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Signals™ Headlines - August 5, 2002

FMC Orders Green Master Int’l Freight to Pay $1,530,000 Penalty: Docket No. 01-10

Green Master Int’l Freight Services, Ltd., a Taiwan based NVOCC, has been ordered by the FMC to pay a civil penalty of $1,530,000 due to violations of the Shipping Acts. According to the Initial Decision in Docket No. 01-10 Green Master knowingly and willfully violated the Shipping Acts by accessing service contracts it was not party to. Evidence obtained by FMC investigators showed Green Master participated in an organized scheme during 1997 and 1998 to assume the identity of another NVOCC, Hudson Shipping (HK) Ltd. Green Master paid Hudson $20 for each container it was able to ship in order to ship cargo with Senator Line and Hyundai Merchant at Hudson’s service contract rates. Green Master also violated the Shipping Acts in 1998 and 1999 by failing to file the rates charged to its customers in its FMC tariff. In total, the decision issued by FMC Administrative Law Judge Michael Rosas applied a penalty of $22,500 for each of 68 violations. Judge Rosas also ordered Green Master to cease and desist from accessing service contracts it is not party to, and from charging its customers less than the published rates in its tariff. Because Green Master participated in the proceedings, and because there was no evidence of violations after 1999, Judge Rosas did not cancel its FMC tariff.

All Flags Forwarding Investigated for Possible Shipping Act Violations:Docket No. 02-10

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.

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