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10-18-2019

How to Apply for NVOCC License?

The United States of America has always been one of the largest importers in the world. Very often, exporters hire freight forwarders to facilitate the export process. However, US-based companies or sole proprietor acting as freight forwarders or NVOCCs must apply and obtain an Ocean Transportation Intermediary (OTI) license from the Federal Maritime Commission (FMC). Non-US-based NVOCCs are not required to obtain a license but can either apply for a license or simply register with the FMC.

Applying for an NVOCC license can be confusing and troublesome. In this post, we will clear things up and summarize the process for your ease of reference. Before we proceed to the steps, let’s answer some common questions first.

What are the types of licenses?

Depending on your role, you may apply for one of the three OTI licenses listed below.

1. OTI - NVOCC license
Operators who obtain this type of license are authorized to perform the following activities:
  1. Issue their own bills of lading
  2. Set their own selling rates for shipments
  3. Purchase transportation services from carriers
2. OTI - Ocean Freight Forwarder (OFF) license

Even though operators with this kind of license cannot perform the aforementioned three activities, they can collect commissions from carriers after they facilitate the shipping process and documentation.

3. OTI - NVOCC and Forwarder license

Holder of this type of license can act as both NVOCC and freight forwarder; however, it is important to note that FMC does not allow any party to act as both freight forwarder and NVOCC in one shipment.

What are the fees required to apply for an OTI license?

According to the official website of FMC, there are two types of application fees, namely electronic and paper. Electronic application fee is $250 while the paper one is $1962.

Aside from the application fee, NVOCCs and freight forwarders must submit acceptable proof of financial responsibility in the form of surety bonds, which will be discussed below.

How often should I renew my license?

The FMC requires the licensees to renew their licenses every three years. Licensees will receive an email with a username, password, and a link to the renewal website three months before the deadline.

Now let’s move on to the steps to get your license for either US-based or non-US-based OTIs.

Steps to apply for OTI license

Step 1. Appoint a qualifying individual (QI)

Whether you are applying the license as a sole proprietor, partner, or corporation, you must appoint a qualifying individual (QI). This QI must have three years of verifiable OTI experience. In addition, three references for that QI must be provided. The FMC will contact these three people and confirm that they have firsthand experience with this QI to verify his or her experience and character. Note that the experience of US-based NVOCC must be gained in the United States.

In short, you need Step 2. Fill out Form FMC-18

After preparing all the information, you need to fill out Form FMC-18 in electronic format or in paper.

Step 3. Submit the form and pay for the application fee

After filling in all the required information, you can then submit the form and pay for the application fee. Application fee for electronic format is $250 while for paper application is $1962.

Step 4. Establish a presence in the U.S (for non-US-based applicants only)

If you are a non-US-based NVOCC, you must establish a presence in the U.S. The presence could be in the form of an unincorporated branch office.

Step 5. Submit proof of financial responsibility
Each of the four different types of OTIs requires proof of financial responsibility with different minimum amount:
  1. License, US-based NVOCCs: $75,000
  2. Licensed, US-based OFFs: $50,000
  3. Licensed, Non-US-based NVOCCs: $75,000
  4. Non-US-based NVOCCs without an OTI license: $150,000

For each unincorporated branch office of licensed US-based NVOCCs and OFFs, applicants must provide the addresses to the FMC. In addition, the agent of a non-US-based NVOCC must be licensed by FMC.

After you obtain your license, you may consider using GoFreight as your freight forwarding or NVOCC software to gain an edge over your competition. Check out why freight forwarders and NVOCCs chose GoFreight as their NVOCC software.

References
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