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Ocean Transportation Intermediary Surety Bond / OTI Bond
What is an OTI Bond?
An Ocean Transportation Intermediary Bond is a surety bond that is required for licensure to operate as an Ocean Freight Forwarder (OFF) or as a Non-Vessel-Operating Common Carrier (NVOCC). This surety bond is also referred to as an FMC-48 Surety Bond and an FMC-69 Surety Bond. FMC-48 and FMC-69 refer to the required bond forms that must be filed with the Federal Maritime Commission (FMC). The FMC-48 bondform is required for individual OTIs and the FMC-69 bondform is required for a group or association of OTIs. Ocean Transportation Intermediary is often abbreviated to OTI.
Ocean Freight Forwarders are required to submit a surety bond in the amount of $50,000. Non-Vessel-Operating Common Carriers based in the U.S. and licensed non-U.S.-based Non-Vessel-Operating Common Carriers are required to submit a surety bond in the amount of $75,000. NVOCCs that are not licensed and not based in the U.S. must post a surety bond in the amount of $150,000.
An Ocean Freight Forwarder (OFF) is defined as a company or an individual that is located in the United States which arranges cargo movement to an international destination, and/or dispatches shipments from the U.S. via common carriers and books or otherwise arranges space for those shipments on behalf of shippers, and/or prepares and processes the documentation and performs related activities pertaining to those shipments.
A Non-Vessel-Operating Common Carrier (NVOCC) is defined as a common carrier that holds itself out to the public to provide ocean transportation, issues its own house bill of lading or equivalent document, and does not operate the vessels by which ocean transportation is provided and/or a shipper in its relationship with the vessel-operating common carrier involved in the movement of cargo.
Ocean Transportation Intermediary Bonds are individually underwritten so the cost can vary and is dependent upon the personal credit report of the applicant as well as personal financials, business financials and experience. Customers with good credit scores (generally 680 or higher), overall good financials and good industry experience could qualify for a rate as low as 1% of the bond amount. Of course, we will always provide you with the lowest rates available on the market. And can typically handle all credit types — from excellent to poor — as such those terms vary.
For example, a $50,000 bond for an OFF could cost as low as $500 per year. And a $75,000 bond for an NVOCC could cost as low as $750 per year.
The purpose of Ocean Transportation Intermediary surety bonds or OTI surety bonds is to ensure compliance by the Principal (the OTI) with Section 19 of the Shipping Act (Title 46, U.S. Code 40901-40904). By posting the bond the Principal is also guaranteeing they will follow all the rules and regulations of the Federal Maritime Commission. Additionally, the bond also holds the Principal liable to Section 11 and Section 13 of the Shipping Act. This means the Principal is agreeing to conduct business in an ethical manner without committing fraud and will make all necessary payments collected from the shipper to the carrier.
The Federal Maritime Commission is charged with licensing OTIs and requires proof of financial responsibility as part of the licensing process in pursuant to Title 46, Code of Federal Regulations, Part 515, Subpart C. To date all such proof has been in the form of surety bonds. The Obligee on the bond is the United States of America.
OTI surety bonds begin on the effective date and remain in effect until canceled. The bond may be canceled by the Principal (the OTI) or the Surety with 30 days written notice to the Obligee (Federal Maritime Commission). The bonding company will renew and bill for the bond on an annual basis. As of December 2016, OTIs are required to renew their license every three years.
Contact The ProSure Group. As surety bond experts in business for over 23 years, The ProSure Group has experience handling bonds of this type and has partnerships with more than 30 different surety companies. This ensures that we get you the best, most competitive pricing and terms available in the marketplace. You just need to complete our simple application and one of our specialists will quickly contact you.