The Federal Maritime Commission (FMC) is the agency responsible for licensing and monitoring of all ocean-based shipping, and regulates maritime shipping and commerce between U.S. organizations and foreign countries. Ocean Transportation Intermediaries (OTIs) are required to provide proof of financial security in the form of a FMC-48 surety bond to the FMC. This guarantees compliance with Section 19 of the Shipping Act (46 U.S.C. 40901-40904) and the rules and regulations of the FMC. If the principal (OTI) violates any of the rules or regulations, a claim can be filed to pay for fines or judgments against the principal. Any monies paid out by the surety must be reimbursed by the principal.
OTI Surety Bonds have a continuous term and will remain in effect until canceled. The surety can cancel the bond by submitting a written 30-day notice to the FMC. If the bond is canceled, the OTI’s license will be revoked. OTI’s cannot operate without active acceptable proof of financial responsibility.
Below are the two classifications of OTI licenses and the bond amounts required for each:
NVOCC – Non-Vessel Operating Common Carries
- S. based and non-U.S. based companies
- Common carries that provide ocean transportation but does not operate the vessels by which ocean transportation is provided.
- Issues own house bill of lading
- S. based NVOCCs must publish a tariff. A published tariff details the actual rates, charges, classifications, rules, regulations and practices of a common carrier.
- Must carry a $75,000 bond (21 Financial Responsibility Requirements)
- Additional $10,000 for each unincorporated branch office in the United States performing NVOCC services.
- Additional $21,000 optional rider is needed for NVOCC’s serving in the US – China Trade to cover Chinese government financial responsibility requirements.
- Non-U.S. based NVOCCs must carry a $150,000 bond.
OFF – Ocean Freight Forwarders
- S. based companies or individuals
- Arranges cargo movement to an international destination
- Dispatches shipments from the United States via common carries and books or otherwise arranges space for those shipments on behalf of shippers
- Prepares and processes the documentation and preforms related activities pertaining to those shipments
- Must carry a $50,000 bond (21 Financial Responsibility Requirements)
- Additional $10,000 for each unincorporated branch office in the United States performing ocean freight forwarder services.
Applicants for OTI licenses must meet these qualifications to be eligible:
- 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.
- If applying for a non-U.S. based license, the OTI experience can be earned outside of the U.S.
- Must be a partner, officer or sole proprietor of the applying business
Pacific Surety is proud to offer a variety of approvals regardless of credit. Rates as low as .60% are available, subject to underwriting. The process typically takes just a few hours for a quote, and we have the ability to beat any competitors pricing. If you have any specific questions feel free to contact our knowledgeable underwriting staff.