[Advantage Logistics] The United States is a strict market not only on goods quality standards, but also tightens many regulations on goods declaration for the authorities. In it, there is an agency that plays a very important role – it is the US Federal Maritime Commission (FMC). The FMC license issued by this Commission is the passport that brings Vietnamese logistics enterprises deep into the US market – the largest export market in Vietnam today.
A passport ticket into US market
In recent years, the United States has always been Vietnam’s largest export market. According to statistics, two-way trade turnover between Vietnam and the United States has increased from 450 million USD in 1995 to 90.8 billion USD in 2020. In 2021, despite the negative impacts of the pandemic During the Covid-19 pandemic, Vietnam-US trade continues to grow, and is expected to hit the $100 billion mark. Vietnam has also become the 10th largest trading partner of the United States, becoming an important link in the supply chain of many types of goods for this market.
Out of more than 30,000 businesses registered to provide logistics-related services, only about 4,000 are capable of providing international connection services, especially sea freight services. The FMC license issued by the US Federal Maritime Commission is an important key, the ticket to bring Vietnamese logistics businesses deep into the US market.
Most logistics enterprises, freight forwarders providing international shipping services on the US route are joint ventures and foreign enterprises with a global office system, so they have many advantages in signing contracts with customers. shipping lines due to having the US Federal Maritime Commission (FMC) operating license for shipping intermediaries – OTI of parent companies (FMC license).
FMC’s regulations related to container shipping to the United States are very strict, requiring a thorough understanding of local regulations and professionalism to avoid the risk of taxes, fees, and fines at the place of delivery. cargo as well as transshipment points.
According to Ms. Vo Thi Phuong Lan, Head of Transportation and Forwarding Department of VLA Executive Board, FMC’s function is to ensure that the international shipping supply system is competitive and reliable to support the economy. economy and protect customers during transportation, delivery and receipt of goods into the US territory.
Every year, FMC will review and monitor all agreements between shipping lines and port operators and contracts of carriage between shipping lines and NVOCC. FMC also maintains and reviews service contracts that are kept confidential and prevent adverse effects on the carriage of goods to and from the United States. Normally, FMC also provides forums for importers and exporters and members of shipping companies to support seaport operations and limit risks and disputes. At the same time, ensure the normal tariff and fee schedule announced by shipping lines in the automatic tariff system on FMC’s website.
How to apply for a FMC license?
With the goal of performing the task of improving competitiveness and developing logistics services in Vietnam according to Decision 221/QD-TTg amending and supplementing Decision 200/QD-TTg dated 14/02/2017 on approving Action plan to improve competitiveness and develop logistics services in Vietnam by 2025, as well as towards the goal of improving the capacity of sea freight transport to the US for businesses of Association members. VLA in particular and enterprises operating in the field of logistics in general. VLA Association held a seminar “General provisions on registration of FMC license for Vietnamese logistics enterprises”.
At the seminar, Ms. Lam Hoang Bao Phuong shared useful knowledge and experiences for Vietnamese businesses to prepare for the registration of FMC licenses.
5 steps for Vietnam logistics enterprises to register the FMC license
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- Register and maintain regularly the Standard Carrier Alpha Code (SCAC) at Nation Motor Freight Transportation Association. This code must be obtained prior to registration of an FMC license.
- Register and maintain an account at one of the tariff listing pages, which have been approved by FMC, to publish the sale prices. This account must be filled-in in the print license form.
- Fill out and submit form FMC-65 along with other documents upon request of FMC (financial report, liability insurance, certificate of VLA/VIFFAS membership, business registration certificate, list of shareholders and management board, FBL form, etc.)
- Arrange a surety bond worth $150,000 USD with one of the surety bond companies approved by FMC. After completing the surety bond arrangement, the surety bond company will send a direct confirmation to FMC that the bond has been arranged.
- FMC considers the noticed surety bond. After approving the surety bond, FMC officially issues a license and publishes the licensed company’s names onto the list of NVOCCs on their website.
4 conditions for eligible enterprises prior to registration of FMC license
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- Stable operation for at least 3 years.
- Be a member of a national forwarding association (like VLA) or directly a member of FIATA.
- Have logistics liability insurance at least 100,000 USD/case and at least 1,000,000 USD/year.
- Having a sound financial statement, proving the capacity to be responsible for logistics activities to the US in the last 3 years.
2 noticed points after approved an FMC license
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- Licensed NVOCCs must include the license number on the bill of lading issued for shipments to the United States.
- Licensed NVOCCs may only work with or deal with licensed NVOCCs in the United States.
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