The Ocean Shipping Reform Act of 1998 (Senate Bill S.414), approved by the US Senate on April 21, has still not yet been introduced in the US House of Representatives. Time is running short for this ship reform bill in the 105th Congress. House Maritime Sub-Committee Chairman Wayne Gilchrest (R-MD) has not yet scheduled hearings on the bill, or placed it on the House calendar for a vote. The House was in recess in late May, and it traditionally takes a recess in early July and the entire month of August. The Clinton administration has given the bill less than strong support. 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.

On May 4, 1998 the Federal Maritime Commission (FMC) announced seven compromise agreements for alleged violations of the Shipping Act of 1984, recovering civil penalties in an aggregate amount of $206,000. In concluding these compromises, these companies did not admit any violations of the Shipping Act of 1984. The compromise agreements resulted from investigations conducted by representatives of the FMC Bureau of Enforcement. Settlements were negotiated by FMC attorneys.

Big Save International Corp. Los Angeles, California importer and distributor of home furnishings, giftware and toys. FMC alleged that Big Save violated section 10(a)(1) of the Shipping Act of 1984 by obtaining ocean transportation at less than applicable rates or charges through the device or means of misdescription of commodities shipped. Big Save paid FMC $35,000 to settle the allegations.

Exbo Shipping Company FMC alleged this Hong Kong based NVOCC violated section 10(a)(1) of the Shipping Act of 1984 by receiving transportation at less than the rates and charges otherwise applicable by accessing a service contract in which it was neither the signatory nor affiliate, and by giving unlicensed NVOCCs access to its service contract, and violated section 10(b)(1) by providing transportation at less than the rates and charges shown in its filed tariffs. Exbo paid FMC $55,000.

Savoy Shipping Company, Inc.- This Dania, FL based vessel operator was alleged by FMC to have violated section 10(b)(1) by providing transportation at other than the rates or charges established by Savoy in its tariffs or service contracts. Pursuant to the compromise, Savoy paid $40,000 to FMC.

Total Port Clearance of Florida Inc.- a destination agent and consignee in Miami, Florida. It was alleged that Total Port violated section 10(a)(1) of the Shipping Act of 1984 by obtaining transportation at less than the rates or charges otherwise applicable, through the device or means of misdescription of the commodities shipped. Total Port Clearance paid $17,000 to FMC to settle these allegations.

Sims, Waters & Associates, Inc.- a licensed ocean freight forwarder located in Jacksonville, FL, was alleged to have violated the Shipping Act of 1984 by obtaining or attempting to obtain transportation for property at less than the rates and charges otherwise applicable through the unlawful use of service contracts and time-volume rates, and by collecting freight forwarder compensation on shipments in which it had a beneficial interest. Sims, Waters & Associates paid FMC $15,000. and Kathy Morris Transport Partner USA, Inc., of Charleston, SC were alleged to have violated of the Shipping Act of 1984 by obtaining or attempting to obtain transportation for property at less than the rates and charges otherwise applicable through the unlawful use of service contracts and time-volume rates, and by collecting freight forwarder compensation on shipments in which it had a beneficial interest. Transport Partner paid $14,000 to FMC to compromise the allegations.

Versatile International Corp.- FMC alleged this Torrance, California based NVOCC violated section 10(a)(1) of the Shipping Act of 1984 on shipments from the China by obtaining transportation at less than the rates or charges which would otherwise be applicable, through the device or means of misdescription of the commodities shipped. Versatile paid $30,000 to the Commission.

Recent public remarks by FMC Chairman Hal Creel indicate the agency is not satisfied with the progress of reforms at Japanese ports. The FMC may be considering a renewal of sanctions against Japanese ocean carriers or freight consolidators in order to increase pressure on Japan to reform its port services industry. In a speech at Charleston, SC on May 18, the FMC Chairman said “insufficient progress has been made” in the reform of Japanese port practices that discriminate against US flag carriers. Chairman Creel also noted the “rule which proposed sanctions was not discontinued, but merely suspended.”

Reforms promised by Japan’s Ministry of Transport (MOT) formed the basis of a agreement between the US and Japan in November 1997. Before the agreement was reached, however, three Japanese carriers, NYK Line, K-Line and Mitsui OSK Lines, were fined a total of $1.5 million as a result of countervailing sanctions enforced by the FMC. In the agreement, MOT officials agreed to grant US flag carriers Sea-Land and APL expeditious approval of licenses to operate their own terminals at Japanese ports. Japanese officials also agreed to reform the prior consultation system used at Japanese ports, and to also develop an alternative that would allow carriers to bypass the Japan Harbor Transportation Association.

Japanese officials have indicated substantial reforms have been accomplished, and note APL and Sea-Land have not submitted applications for licenses to operate ocean cargo terminals in Japan. A new round of discussions on Japanese port reforms between US and Japanese officials appears likely.

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SIGNALS™ the newsletter of Distribution-Publications, Inc. Vol. 2, No. 2, June, 1998