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Signals™ Headlines - December 5, 2002

New York Motor Carriers Petition FMC to Investigate Marine Terminals

An association of motor carriers serving the Port of New York has petitioned the Federal Maritime Commission (FMC) to request an investigation of possible Shipping Act violations by the marine terminal operator members of the New York Terminal Conference. In its Petition P3-02 the Association of Bi-State Motor Carriers, Inc. formally requests the FMC to investigate and determine whether the truck detention practices and tariff regulations of the members of the New York Terminal Conference (NYTC) constitute unjust and unreasonable practices and regulations in violation of Section 10(d)(1) of the Shipping Act.

The Association of Bi-State Motor Carriers, Inc. represents 40 trucking companies serving the New York/New Jersey ports. The NYTC members are American Stevedoring, Inc.; Port Newark Container Terminal; and Universal Maritime Service Corp. American Stevedoring operates the Red Hook Marine Terminal in Brooklyn, NY. Port Newark Container Terminal operated by P&O Ports. Universal Maritime Service is a division of the A.P. Moeller Group; it changed its name in January 2002 to APM Terminals. These are three of the larger terminal operators at the bi-state Port of New York and New Jersey. The NYTC operates under the authority of FMC Agreement No. 008005. This agreement allows the NYTC to publish and enforce rates for marine terminal services jointly in a single tariff. This tariff is available at www.newytc.com The tariff includes marine terminal rules, practices and rates for truck, rail and lighter unloading and loading, and free time and demurrage on export and import cargo, containers and chassis.

In support of its request the motor carrier group asserts that NYTC and its members are causing port congestion and delays by manipulating entry through the terminal gate or point of processing, and this manipulation causes congestion and adds to delays in picking up and delivering containers. The petition also claims that NYTC and its members do not compensate the motor carriers for costs associated with delays at the gate and in the terminal. Moreover, the motor carriers claim that the NYTC and its members have established excessive free time provisions in their tariff to avoid paying detention penalties to motor carriers. In this regard, the motor carriers point out that the NYTC terminals require trucks to use offsite chassis depots or other offsite facilities, spending time that is excluded from the truck detention calculus. Finally, the motor carrier group claims that the NYTC members retaliated against its members after a successful arbitration by modifying their tariff in such a way as to prevent reasonable detention penalties from being paid.

The motor carrier association has asked the Commission to investigate these practices under section 11(c) of the Shipping Act. If violations are found, the motor carriers ask the Commission to order NYTC to modify its tariff to: include a reasonable calculation that captures “queue waiting time;” and remove the excessive free time provisions and establish reasonable provisions that address the specific concerns set forth in the petition such as roadability issues and exclusions that exempt time spent due to lack of equipment or maintenance and repair. Additionally, the motor carriers seek an order directing NYTC to cease and desist from its practice of tendering defective equipment.

In order for the Commission to make a thorough evaluation of the Petition, it is inviting interested persons to submit their comments no later than December 20, 2002. Comments must be directed to the Secretary, Federal Maritime Commission, (e-mail to: Secretary@fmc.govand include a reference to the docket number in the subject field); and must also be served on Petitioner’s counsel (see Petition P3-02 for details).

Docket 02-16, Golden Bridge International: FMC to Investigate Possible Ship Act Violations

The Federal Maritime Commission has ordered a formal investigation and hearing into the activities of Golden Bridge International Inc., an OTI-NVOCC based in Southern California. According to FMC Docket 02-16 Golden Bridge may have violated the Shipping Act in three key areas. First, by intentionally misdescribing shipments in order to obtain lower rates from ocean carriers. Second, by failing to file its freight rates in its NVOCC tariff. And, third, by operating before it obtained its OTI-NVOCC license from the Commission.

The details of Docket 02-16 released by FMC indicate Golden Bridge entered into service contracts with China Ocean Shipping Company (COSCO) and other ocean common carriers. Shipments declared to COSCO as “housewares” or “household goods” and rated accordingly were actually were loaded with garments, textiles, and miscellaneous other commodities. NVOCC house bills of lading and invoices provide the correct descriptions. It appears that Golden Bridge thereby obtained lower rates for its shipments than those rates and charges set forth in the applicable service contracts.

With regard to its tariff, Docket 02-16 alleges the electronic tariff published by Golden Bridge included only Cargo NOS rates through at least August 2002. The commodity rates assessed by Golden Bridge to shippers thus appears to differ substantially from the Cargo NOS rates published in its NVOCC tariff. Golden Bridge nonetheless charged and collected payment on the basis of the inaccurate or unpublished rates shown on its invoices issued at destination.

Operating as an OTI without a license is a violation of the Shipping Act. It appears also that a large number of import shipments handled by Golden Bridge were transported prior to June 2000, at a time when Golden Bridge did not yet have an effective OTI license nor tariff rates for its NVOCC services.

The FMC has ordered an investigation to determine if Golden Bridge has violated the Shipping Act and Commission regulations. In the event violations are found, this proceeding will determine if civil penalties should be assessed against Golden Bridge and, if so, the amount of penalties to be assessed, and whether the ocean transportation intermediary license of Golden Bridge should be suspended or revoked. The initial decision of the Administrative Law Judge shall be issued by November 6, 2003, and the final decision of the Commission shall be issued by March 1, 2004. The matter could be settled earlier by a compromise agreement.

FMC Commissioner Brennan Holds Hearings on TSA Service Contracting Practices

The FMC’s investigation of the Transpacific Stabilization Agreement (TSA) and its service contracting practices continues to move forward. In late November, FMC Commissioner Joseph E. Brennan held hearings in Long Beach, San Francisco, and Seattle to take testimony under oath and receive documents in evidence. The hearings were not open to the public. The Commission has now received the answers to Section 15 Orders it issued to each of the TSA member carriers in September. These required the TSA members to submit detailed information on the negotiation of service contracts for the 2002-2003 season, and the implementation of general rate increases (GRI) and peak season surcharges (PSS). The Commission will use the responses to the Section 15 Orders, and evidence and testimony given at the hearings in determining whether TSA member practices warrant further action. This investigation was prompted by Petition P1-02 filed
in May 2002 by the National Customs Brokers and Forwarders Association of America, Inc. (NCBFAA) and the International Association of NVOCCs, Inc. (IANVOCC). The NCBFAA and the IANVOCC claimed that TSA members violated the Shipping Acts by engaging in a concerted practice of discrimination against NVOCCs.

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