February 5, 1999   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.

FMC Approves First Final Rules Implementing OSRA: effective May 1, 1999

At a meeting on February 3rd the Commission approved the publication of the first three final rules implementing the Ocean Shipping Reform Act of 1998 (OSRA). With the exception of Docket 98-25, these rules were not the subject of extensive public comments. These three final rules were approved without amendment; they become effective on May 1, 1999.

Docket 98-21: Miscellaneous Amendments to Rules of Practice and Procedure. This final rule makes changes to the rules of practice necessitated by OSRA, including special docket procedures.

Also, it will reorganize FMC regulations in the Code of Federal Regulations (CFR-46) Parts 500-588.

Docket 98-25: Amendments to Regulations Governing Restrictive Foreign Shipping Practices, and New Regulations Governing Controlled Carriers. The final rule updates and clarifies rules implementing section 19 of the Merchant Marine Act, 1920, sections 9 and 13(b)(5) of the Shipping Act of 1984, and the Foreign Shipping Practices Act of 1988 to reflect changes made by OSRA. This rule significantly strengthens the Commission’s authority over controlled carriers.

Docket 98-27: Marine Terminal Operator (MTO) Schedules. The final rule will implement new FMC regulations governing the publication of marine terminal tariffs.

Comments on Proposed Rules Gain Consideration by FMC Commissioners

The more controversial new FMC rules proposed under Docket Nos. 98-28:, 98-29: and 98-30: were not approved at the Commissioner’s meeting on Feb 3. FMC Chairman Hal Creel, and Commissioner’s Ming Hsu and John Moran indicated the serious consideration is being given to extensive comments received by the Commission on these proposed rules, but it is not clear what changes can be expected. In a recent speech, Chairman Creel said, "I would ask that you in the shipping industry make a reasonable effort to adapt to the new law. In exchange, we at the Commission will be fair and reasonable in our application of the law." The Commission will meet again on February 18. A decision on the rules is due by March 1st, however, the rules will not become effective until May 1, 1999.

Proposed rules governing regulations for Licensing and Bonding of Ocean Transportation Intermediaries (OTI), Carrier Automated Tariff Systems, and Service Contracts generated comments from more than 100 parties, including many carefully drafted and extensively detailed comments. Many took issue with aspects of the proposed rules that combine ocean freight forwarders and NVOCCs under the new OTI designation. The American Surety Association, the International Association of NVOCCs and others urged the Commission to amend its definition of "transportation related activities." A large group of major ocean carriers, represented by the Ocean Carrier Working Group Agreement, requested extensive changes to Dockets 98-29 and 98-30 to simplify tariff publication and service contract filing regulations.

FMC Announces Compromise Agreements: $850,000 in fines collected

The Federal Maritime Commission recently announced compromise agreements with nine organizations alleged to have violated the Shipping Act of 1984 . A total of $850,000 was collected; details follow:

Best Lines Ltd.: this Hong Kong based NVOCC was charged with violating the Shipping Act of 1984 by charging, demanding, collecting or receiving less compensation for the transportation of property than the rates and charges set forth in its tariff. It paid FMC $30,000., and did not admit violations of the Act.

China National Foreign Trade Transportation Corp. dba SINOTRANS: this Beijing based VOCC was alleged to have failed to invoice or collect deadfreight penalties required under its service contracts; it permitted non-signatory parties to obtain access to service contract rates, and paid freight forwarder compensation to a licensed forwarder related to the contracting shipper in violation the 1984 Act. It paid $350,000 and did not admit violations.

Crowley American Transport, Inc.: this Jacksonville, Florida based VOCC was alleged to have knowingly and willfully accepted and transported cargo for the account of an NVOCC that did not have a tariff and bond on file with the FMC. Crowley paid $35,000. It did not admit violations of the Act.

Fortune Network Ltd.: this Hong Kong based NVOCC was charged with obtaining transportation of property at less than the applicable service contract rates and charges by misdescribing commodities on shipments transported under its service contract with Mexican Line. Fortune Network paid $40,000 and did not admit violations.

Hudson Shipping (H.K.) Ltd. d/b/a Hudson Express Lines: it was alleged by the FMC that this Hong Kong based NVOCC misdescribed the commodities shipped under its service contract with Hyundai. Additionally, it was that Hudson, in its capacity as common carrier, violated the 1984 Act by charging or receiving less or different compensation than the rates and charges shown in its FMC tariff. Hudson paid $30,000. It did not admit violations.

Kenwa Shipping Co. Ltd.: this Hong Kong based NVOCC was alleged to have obtained transportation on behalf of others at less than the applicable service contract rates and charges by permitting other NVOCCs to access its service contract with COSCO. It paid $40,000 and did not admit violations.

Madrigal-Wan Hai Lines Corp.: it was alleged by FMC that is Manila based VOCC accepted cargo from or transported cargo for the accounts of NVOCCs that do not have tariffs and bonds, insurance, or other surety as required by the 1984 Act. Additionally, Madrigal entered into service contracts with NVOCCs, or in which NVOCCs were listed as affiliates, that do not have tariffs and bonds as required by FMC. Madrigal admitted the violations as alleged, paid $175,000 and agreed to institute a compliance program.

NEC Logistics, Ltd.: this Tokyo based NVOCC was alleged to have allowed ineligible shippers to access its service contracts. NEC paid the amount of $60,000 and did not admit violations of the Act.

Traffic Care International Corp.: it was alleged by FMC that this Inglewood, CA based ocean freight forwarder received compensation as an ocean freight forwarder without performing those services required for payment of forwarder compensation, and without furnishing to the ocean common carrier the required freight forwarder certification. Traffic Care paid $90,000 and did not admit violations of the Act.

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SIGNALS™ the newsletter of Distribution-Publications, Inc.
Vol. 3, No. 2, February 5, 1999