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Signals™ Headlines - February 7, 2000

FMC Chairman Orders OSRA Impact Study: compliance assessment

FMC Chairman Hal Creel has ordered the Commission’s staff to prepare a report on the impact of the Ocean Shipping Reform Act (OSRA) of 1998. The study will assess industry compliance with the new regulations implemented by the FMC on May 1, 1999. The report is also expected to help the FMC evaluate the effectiveness of the new regulations it wrote under tight deadlines early last year. These included new regulations governing tariffs, service contract filing and NVOCC licensing.

Chairman Creel has ordered a two-year study, with the participation of all FMC Bureaus, but parts of the report will be completed this year. Congress is expected to refer to the report this summer as it considers legislation proposed by Rep. Henry Hyde (R-IL) which would revoke the antitrust immunity ocean carriers have enjoyed since the Shipping Act of 1916. OSRA retained this immunity.

Since May 1, 1999, the FMC has collected over $5 million in settlements from ocean carriers, forwarders and NVOCCs alleged to have violated the Shipping Act. At a recent meeting of the Propeller Club of Los Angeles, Chairman Creel said “we take our enforcement responsibilities seriously…but our primary objective is to achieve compliance and to clarify uncertainty as to legal issues, not to play ‘Gotcha’ and impose penalties for their own sake.”

Service Contracts: ocean carriers continue to file at a record pace

The popularity of confidential service contracts will form a key part of the OSRA impact report. Ocean carriers are required to file the complete text of service contracts, both new and amended, with the FMC. Between May 1 and December 31, 1999 the FMC received over 84,000 service contract filings. These included 25,500 new contracts, and over 59,000 amendments. This represents an increase of 143% over the same time period in 1998. The FMC expects this trend to continue. In the Trans-Pacific eastbound trade, thousands of contracts are set to expire on April 30, 2000. Another upgrade to the FMC’s Internet based filing system may be needed to handle the volume.

Docket 00-01: ‘K’ Line v. Intercontinental Exchange, re: unpaid freight

Kawasaki Kisen Kaisha, Ltd. (‘K’ Line) has filed a complaint with the FMC alleging Intercontinental Exchange, Inc., (Intercontinental) failed to remit payment for freight charges, made false statements, and presented false wire transfer documents. ‘K’ Line has asked the FMC to order Intercontinental to remit US$ 265,126.23 in unpaid freight and charges. The Commission has initiated a formal docketed proceeding, and assigned the case to an Administrative Law Judge on January 8, 2000. Hearings on FMC docketed proceedings are scheduled only after a review of the evidence, and after the parties attempt to reach a settlement agreement with the participation of the Commission.

Docket 00-02: Crowley and Trailer Bridge v. Puerto Rico Ports, re: dockage

A new vessel measurement system used by the Puerto Rico Ports Authority (PRPA) to assess dockage charges has prompted Crowley Liner Services, Inc. and Trailer Bridge, Inc. to file a complaint with the FMC. Crowley and Trailer Bridge allege the PRPA enforced the new vessel measurement system contrary to the terms of its tariffs, and without giving notice of the change, and thereby violated the Shipping Act and the Settlement Agreement in FMC Docket 95-10. This proceeding was assigned to the FMC office of Administrative Law Judges on Jan. 22, 2000.

Docket 00-03:Inlet Fish Producers v. Sea-Land Service, Inc., re: tare weight

Inlet Fish Producers has alleged Sea-Land Service unfairly assesses freight charges for frozen seafood shipments. According to documents made public by the Commission, Inlet Fish claims Sea-Land allows some shippers to subtract the ‘tare-weight’ from the rated weight of their frozen seafood shipments, but will not let Inlet Fish do so. This complaint was assigned to the FMC office of Administrative Law Judges on February 3, 2000. A review of the evidence, including the applicable tariffs and service contracts, in this case has not yet taken place. The FMC could dismiss this case if it finds no evidence of violations.

Bureau of Economic and Agreement Analysis:duties and responsibilities

The Bureau of Economic and Agreement Analysis, directed by Ms. Florence A. Carr, is the FMC’s in-house expert on the economics of international liner shipping. It monitors the activities of vessel operating common carriers serving the USA, and conducts research used to keep the Commission apprised of trade conditions, emerging trends, and carrier pricing and service activities. The Bureau also reviews the reasonableness of tariffs and service contracts of carriers controlled by foreign governments, with certain exceptions. Section 9 of the Shipping Act gives the FMC the authority to prohibit the publication or use of tariffs of controlled carriers that are not “just and reasonable.” Only controlled carriers are subject to this standard.

Agreements between carriers and marine terminal agreements subject to FMC jurisdiction are filed with the Bureau. New and amended agreements are subject to a 45-day notice period before they may take effect. The FMC can expedite this period to about 30 days; it can also request additional information and delay approval. Agreements are evaluated for potential anti-competitive impacts, and for compliance with FMC regulations issued in 46CFR Part 535. Agreements are maintained in the Bureau’s library. Rate agreements between carriers may be required to file quarterly monitoring reports with the Bureau.

The Bureau’s publication “Carrier Agreements in the U.S. Oceanborne Trades” summarizes Agreements filed with Commission, and identifies participating carriers and marine terminal operators. For more information contact the Bureau at tel: 202-523-5793, fax: 202-523-4372, or e-mail: florence@fmc.gov

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