If you are an ocean Freight Forwarder or Non-Vessel Operating Common Carrier (NVOCC) handling cargo destined to or from the United States, being licensed and bonded as an Ocean Transportation Intermediary (OTI) is a mandate. OTI Bonds warrant completing all contracts with shippers and carriers. NVOCC and Forwarder compliance with Federal Maritime Commission regulations protect and ensure the shipping public.
Although bonds do provide a level of asset protection, it is important to keep in mind that a bond is not insurance. The main difference being that a bond or surety is a guarantee sponsored by a third-party regarding the arena of international trade.
Acceptable proof of the carrier’s financial responsibility is underwritten by a surety company approved by the U.S. Department of Treasury and on their List of Approved Sureties.
Both the Freight Forwarder and NVOCC have set bond amounts. Concerning the Federal Maritime Commission (FMC) and U.S. Customs there are two basic classes of bonds required.
Freight Forwarder – required to obtain and carry a bond in the amount of $50,000 in addition to $10,000 for each additional operating location
NVOCC – required to obtain and carry a bond in the amount of $75,000 in addition to $10, 000 for each additional operating location
Outside the U.S. the bond the minimum requirement is $150,000
U.S. Custom Bond
Importers are also required to post a cash equivalent or the bond itself with the U.S. Customs Service to ensure compliance of all laws and regulations pertaining to commercial goods brought into the country. Unlike OTI bonds which protect the shipper and carriers, this bond protects the interest of the U.S. Commerce.
There are three bonds most common in the freight industry.
- Activity Code 1 Importer also known as Broker Entry Bond
- Activity Code 2 – Custodian of Bonded Merchandise
- Activity Code 3 – International Carrier Bonds
If the (FMC) determines that you are operating without proper proof of financial responsibility you will face paying stiff fines.
Non-compliance with government laws and regulations will result in stiff fines and license revocation. Protect all contracts with shippers and carriers by promptly complying with OTI Bond guidelines.
If you have questions or would like more information about our services contact us today.