Rules for operating agreements between Brazilian and foreign shipping companies

Federal regulator ANTAQ establishes requirements for charter agreements between Brazilian shipping companies and foreign shipowners

The National Waterway Transport Agency (ANTAQ) published Resolution 119, dated 9 October 2024, outlining the requirements to be met for operating agreements related to space charter in long-haul navigation between Brazilian shipping companies (EBN, in the Portuguese acronym) and foreign shipowners. This regulation seeks to enhance service quality and consistency, optimise vessel usage, and reduce operational costs.

Reporting requirements

The regulation stipulates that operating agreements between EBNs and foreign companies must be submitted for approval to ANTAQ through a designated ‘liaison agent’, that is, a company chosen from among the participants to represent them before the federal regulatory agency for the performance of acts provided for in the regulation. The liaison agent remains jointly and severally liable for the accuracy of the information provided.

The operating agreement must be written in Portuguese and any other language agreed upon by the participating companies. It must contain, at a minimum, the qualifications of the companies and their representatives, along with their addresses and clauses detailing services offered, operational cycles, routes, ports served, and frequency of calls. Additionally, the agreement must include rules regarding the exchange and availability of space on all participant vessels for each voyage and operational cycle. A mechanism for recording and controlling the exchanged spaces must be incorporated.

Every month, the liaison agent is required to submit to ANTAQ, by the twentieth day, the travel schedule of the participating vessels for the upcoming month, as well as the results of any space exchanges that occurred during the completed operational cycle of the previous month.

Furthermore, the liaison agent must provide ANTAQ with a monthly statement detailing the total cargo transported under the agreement. This should specify the space allocated for the loads carried by the participating EBNs and that allocated to cargo carried by foreign companies and which use space on vessels operated by a Brazilian company. Copies of the respective cargo manifests must accompany the monthly declaration.

Any breach of the service regularity under an approved agreement must be communicated to ANTAQ in writing within three business days, along with a justification. The communication should also indicate the measures taken and the expected deadline for restoring normal operations.

Cabotage reserve

Under ANTAQ Resolution 119/2024, the carriage of cargo that originates from or is destined for ports or facilities within the national territory on foreign vessels is prohibited unless the ship has been chartered to an EBN for cabotage navigation.

Unless there is an overlap or complementarity between the routes provided for in regular services, the same ship cannot be engaged in more than one operating agreement. Operations can only commence after receiving approval from ANTAQ, which must be granted within 30 business days of the application submission and remains valid for two years.

Penalties

Failure to comply with any legal or regulatory provisions or the terms and conditions associated with approved operating agreements will lead to the levying of penalties in the forms of warnings, fines, suspensions, revocation of licenses, or being declared disreputable (in bad standing).

For serious violations of ANTAQ regulations, fines can be as high as BRL 10 million (approximately USD 1.8 million) and may be imposed in addition to other penalties.

Entry into force

ANTAQ Resolution 119/2024 will take effect on 1 November 2024. Agreements approved before this date must be aligned with the new requirements and submitted for re-approval by the federal waterway transport regulator.

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