Certification and Licensing, 800 North Capitol Street N.W., Washington, D.C. 20573-0001. You can also call the BCL, Office of Transportation Intermediaries, at (202) 523-5843 or email at oti@fmc.gov.
After the application has been review by the Federal Maritime Commission, you will be notified to send in your proof of financial responsibility. To submit your forms, you will visit the same FMC website. You will need to submit your surety bond form and an insurance form for each insurance policy.
