The Federal Maritime Commission recently executed four compromise agreements recovering a total of $297,500 in civil penalties. The agreements were reached with five ocean transportation intermediaries (OTI). The agreed penalties resulted from investigations conducted by the Commission's Area Representatives. FMC staff attorneys negotiated the compromise agreements. In settlement of these compromise agreements the parties involved did not admit to any violations of the Shipping Act or FMC regulations. The compromise agreements are as follows:

Allied Transport Systems (USA), Inc. and Centurion Logistics Services Limited. Allied Transport Systems, dba Centurion Logistics Management, is a licensed NVOCC based in City of Industry, California. Allied’s counterpart, Centurion Logistics Services Ltd., is an unlicensed, bonded foreign-based NVOCC located in Hong Kong. Commission staff alleged that the Centurion companies obtained ocean transportation at less than the rates and charges that would otherwise be applicable by unlawfully accessing service contracts to which they were not a signatory, by misdescribing the commodities shipped, and by abusing rules and practices relating to equipment substitution. Under the terms of the compromise, the Centurion companies paid penalties of $150,000.

Atlantic Express Corp. Atlantic Express is a licensed NVOCC based in Bridgeview, Illinois. Commission staff alleged that Atlantic Express accepted numerous shipments of cargo from unlicensed and unbonded OTIs. Atlantic Express also allegedly violated the Shipping Act by failing to charge the rates in its published NVOCC tariff. Atlantic Express paid the Commission $70,000 in compromise of these allegations.

Prime Shipping International Inc. Prime Shipping International, dba Prime Agency, is a licensed NVOCC located in City of Industry, California. Commission staff alleged that Prime obtained ocean transportation for property at less than the rates and charges that would otherwise be applicable by unlawfully accessing service contracts to which it was not a signatory, and by misdescribing the commodities shipped. Prime also allegedly violated the Shipping Act by failing to charge the rates in its published NVOCC tariff. Prime paid penalties of $45,000 to settle these allegations.

Speedy International LLC. Speedy International is a licensed NVOCC located in South San Francisco, California. Commission staff alleged that Speedy obtained ocean transportation for property at less than the rates and charges that would otherwise be applicable by unlawfully accessing service contracts to which it was not a signatory, and by misdescribing the commodities shipped. It was also alleged that Speedy International violated the Shipping Act by failing to charge the rates in its published NVOCC tariff. Speedy made a payment of $32,500 in compromise of these allegations.

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The U.S. Senate Committee on Commerce, Science, and Transportation recently approved President Barack Obama's nominees for appointments to the Federal Maritime Commission. FMC Commissioner Rebecca Dye and Commissioner-nominee Mario Cordero's appointments now await final approval from the full Senate. The senate committee approved FMC Commissioner Dye's nomination to serve a five-year term with the FMC. This will be Commissioner Dye's third term with the FMC. She has been a member since 2002. The committee also approved Cordero's nomination to serve a five-year term as an FMC Commissioner. This would be Cordero's first term with the FMC. Cordero is an attorney and a member of the Long Beach Board of Harbor Commissioners. If both nominees are approved by the full senate, the Commission will have a full house of five Commissioners for the first time since December 2006.

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Carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223, serving the East Asia/USA trade lane announced a General Rate Increase (GRI) to go into effect May 1, 2011. See below for details. This GRI is consistent with the 2011-12 “revenue stability program” the TSA Carriers announced in November 2010. At that time, the group also recommending its members plan for a peak season surcharge of $400 per FEU, effective from June 15, 2011 through November 30, 2011, with those dates subject to adjustment based on changing market conditions.

TSA General Rate Increase (GRI), effective: May 1, 2011, from Asia Ports to:

This GRI applies to both tariff and service contract rates. It also applies to flat rack, open-top, tank and all other types of special equipment. The TSA’s 15 carrier members are American President Lines, CSCL, CMA-CGM, COSCO Container Lines, Evergreen Marine, Hanjin Shipping, Hapag-Lloyd Container Line, Hyundai Merchant Marine, "K" Line, Maersk Line, Mediterranean Shipping, NYK Line, OOCL, Yang Ming Marine and Zim Integrated Shipping Services. The group’s web site at www.tsacarriers.org provides additional information.

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The Federal Maritime Commission’s new rules on NVOCC Negotiated Rate Arrangements will become effective on April 18, and will establish a new pricing option for licensed NVOCCs. An NRA is an agreement between an NVOCC and a shipper for one or more shipments of a specific cargo quantity over a designated period of time. The NRA must be agreed in writing by both parties before the NVOCC receives any shipments under the NRA.

Each NRA can be valid for any time period agreed to by the NVOCC and shipper. This makes NRAs much more flexible than tariff rates, which must be published for a minimum of 30 days. Because each NRA is a unique agreement between the NVOCC and its shipper, the commodity description for the NRA can be simply Cargo, Viz: Non-Hazardous, N.O.S. – it will not be necessary to use specific commodity descriptions.

Before an NVOCC can begin utilizing NRAs, it must amend its FMC registration and tariff to notify FMC and the shipping public that it will be using these for some or all shipments. Then, once the NVOCC begins using NRAs, it must do three key things: a. Change its rate quotation format to make these NRAs that comply with the new FMC regulations; b. Obtain the NRA Shipper’s approval in writing for each shipment moving under an NRA; c. Put procedures in place to maintain NRA records as required by the new regulations. The NVOCC may do all this on its own, or utilize a third party service to help. Several tariff publishers, including DPI, plan to assist their NVOCC clients with these requirements.

While the NRA presents an attractive new pricing option for licensed NVOCCs, it does have two critical limitations. First, an NRA cannot be amended after it is agreed to by the shipper and the first shipment is received; at that point, the rates and surcharges agreed in the NRA are frozen and cannot change. Second, NRAs are not like service contracts – they cannot provide for volume discounts, service guarantees, floating surcharges, or GRIs. It is also important to note all NVOCCs must continue to maintain tariffs. These are required by FMC for tariff rules and for tariff rate history.

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