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Signals™ Headlines - July 1, 1998

Ocean Shipping Reform Act Remains “On Hold” in House of Representatives

At this writing, the Ocean Shipping Reform Act of 1998 (Senate Bill S.414), approved by the US Senate on April 21, remains “on hold” in the US House of Representatives. These delays have enabled opponents of the Ship Reform Act to continue to lobby the House for changes to the bill. The Clinton Administration has also called for amendments to the bill. The House returns to session July 14 through the July 31, then recesses for the entire month of August. If the bill does not gain approval by the House prior to the August recess, many observers believe it will not become law this year.

House Maritime Sub-Committee Chairman Wayne Gilchrest (R-MD) has publicly stated he intends to place the ship reform bill before the House for a vote without debate or amendment, but the House adjourned for a two week recess on June 25 without placing S.414 on its calendar. This “fast track” legislative procedure requires approval of all House Committees with jurisdiction over the bill, and the approval of 60% of House members. House Veterans Affairs Committee Chairman Bob Stump (R-AZ) has raised objections to provisions in S.414 that provide benefits to merchant mariners. Rep. Stump’s objections have effectively kept the bill “on hold.”

The Clinton administration continues to give the bill less than strong support. Department of Transportation (DOT) Secretary Rodney Slater has endorsed S.414, but as recently as June 18 he continued to request amendments. In a letter to House Transportation Committee Chairman Bud Shuster (R-PA), Secretary Slater requested “refinements in the treatment of competition.” Specifically, “essential contract terms established by a conference of carriers should be disclosed.” S.414 would prevent public disclosure of key service contract terms, including contract rates and charges.

Docket 98-09: Kin Bridge Express Inc. and Kin Bridge Express (U.S.A.), Inc.

Non-Vessel Operating Common Carriers Kin Bridge Express Inc., of Taipei, Taiwan, and Kin Bridge Express (U.S.A.), Inc. of Jamaica, NY, USA are alleged by the FMC to have participated in a scheme of commodity misdescription on at least 73 shipments transported in 1996 and 1997. According to this recently issued docket these shipments originated from Kin Bridge’s offices in Taiwan and Hong Kong and were consigned to Kin Bridge USA in New York. Additionally, Kin Bridge Taiwan is alleged to have operated as an NVOCC without an effective tariff or bond on-file with FMC during the period in question. Kin Bridge USA maintained a tariff and bond on file with the Commission until April 1998, however, according to Docket 98-09, it did not update its tariff to accurately reflect rates and charges used on its bills of lading. The Commission ordered a formal investigation and hearing to determine if violations of the Shipping Act were committed, and to determine if civil penalties should be assessed, and, if so, the amount of such penalties.

Sinotrans Pays FMC $60,000: due to failure to submit service contract records timely

China National Foreign Trade Transportation Corporation, d/b/a Sinotrans, a vessel operating common carrier represented in the USA by Norton Lilly International, agreed to pay the FMC $60,000 on June 15, 1998 to settle Docket 98-05 without further proceedings. In this docket Sinotrans was alleged by FMC to have violated Commission regulations by failing to furnish requested service contract records timely. This docketed proceeding stemmed from a request of the FMC Bureau of Enforcement for service contract records. According to Docket 98-05, carrier’s record keeping agent in the USA failed to timely produce records of shipments for a service contract which was audited by the Bureau. FMC regulations require all carriers to provide the records within thirty (30) days of receipt of a written service contract audit letter from the Bureau requesting the documents.

In the Commission’s Order approving the settlement and discontinuing the proceeding the Commission agreed the settlement will further its enforcement policy, as it secures compliance with FMC regulations governing carriers’ service contract obligations, and serves notice to Sinotrans and to the industry at large that the FMC will stringently enforce its reporting requirements.

Solex Express, Inc. Pays FMC $70,000: settlement agreement on Docket 97-19

In a compromise agreement, Solex Express, Inc., a non-vessel-operating common carrier, paid the FMC $70,000 to settle allegations set forth in FMC Docket No. 97-19. In this docketed proceeding the FMC alleged that in at least 17 instances during 1996 Solex obtained transportation on ‘K’ Line vessels utilizing commodity descriptions which did not accurately reflect the cargoes being transported. Additionally, the Commission alleged Solex intentionally misdeclared cubic measurements of cargoes in connection with the use of 40′ and 45′ containers provided by ‘K’ Line as substitutes for 20′ equipment.

To settle these allegations Solex agreed to pay the FMC $70,000, and also to institute and maintain measures designed to eliminate the practices which were the basis of the alleged violations.

The endnotes of the order to discontinue Docket 97-19 shows the FMC made extensive use of databases in this case. The FMC used trade statistics provided by the Journal of Commerce PIERS database, additionally, a computer analysis of inbound shipments to Solex was conducted by the U.S. Customs Service to identify shipments transported by Solex during the period in question. It was noted U.S. Customs personnel can now isolate shipments which enter U.S. commerce with a description other than that which had appeared on the ocean common carrier’s manifest. This information permits FMC’s Bureau of Enforcement to be more selective in its investigations.

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SIGNALS™ the newsletter of Distribution-Publications, Inc. Vol. 2, No. 3, July 1, 1998

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