Learn more about NVOCC bonds, and apply today. Absolute Surety offers surety bonds nationwide through a convenient online application system.
What Are NVOCC Bonds?
Don’t be confused by all of the acronyms associated with the NVOCC bonding process. NVOCC stands for Non-Vessel Operating Carrier, also known as an Ocean Freight Forwarders (OFF). An NVOCC or OFF takes legal possession of a shipper’s cargo and prepares it for ocean transit. This involves consolidating the shipment, making all of the arrangements to get it packed, transported, and loaded into shipping containers, issuing a bill of lading to the shipper, and shipping the containers with a common carrier.
An NVOCC bond (or OTI bond) ensures payment of damages incurred in the performance of these tasks. It also covers any fines levied by the Federal Maritime Commission (FMC) against a shipper or carrier for violations of the Ocean Shipping Reform Act.
Who Needs Them?
All NVOCCs and OFFs based in the United States must be licensed as Ocean Transportation Intermediaries, which requires them to obtain a $75,000 NVOCC bond. An extra $10,000 must be added to the bond for each additional domestic branch the NVOCC or OFF maintains. NVOCCs and OFFs based outside of the U.S. do not need to have an OTI license but must still post a bond in the amount of $150,000.
How Do They Work?
The FMC is the obligee requiring the bond as a guarantee that NVOCCs and OFFs comply with all applicable rules and regulations. An NVOCC or OFF required to purchase a bond is the principal, and the company that underwrites and issues the bond is the surety.
The bond protects the shippers and carriers that partner with the principal against financial loss due to the principal’s rule infractions or unethical activities. Any of these parties can file a claim against the principal’s bond. The surety will investigate each claim to ensure its validity before making payment up to the full bond amount. The principal is responsible for repaying the surety for all claims paid out.
What Do They Cost?
The required bond amount is $75,000 for the first U.S-based branch, plus $10,000 for each additional domestic branch—or $150,000 for a foreign-based NVOCC or OFF. The annual premium amount is a percentage of the bond amount—generally 1% to 7% depending on the applicant’s personal credit history and financial strength.
Use our convenient online system to apply for an NVOCC bond today.