FMC Approves Rewrite of OTI (Ocean Transportation Intermediary) Regulations

Recently, the U.S. Federal Maritime Commission (FMC) voted 3-2 to move forward on a proposed rewrite of OTI (Ocean Transportation Intermediary) regulations. The new regulations would require:

1. OTI's to renew their licenses every two years;
2. foreign-based non-vessel ocean common carriers (NVOCC) to keep a full-time staffed U.S. presence; 
3. more stringent qualification requirements for new OTI entrants, regarding age, experience, and character; and
4. increase in OTI bonding levels.

To some, this decision suggests a general assumption among advocates that costs will only rise marginally and that regulatory burdens will see a minor and harmless increase. However, FMC Commissioner Rebecca Dye disagrees and issued a dissenting statement.

 

Commissioner Dye's statement hinges on the belief that any regulatory changes should work to limit government compliance costs, increase the efficiency of the supply chain, and "allow American businesses to be more competitive in the global marketplace." The proposed regulation changes, as Dye describes, negate more appropriate advances.

 

Firstly, Dye asserts that the new proposal does not address the potential harm of the change in regulations. Such changes should come with a clear analysis of harm with the weigh-in of all stakeholders, including the shipping public. Dye cites Executive Order 13563's call for a Retrospective Review of Existing Rules as grounds for a thorough harm analysis.

 

Next, Dye points out worrisome blanks where the user costs should be. Dye suggests advocates for changes have not adequately forecasted what the costs of such changes will be. Without detailed forecasting, the shipping public cannot respond knowledgeably.

 

Thirdly, Dye does not believe the harm to the public of raising OTI bonding has been quantified. Specifically, Dye points to the possibility of deterring new OTI entrants with raised bonds, thereby diminishing the U.S. capacity to be competitive in the global marketplace.

 

Finally, in her dissenting statement, Dye asserts that the proposed changes initiate a higher bonding level with a shorter renewal time period than those "recently enacted by Congress in MAP-21, Public Law 112-141." This creates a disharmony between MAP-21 and proposed OTI regulations. Dye believes OTI regulations should be made synchronous to MAP-21.

 

The advanced notice of the FMC's proposal will be published in the Federal Register. Upon publication, a 60-day notice and comment period will precede the final rule publication.

Freight Broker Insurance, do you need it?

There comes a time when a business owner can avoid  finger-pointing and a "who is ultimately responsible" type of situation if they are familiar with motor carrier safety rules, laws and even guidelines that can all be addressed with Freight Broker Insurance.  Business owners in this industry have a lot on their plates as they focus on operating their business.  Often they may not be fully aware of everything that can help protect them and the best interests of their operation.

 

Let's check out the "for instance" situation that was recently cited in the Transport Topics Issue of Trucking and Freight Transportation News - "Carriers that re-broker freight — again without separate broker authority and bond — usually are held to retain full liability as the carrier for the cargo (even though they did not transport it), but they will likely have no insurance protection for the actions of the brokered truck."  In cases like this often the business owners are not aware of what is necessary to protect them and their business in complicated and even ordinary situations.

 

This is why it is important to work with knowledgeable people who specialize in this type of industry.  First, you should consult with your insurance agent and possibly even check with your attorney. Together with your property and general liability package there are some other coverage options that you should consider.

 

It is recommended that brokers obtain vicarious auto liability insurance. That will enable your insurer to defend you if you are named in a lawsuit. Be aware that this type of coverage widely varies, so get an expert to help you review the terms and conditions to make sure it is right for you. Another option is contingent cargo coverage. This will help cover some of the gaps that might be contained in the policy that the carrier has in place. You can't be sure what exactly their policy covers, so it is a good idea to play it safe. This is also another type of insurance coverage that is not always the same in policies. You can easily find out more details if you simply contact us to learn more and get answer to your questions.

TIA Releases New Fair Labor Standards Act Framework at 35th Annual Conference

The Transportation Intermediaries Association (TIA) saw a record attendance at the 35th Annual conference held in April. Over 900 3PLs, brokers, forwarders, and suppliers attended the event, the most ever at a TIA convention, according to PerishableNews.com.

Participants received updates to the Carrier Safety Administration and MAP-21. In addition, a new Carrier Selection Framework was released. TIA members can access this new framework at the TIA website.

Conference participants also received the new Fair Labor Standards Act Framework. The working draft is accessible via the TIA website, as well. A brief discussion of this framework appears below.

The document sites two frequently occurring personnel-related issues as the foundation of the new Fair Labor Standards Act Framework:

1. the designation of workers as independent contractors versus employees; and
2. the classification of employees as exempt versus non-exempt.

Designation of workers as independent contractors versus employees is particularly common as it pertains to sales agents, transportation brokers, and similar positions. Businesses who are found to have improperly designated a worker as an independent contractor may be liable for large amounts of back pay, unpaid employment taxes, and penalties.

The issue of employee classification as exempt or non-exempt has occurred most commonly in relation to account managers or similar sales or support positions. Specifically, an employee must be properly classified as exempt from overtime and minimum wage requirements or "non-exempt" (requiring payment for hours worked over 40 per week, or over 8 hours per day in some states). Regulators assume most employees are non-exempt and should be paid overtime. Businesses found to have improperly classified an employee's exemption status face significant liability for back pay (unpaid overtime) and attorney fees.

The framework guides TIA members with greater detail through these commonly occurring personnel challenges. It serves as a resource in identifying potential challenges and making adjustments as necessary. However, members are urged to seek legal advice based on their specific situations and with adherence to any and all applicable laws. Requirements may differ by location of business, location of operations, and finer details of their business models.

The FMCSA (Federal Motor Carrier Safety Administration) TACT (Ticketing Agressive Cars and Trucks) Program

The FMCSA (Federal Motor Carrier Safety Administration) has a major impact on safety standards for all commercial vehicles that travel the highways of the United States.  A goal of the FMCSA is to remove high risk carriers and drivers both at entry level and through education and maintenance programs. 

Key FMCSA programs include:

·         Border and International safety

·         The Commercial Driver's License program

·         Federal Motor Carrier Safety Regulations (FMCSR)

·         Hazardous Material Regulations (HMR)

·         Motor Carrier Safety Assistance Program (MCSAP)

·         Ticketing Aggressive Cars and Trucks (TACT)

 

The TACT program began in 2004 with the key state of Washington for the pilot program.  Its mission was to promote safe driving behaviors by educating car, bus and truck drivers on how to share the road safely.  Also to reduce CMV related accidents and crashes involving injuries and fatalities.

The hierarchy of the TACT program begins at the top with the FMCSA headquarters' outreach programs to divisional and regional areas.  From there it filters down to lead state coordinators and steering committees who communicate, enforce and evaluate programs like TACT to various state agencies such as:

·        Department of Transportation

·         Sheriff and Police Departments

·         Federal Highway Administration

·         State Trucking Associations

·         Government Highway Safety Representatives

 

The State Peer Exchange Network (T-Spen) helps to support and share the results and lessons of TACT and bring federal state and local resources together on the same page to educate the public. In 2004, there were five states participating; in 2009 13 states; and by 2011, 19 states and 3 individual US cities and counties were on board.  Improvements to the administration of TACT have included streamlining evaluations, grant funding and more outreach communication programs. 

In 2013 so far, the FMCSA has shut down 15 passenger carriers and carried out 13,500 roadside inspections and ticketed 1,500 drivers and vehicles for violations. The violations include unsafe lane changes, tailgating, failing to signal or yield right of way, speeding and any combinations of violations of 2 or more that is considered "aggressive behavior."

35th Annual TIA Convention And MAP 21  

For the 8th Consecutive year GSIS was in attendance for the TIA Convention. We made many new friends and thank all those in attendance for an educational and entertaining week.

 

The past 12 months in the 3PL industry have, like the economy, had its ups and downs. Most notably the introduction of MAP 21 of the Highway Authorization Bill. Last July President Obama forever changed the logistics field with the introduction of Map 21 (moving ahead for progress in the 21st century act). Since its introduction, MAP 21 has been implemented by DOT, FTA, FMCSA and FHWA with one goal in mind: to develop a national strategic freight plan. Just renewed by congress in April, MAP 21 is running full steam ahead. we can revisit some key points pertinent to our field:

 

1. Electronic Logging Devices- the law requires DOT to establish regulations mandating electronic logging devices (EOBR’s) for motor carriers currently required to complete paper logs. The regulations must be in place within 1 year and carriers will have two years thereafter to adopt/install the devices.

2. Freight Policy- DOT is creating a national freight plan that includes an assessment of the condition and performance of the national freight network and identification of highway freight bottlenecks. This is intended to improve freight efficiency from 80% to 90% off of interstate systems and 95% for interstate systems.

3. Truck Size and Weight- the act does not include an increase in size and weight limits except for an increase in allowable weight for idling reduction devices from 400 pounds to 550 pounds. States are also allowed to issue 120 day oversize-overweight permits to trucks responding to disasters if a national emergency is declared.

4. Performance Standards- each state and urban area is required to establish minimum performance standards related to highway and bridge maintenance, congestion, system reliability, safety, freight efficiency, air quality and project delivery. Failure to do so will result in the transfer of federal funds from non logistic areas in order to compensate.

5. Broker Bond- MAP-21 increases the broker bond to $75,000 and applies it to freight forwarders. It also tightens requirements on bonding companies to respond to carrier claims.

6. Proficiency Testing- all new employees entering the motor carrier field now must complete the DOT safety testing within 12 months rather than the previous standard of 18 months.

7. Transport of Agricultural Commodities & Supplies-increases air mileage from 100 to 150 and eliminates “in the state” from regulation; making it an "interstate" issue.

8. HAZMAT- Hazardous Materials Safety Administration (PHMSA) is to update its accident and release recordkeeping and reporting requirements. PHMSA is also to assist DOT in creating mandatory standardized training for HAZ enforcement officials.