Now is an uncertain time for Texas companies that do business with the shipping industry as trade deals are renegotiated and the shipping industry continues to rank in the top of most lists for industries likely to face insolvency. In light of this likelihood, Texas businesses and their attorneys should be aware of legal and practical issues that may arise in the event of a shipping insolvency. Two particularly murky areas that have been illuminated by recent case law are maritime liens and reclamation rights.
Cast of Characters
In order to discuss maritime, it is necessary to begin with an overview of the relevant supply chain and cast of characters involved in shipping. A Texas business shipping goods by sea generally deals with the following supply chain and cast of characters: 1) a freight forwarder; 2) a nonvessel operating common carrier (“NVOCC”); 3) a vessel operating common carrier (“VOCC”); 4) a customs broker; 5) ground transport; and 6) a supplier. The roles of the first three actors require further introduction. A Texas business usually works with a small portfolio of freight forwarders, who organize the logistics of getting the cargo from Point A to Point B. A freight forwarder owes a fiduciary duty to a shipper and operates as its agent in coordinating logistics for the cargo—which can include land, air, and sea transport. Importantly, a freight forwarder can also be one and the same as an NVOCC, affiliated with an NVOCC, or acting as an agent of an NVOCC. An NVOCC is not a ship, but possesses many rights and responsibilities, including those under maritime law, similar to operating vessels. An NVOCC coordinates with a portfolio of VOCCs, which are operating vessels, to carry the shipper’s cargo over international waters. NVOCCs and freight forwarders are licensed by the Federal Maritime Commission.
