Whenever a carrier executes a contract for the transportation of goods for a shipper, a service contract must be filed with the Federal Maritime Commission. The following are the basics on service contracts and how to file them with SERVCON, the automated filing system.
The basics on service contracts
When a shipper and ocean common carrier make an agreement wherein the shipper will provide a specific amount of cargo over a specific time period and the ocean common carrier agrees to a specific rate and a defined level of service, this constitutes a service contract. A service contract is confidentially filed with the Commission. The Commission is tasked with overseeing service contracts to ensure they comply with the Shipping Act of 1984. The original service contract must be maintained for five years following the end of the contract. It is essential that these agreements are kept because the Commission has five years to audit the contract if necessary.
Filing service contracts
Service contracts are filed with SERVCON, which is the FMC’s online filing program. Vessel Operating Common Carriers are obligated to register for a SERVCON account. However, VOCCs can use the FMC’s Web Service to incorporate the filing of their service contracts into their own systems for managing contracts, thus eliminating the need for duplicate data entry. This also has the added benefit of reducing typographical mistakes.
The FMC oversees service contracts, and these agreements must be filed with the Commission. It is essential that carriers and shippers understand their legal obligations, so they can move forward in a way that meets their best interests.