The FMC has ordered a formal investigation of possible Shipping Act violations by All Flags Forwarding Inc., an FMC licensed ocean freight forwarder and NVOCC based in Jamaica, NY. According to Docket 02-10, the Commission has obtained evidence that All Flags and its principals collected freight forwarder compensation from ocean carriers for shipments without performing any forwarding services. This activity appears to have resulted from another NVOCC consistently listing All Flags as the freight forwarder on ocean bills of lading for shipments which were processed entirely by that NVOCC’s employees. Furthermore, Docket 02-10 alleges All Flags knowingly and willfully shared a portion of the compensation with the NVOCC. This violates FMC regulations which require that ocean freight forwarders may not "share, directly or indirectly, any compensation for freight forwarding with a shipper, consignee, seller, or purchaser, or an agent, affiliate, or employee thereof." The initial decision in this proceeding is expected by August 1, 2003. The FMC license held by All Flags was revoked on April 12, 2002 due to failure to maintain the required surety bonds.

FMC Orders Investigation into Sinotrans/HASCO Agreement:   Docket No. 02-09

A proposed new space charter agreement between two Chinese ocean carriers has prompted the FMC to order an investigation into the proposed agreement and the status of one of the participants. Sinotrans Container Lines Co., Ltd. (Sinotrans) and Shanghai Hai Hua Shipping Co., Ltd. (HASCO) recently filed an agreement with the Commission to allow them to share space on five vessels in a new weekly container service between ports in Asia and the US Pacific Coast. Sinotrans proposes to time charter one of these vessels to HASCO. In Docket No. 02-02 the FMC has raised questions as to the common carrier status of HASCO and the validity of the agreement. While HASCO registered with the FMC as a vessel operating common carrier (VOCC) and published a tariff in October 2001, it has not yet operated any vessels serving US ports. HASCO and Great Western Steamship Company filed a very similar agreement with the Commission in October 2001, but cancelled it shortly afterward before any vessels began operation. For these reasons the FMC is questioning whether HASCO is a bona fide ocean carrier, and it has suggested the Sinotrans/HASCO agreement is a "device (to) enable HASCO to avoid applicable regulatory requirements." If the Commission determines HASCO is not a VOCC, then HASCO could only serve the USA as an NVOCC, and it would not be eligible to enter into a space charter agreement with Sinotrans.

A formal investigation and hearing has been ordered by the FMC due to possible Shipping Act violations by Empire United Lines Co., Inc., an NVOCC based in Brooklyn, NY. According to Docket 02-11, evidence obtained by the Commission indicates that Empire knowing and willfully provided false information on thousands of ocean bills of lading. The FMC alleges Empire listed the name of a freight forwarder on bills of lading in order to enable the forwarder to collected unwarranted compensation from several ocean carriers, and Empire collected a portion of the unwarranted compensation from this freight forwarder. Additionally, FMC alleges Empire violated the Shipping Act on at least 20 shipments by assessing rates and charges that were not properly filed in its FMC tariff. The investigation will determine if Empire violated the Shipping Acts and FMC regulations. If violations are found, an Administrative Law Judge will determine if civil penalties should be assessed, and the amount of such penalties, and whether the license and tariff of Empire should be suspended or revoked. An initial decision in this proceeding is expected by August 1, 2003.

Volume 6   Number 8      August, 2002

The information contained herein is obtained from reliable sources. It is subject to change at any time, however, depending on changes in laws and regulations. While we continually attempt to monitor this information, we do not guarantee its accuracy and are not responsible for any damages suffered by any party in reliance on it.