If you’re an ocean freight forwarder, then you are likely familiar (and if you aren’t familiar, then you certainly should be) with the OTI Bond Program. As it’s always good to remind yourself of the details of the business, here are some facts from the Federal Maritime Commission (FMC) to refresh your knowledge:
- Ocean Transportation Intermediary (OTI) ocean freight forwarders are required to prove financial responsibility. This is usually accomplished through an OTI surety bond, the FMC states.
- The amount required to prove financial responsibility is $50,000. An additional $10,000 is required for each unincorporated U.S. branch office that provides ocean freight forwarder services.
- The U.S. Department of Treasury must approve the surety company who underwrites the bond and the company must appear on its listing of approved sureties.
- The bond must be signed by both the OTI and the surety, with a current power of attorney attached that permits the surety representative to sign the bond.
- In order for a bond to be cancelled by either the surety or the OTI, a notice of cancellation must be received by the FMC. The cancellation won’t be in effect until 30 days have passed since receipt of the notice.
- If a bond has been cancelled, then the OTI is removed from the commission’s list of active OTIs and it cannot perform OTI services within the United States trades. The FMC warns, inactive OTIs offering these services could face substantial penalties.
- It is sometimes permissible, if the surety issues a notice of cancellation, for the OTI to obtain replacement coverage. Provided there has been no lapse in coverage and a reasonably short period of time has passed, the commission will generally reissue the license.
For more information about the OTI Bond Program, contact GSIS today.