November 3, 2005 Volume 9, Number 11 Oakland, California

SIGNALS™ provides detailed information on the regulations and activities of the US Federal Maritime Commission (FMC), and related developments in the ocean freight industry. For past issues, please consult our index.

FMC Holds Industry Briefing with the National Association of Waterfront Employees

In its efforts to gain better understanding and increase dialog with stakeholders in the U.S. maritime industry the Federal Maritime Commission met with members of the National Association of Waterfront Employers (NAWE). This industry briefing, held October 19, 2005, was the sixth such briefing the FMC has held with various members of the maritime industry. Among topics discussed at the briefing were the impact of increasing cargo volumes on constrained port, marine terminal, rail, and highway infrastructures, additional ways to keep cargo moving and the need to coordinate at the local, state and national level when seeking solutions to common problems. Marine terminal operators also commented on the improvements in port productivity as a result of the OffPeak PIERPass program in effect at the Ports of Los Angeles and Long Beach. OffPeak created night and weekend OffPeak shifts for container delivery and pick-up, as well as implemented a Traffic Mitigation Fee for all pick-up/deliveries made outside of OffPeak hours. Panelists praised the program for improving congestion within and outside the ports.

Docket 05-06: FMC Extends Comment Period on Additional NSA Rule Changes

The Commission received five comments regarding further changes to NVOCC Service Arrangement rules that would allow multiple unaffiliated NVOCCs to jointly offer NSAs. The comments came in response to the FMC's Notice of Inquiry, Docket No. 05-06, issued August 30, 2005. The NOI contains 15 questions concerning the impact and practicality of multiple NVOCC NSAs. Comments were originally due October 6, 2005, but the deadline was extended to October 20. The International Trade Surety Association, U.S. Department of Justice, U.S. Department of Transportation and the World Shipping Council all filed separate comments. The Agriculture Ocean Transportation Coalition, FedEx Trade Networks Transport & Brokerage, Inc., The National Industrial Transportation League, North Atlantic Alliance Association, Inc. and United Parcel Service, Inc. filed joint comments with the Commission.

International Trade Surety Association, commented specifically on the issue of financial responsibility if NVOCCs were allowed to offer joint NSAs. ITSA stated that "the fact that two or more NVOCC offer services to one customer does not and should not result in double liability by two NVOCCs acting as common carriers." ITSA stressed that only the NVOCC issuing the bill of lading or the financial responsibility provider of the NVOCC should be held responsible in the event a claim is filed. ITSA conjectured that issues with surety providers would arise when two or more NVOCCs jointly offer services to a customer and agree to be jointly and severally liable. ITSA suggested that in these cases the NVOCCs be required to file for additional insurance or bond coverage.

U.S. Department of Justice, commented in support of the proposed joint NSAs, stating that jointly-offered NSAs, while being subject to oversight under antitrust law, would likely enhance competition and create greater contracting flexibility for NVOCCs. U.S. Department of Transportation also commented in support of jointly-offered NSAs. DOT also stressed that such agreements would likely not lead to NVOCCs receiving antitrust immunity, however to prevent any misinterpretation of such rule the FMC should include specific language stating NVOCCs are not immune to antitrust laws. The World Shipping Council made a similar comment. Joint comments urged the FMC to consider jointly-offered NSAs and provided detailed answers to all the Notice of Inquiry's 15 questions. Joint comments also stated that jointly-offered NSAs would "increase the efficiency of the NVOCC marketplace and enhance competition - ultimately resulting in more options and lower prices for shippers and beneficial cargo owners."

Peak Season Surcharges Extended for US East Coast All Water Services

Many carriers serving the Transpacific Eastbound Trades from Asia to the USA have amended their tariffs to extend Peak Season Surcharges(PSS) through Jan 31, 2006 on shipments to or via US Atlantic Coast Ports. The PSS on shipments to or via US Pacific Coast Ports will expire on Nov 30, 2005. Generally speaking, carriers have filed as follows:

PEAK SEASON SURCHARGE (PSS) 2005

From: Ports & Points in Asia, To: USA Ports & Points
Effective: 15Jun2005 thru 30Nov2005, except as noted

Exception:
1. Shipments to or via US Atlantic (East) Coast Ports moving via the Panama Canal (All Water Service) will be subject to the PSS thru 31Jan2006.

FMC Announces Compromise Agreements, Collects $305,000 in Civil Penalties

The Federal Maritime Commission announced five compromise agreements, resulting in the collection of $305,000 in civil penalties. These agreements are the result of investigations conducted by FMC Area Representatives of the Office of Operations into violations of the Shipping Act. Staff attorneys with the Bureau of Enforcement negotiated the compromise agreements announced October 5, 2005. In concluding these compromises the parties involved did not admit any violations of the Shipping Act or FMC regulations. Details are as follows:

Aces, Ltd. and Northeast Consolidators, Inc. Aces, Ltd. is a licensed ocean freight forwarder and Northeast Consolidators, Inc. is a licensed NVOCC, both are located in Scituate, MA. Allegedly, Aces obtained freight forwarder compensation from ocean common carriers on shipments in which it had a direct or indirect beneficial interest. Northeast Consolidators allegedly obtained transportation for property at less than the applicable rates or charges by allowing Aces to collect forwarder compensation on shipments handled by Northeast. In compromise of these allegations Aces and Northeast made a payment in the amount of $55,000.

Air Parcel Express, Inc. (APX), a licensed ocean transportation intermediary located in Miami, FL, allegedly accessed service contracts to which it was not a signatory, thereby obtaining ocean transportation for property at less than the applicable rates and charges. Furthermore, APX allegedly operated as an NVOCC, without an OTI license, tariff or proof of required financial responsibility. In compromise of these allegations APX made a payment of $25,000.

Cosa Freight Inc., a licensed and bonded ocean transportation intermediary located in City of Industry, CA, allegedly accessed service contracts to which it was not a signatory thereby obtaining ocean transportation for property at less than the applicable rates and charges. Cosa Freight also allegedly provided transportation that was not in accordance with the rates and charges as published in its tariff. Cosa Freight made a payment of $60,000 in settlement of these charges.

Nations Express Inc., a licensed freight forwarder located in Charlotte, NC, allegedly provided service as an ocean freight forwarder, and collected compensation therefore, without obtaining an OTI license and without providing proof of financial responsibility. In compromise of these allegations Nations paid $25,000.

Topocean Consolidation Service, Inc., a licensed NVOCC based in Los Angeles, CA, allegedly obtained ocean transportation for property at less than the applicable rates by improperly describing the commodities and through the unlawful use of equipment substitution. Topocean also allegedly provided service that was not in accordance with its published tariff. In compromise of these allegations, Topocean made a payment of $140,000 to the FMC.