OTI License Application
To qualify for any of the three types of OTI license (Large PDF) issued by the Federal Maritime Commission (FMC), your company must demonstrate to the FMC that at least one of your company officers has a minimum of three (3) years working experience for an FMC licensed NVOCC, ocean forwarder, or ocean carrier in the USA. This person is called the FMC Qualifying Individual or "QI".
Generally speaking, one person cannot serve as the QI for more than one licensed company. The QI does not need to be a company shareholder. Your QI must have three references to the FMC who will provide evidence of the applicant's experience in this area. These references will be contacted by the FMC license office, and must confirm the ocean experience of the proposed QI based on their first-experience. For example, the references must confirm they contacted the QI for ocean rate quotations, or to book ocean shipments.
Types of OTI Licenses
In May 1999 new licensing requirements for ocean freight forwarders and Non-Vessel Operating Common Carriers (NVOCCs) operating in the USA were established by the US Federal Maritime Commission (FMC). Due to these regulations, each ocean transportation service provider in the USA acting as ocean freight forwarder or NVOCC agent must obtain a license to operate as "Ocean Transportation Intermediary" (OTI) before it begins operations. This applies on both imports and exports. The FMC issues three (3) different OTI licenses:
- - OTI-NVOCC
- Holders of this license may issue bills of lading in their name "As Carrier" for shipments to/from the USA. All freight rates and charges applied on these b/ls (selling rates) for both US exports and imports must be filed in an FMC tariff. NVOCCs can also provide forwarding services as part of their services; and charges for these services must be filed in the tariff. NVOCCs may enter into service contracts with ocean carriers and/or co-loading agreements with other NVOCCs. One thing an NVOCC may NOT do is collect forwarding commissions (brokerage) from ocean carriers. This is the most popular license. It requires a bond of US$ 75,000.
- - OTI-Ocean Freight Forwarder
- Holders of this license may operate as ocean freight forwarders in the USA, or as agents of NVOCCs who have their own FMC bond & tariff. Ocean forwarders may NOT issue a bill of lading as a Carrier, and must invoice their customers the same exact ocean freight charged to you by the ocean carrier (no mark up!). Ocean forwarders may charge their customers’ additional fees for preparing documentation and other services as agreed; tariff filing is NOT required for these fees. Only licensed ocean forwarders may collect commissions from ocean carriers for shipments handled just as a forwarder. Ocean forwarders may NOT enter into service contracts with ocean carriers and/or co-loading agreements with other NVOCCs. A bond of US$ 50,000 is required.
- - OTI-NF
- Holders of this license may operate as NVOCC or as Ocean forwarders in the USA. Both bonds are required. Some companies hold this license because they handle full container load shipments as forwarder, but handle LCL shipments as an NVOCC. This license does not allow an NVOCC to issue its B/L and collect forwarder commissions on the same shipment.
Concerning NVOCCs outside the USA
The OTI license is not required for NVOCCs outside the USA. Only the FMC registration, tariff and bond are required for NVOCCs operating outside the USA, i.e., those who issue bills of lading for shipments to and from the USA. If you retain an agent for ocean transportation services in the USA, however, this agent must be licensed by the FMC as an OTI. With the NVOCC registration, bond and tariff, an NVOCC operating outside the USA may issue its bill of lading for shipment to and from the USA, and enter into service contracts with vessel operating common carriers serving US ports – more than 1,000 companies are registered with FMC as NVOCCs outside the USA.
What DPI Can Do
- OTI License Application Preparation
Some of our customers have filed their applications directly with the FMC, but most have relied on DPI to help prepare the application and all the attached documentation, file it with the FMC, pay the fees, and follow-up with the FMC. Most of the applications handled by DPI are approved by FMC within 60 days.
Your first step in the application process should be to review the regulations issued in 46 CFR Part 515. After review, prepare the application (Form FMC-18) in draft form and FAX or e-mail to us. This is just a rough first draft; handwritten answers are fine. We will review your application carefully, and advise corrections or additions necessary to meet FMC requirements. We will send you an updated draft, along with a letter explaining everything that will be required to put your application in good order and move forward. When you have any questions about the OTI license requirements, we will be pleased to answer these promptly. After reviewing your application we will forward our invoice for the FMC filing fee (USD 250) and our DPI handling fee (USD 60 per hour).Most applications are completed in about 10 hours of our time.
We submit the OTI Applications to the FMC on-line and also send a hard copy by courier under with cover letter and payment for the filing fee. We confirm receipt by the FMC, confirm this with you, and advise what you can expect during the FMC processing. We respond to all FMC questions or requests regarding your application, and keep you well advised of its progress. However, you must also expect the FMC also to contact your references directly. The FMC's review of your application will take about 60 days. We will notify you when your application is approved, and when you are required to finalize bonding.
The OTI license filing fee is non-refundable after it is submitted to the FMC, because processing of applications filed by DPI begins almost immediately. Your application can be "withdrawn" if you request this, but the filing fee is not refundable. Our handling fee is also non-refundable. Also note, these fees do not cover the NVOCC tariff publication.
If you prefer to file your application directly with the FMC, we will be happy to just handle your NVOCC tariff. We can also advise you on the FMC licensing regulations that apply on an on-going basis. For example, if your company officers or shareholders change this must be reported to the FMC. If your QI leaves your company, you must select a replacement QI and submit an application to the FMC. Many of our clients rely on us to assist with these reports and applications.
- NVOCC Tariffs
Once your company is approved and licensed as an OTI-NVOCC, your NVOCC services will be subject to the terms and conditions of your tariff, which must be published and maintained according to FMC's regulations. The tariff must be published immediately after your license certificate is issued by the FMC, even if you do not begin NVOCC operations right away. Every FMC tariff must contain complete and accurate details of all rates and charges applied on your house bill of lading (HB/L). Publishing tariffs for our customers is a big part of what we do here at DPI. We can also help with your HB/L. More information about tariffs is can be found under Tariffs / FMC.
Each OTI and each NVOCC based outside the USA must submit proof of financial responsibility to the FMC in form of an OTI Bond: (PDF) before its license is issued and first tariff is published. CFR-46, Part 515 provides full details of these requirements. Most OTIs and NVOCCs meet this requirement through the filing of a government surety bond by a qualified surety, or through participation in a group bond. If you are applying for the OTI license to operate as both an NVOCC and as an ocean freight forwarder two separate bonds are required. FMC bonding requirements as of December 9, 2015 are as follows.
- - OTI-Ocean Freight Forwarders: US $50,000
- - OTI-NVOCCs: US $75,000
- - NVOCCs outside the USA: US $150,000
In December 2016 the bond form, FMC-48, was updated to include additional wording and the requirement for U.S. branch office bonding was dropped by FMC.
- How Can DPI Assist
We are not insurance or bond agents. We provide the FMC's required document, Form FMC-48, as a convenience, but your insurer must complete it. Each bond must be signed by qualified insurer and by an officer of your company. Here at DPI we need a copy of your bond for our record keeping, and to attach it to your OTI license application, or registration for an FMC organization number. Also, complete bond information must be referenced in rule no. 24 of your FMC tariff. Any change to an NVOCC bond must be reflected in your tariff.
- Bonding Resources
We are often asked to recommend an insurance agent or surety who is qualified to handle the FMC bonding requirements. We recommend you contact Avalon Risk Management, Inc. or Roanoke Trade Services, Inc. or Integro Insurance Brokers – these fine companies maintain offices in key US cities, and have worldwide agency networks. Another recommendation is Anova Marine - their unique “BondASSIST” program does not require financials or collateral. If your organization is based in Asia, we recommend you contact Mr. Caesar Tsui, of Risk Management Insurance Brokerage (RMIB), in Hong Kong. One of the best values for bonding is Avalon's "FIATA Group Bond." This unique programme enables FIATA members and affiliate members to obtain FMC bonding at the lowest possible cost. For more information on FIATA visit its web site. In the USA, affiliate membership is extended to members of the Transport Intermediaries Association (TIA). A complete list of national associations affiliated with FIATA including complete contact information is available at the FIATA web site.