Federal Maritime Commission To Adjust Optional Bond for China Operations

The Federal Maritime Commission today issued a Notice of Proposed Rulemaking regarding the bond limits of a Non-Vessel-Operating Common Carrier who needs to do business in China. At present an NVOCC is required to carry a basic bond of $75,000, $10,000 for each unincorporated branch office, and an additional $21,000 to cover China operations (the optional China Bond Rider) in lieu an actual cash deposit in a China bank. The FMC proposes to amend its rules regarding the amount of bond coverage required in its optional China Bond Rider for an NVOCC. The proposed rule is intended to provide NVOCCs with the ability to post a bond with the Commission that satisfies the equivalent of 800,000 Chinese Renminbi, for which the equivalent dollar amount has fluctuated since the regulation was first adopted by the Commission in 2004. Under the proposal the minimum bond required of a U.S. NVOCC who does business in China will be $125,000. The FMC will take comments on its proposed rule. It is anticipated that there will be little or no opposition and the new bond requirement will be adopted. The cost of the bond is a small price to pay initially for being able to do business in China. There are possibly additional legal requirements for U.S companies arranging for freight movements in or out of China. Depending on how your business plan is set, a company may need to secure a license and post its tariffs.