October 1, 1998   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.

Eastbound TransPacific "Peak Season Surcharges" Investigated by FMC

In response to recent complaints the Federal Maritime Commission (FMC) opened its Fact Finding Investigation No. 23 - Ocean Common Carrier Practices in the TransPacific Trades - on 21Sep1998. The FMC is aware of the heavy demand for space on vessels sailing eastbound from Asian ports to the USA during the current holiday peak shipping season. Many carriers operating in this trade have recently increased freight rates, and filed "Peak Season," "Container Repositioning" or "Space Protection" surcharges in their tariffs and service contracts. The FMC is investigating allegations that some carriers violated the Shipping Act in the manner in which these surcharges and rate increases have been applied.

FMC Commissioner Delmond Won has been named Investigative Officer in this matter. In this capacity, Commissioner Won is authorized to issue subpoenas, require reports and hold hearings as may be necessary. The investigation has been widely publicized; Commissioner Won discussed it on National Public Radio (NPR) in the US, and FMC Chairman Hal Creel called it "an extremely pressing matter."

Hearings have been scheduled by the Commission for Oct. 6-8 in San Francisco, Oct. 13-15 in Seattle and Oct. 19-22 in Los Angeles. Members of the Transpacific Stabilization Agreement, which includes both conference and non-conference lines, are expected to testify under subpoena. A number of shippers are also expected to testify. Interested parties may contact Commissioner Won’s office, telephone: 202-523-5721 or fax: 202-523-0298 for more information.

FMC Investigation No. 23 will attempt to document the following within 90 days or less:

1. Demands for rates other than those set forth in applicable tariffs or service contracts;

2. Refusals to accept cargo or provide service absent payment of higher rates;

3. Demands for renegotiation or amendment of service contracts under threat of non-acceptance of cargo;

4. Improper termination of service contracts and application of higher tariff rates;

5. Acceptance of low rated cargo as misdescribed higher rated cargo;

6. "Voluntary" rate increases;

7. Unlawful preference or discrimination by exempting large shippers or "champion accounts" from rate increases or service refusals;

8. The imposition of unreasonable increases in rates or charges; and

9. Other similar practices which may be violative of the Act or Commission regulations.

In its Order of Investigation the FMC reminds ocean carriers of their "obligation to treat shippers in a fair and non-discriminatory manner in the acceptance, handling and carriage of cargo." Furthermore, the FMC cites a ruling issued in 1959 wherein it found "where demand for space exceeds the supply, the law is clear: a common carrier must equitably prorate its space among shippers."

Docket 98-16: Eastern Mediterranean Shipping, Possible Violations of the Shipping Act

By this docket the FMC opened a proceeding to determine if Eastern Mediterranean Shipping Corp., a New York based NVOCC, and its owner and operator, Anil K. Sharma, violated the Shipping Act. Docket 98-16 alleges Eastern Mediterranean knowingly and willfully misdeclared cargo shipments in order to obtain favorable rates under a service contract entered into with Zim Israel Navigation Co. Ltd. Additionally, Eastern Mediterranean allegedly failed to charge rates set forth in its tariff on numerous shipments, filed tariff amendments subsequent to shipments, and filed commodity rates under the wrong commodity description, making them inapplicable to the shipments involved. Also, it is alleged Eastern Mediterranean failed to establish, observe and enforce just and reasonable practices in receiving and delivery of property entrusted to it by its customers. The FMC has received over 40 complaints from shippers and freight forwarders who have dealt with Eastern Mediterranean in the last two years.

New FMC Field Office Opened at New York:Will Carry Out Enforcement Activities

In an expansion of its Field Representative Program, the Federal Maritime Commission announced September 8, 1998 it has appointed Mr. Emmanuel Mingione to carry out enforcement and liaison activities in the New York and New Jersey port region. Mr. Mingione is a former senior investigator with the FMC. His office address is P.O. Box 3461, Church Street Station, New York, NY 10008-3461, telephone: 212-637-2929, fax: 212-637-2930, e-mail: emanuelm@fmc.gov.

Ocean Shipping Reform Act of 1998:Still Awaits Action in the US Senate

Only six working days remain for the US Senate to approve S. 414 before the 105th Congress adjourns on Oct. 9, 1998. At this writing, the Ship Reform bill is not listed on the Senate calendar. The legislation can be approved by voice vote under special Senate rules, but this procedure rarely used. Supporters of the legislation remain optimistic the bill, which has passed both Houses of Congress, will win final approval this year. The controversy surrounding President Clinton slowed progress on many important bills in Congress during the last weeks of the 105th Congress.

If the Senate approves S. 414 prior to its adjournment, and if President Clinton promptly signs the bill, the FMC will proceed with new tariff publication regulations and new licensing requirements for Ocean Transportation Intermediaries (Freight Forwarders and NVOCCs). These regulations would be finalized by March 1, 1999, and implemented on May 1, 1999. If S. 414 is not approved this year, the Shipping Act of 1984 and current FMC regulations will remain unchanged in 1999.

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SIGNALS™ the newsletter of Distribution-Publications, Inc.
Vol. 2, No. 6, October 1, 1998