Evidence collected by the FMC pursuant to the Section 15 Order issued to members of the Trans-Atlantic Conference Agreement (TACA) on February 22, 1996 brought a Memorandum of Agreement (MOA) between Hyundai and MSC to the Commission’s attention. The MOA is a detailed document with four appendices, while the FMC agreement is written in general terms and does not contain any appendices or certain other specifics set forth in the MOA. Besides this difference in detail, there are three other critical differences between the agreement filed with FMC and the MOA. The MOA is subject to all the rights, obligations, definitions, terms and conditions set forth in the TACA agreement; the FMC filed agreement contains no similar provision. The MOA sets a fixed initial term of three years, with a six-month termination notice provision thereafter; the FMC filed agreement sets no fixed term. Finally, the MOA initially required both parties to take a common position on membership in TACA; nothing similar appears in the FMC filed agreement. This provision was amended by the parties on May 20, 1996.

The Shipping Act of 1984 and the Commission’s regulations are explicit in requiring that a true and complete copy of every applicable agreement be filed with the Commission, and that parties operate only pursuant to the terms of such agreements. Effective FMC oversight of the activities of parties to agreements granted immunity from US antitrust laws could be thwarted by failure to disclose essential elements of agreements, or Docket No. 97-07 by language filed with the Commission which may not permit an assessment of an agreement’s true competitive impact. The FMC is especially concerned with the anti-competitive aspects of the MOA. It appears the MOA, as originally signed, effectively ties Hyundai, a traditional non-conference carrier, to membership in TACA for at least three years. There is nothing in the FMC filed agreement that would alert the Commission or the shipping public to this anti competitive aspect of the slot charter agreement.

Like Docket 97-07, this investigation began with evidence collected pursuant to the Section 15 Order issued by the FMC to members of the Trans-Atlantic Conference Agreement (TACA) in 1996. Among the documents received by the FMC in response to this Section 15 Order were incomplete copies of an unfiled Record of Discussions (ROD) among Maersk, P&O and Sea-Land dated August 16, 1990. This ROD is similar to the FMC Agreement between these carriers, filed with the Commission on August 27, 1990. Both the ROD and this FMC agreement provide for slot chartering in the US Pacific Coast/North Europe trade.

While the ROD and the FMC filed agreement are very similar, there are three substantial differences of concern to the FMC. First, the ROD requires the parties to be members of the USA-North Europe Rate Agreement and the North Europe-USA Rate Agreement (predecessors of TACA); the FMC filed agreement states merely “the parties shall discuss and agree on a common position as to their conference/non-conference status in the trade.” Second, the ROD contains specific authority under which Maersk will charter to P&O and Sea-Land a defined minimum and maximum number of slots on Maersk vessels sailing between ports in North Europe and California, but the ROD contains no agreement under which any of the parties will charter space on Sea-Land or P&O vessels. FMC filed agreement authorizes the parties to “make space and slots available to each other.” The third difference noted by the FMC is the absence of detail regarding shoreside operations in the ROD. The FMC filed agreement provides that the parties may discuss and agree on the use of terminal facilities, equipment pools and other shoreside services, but the ROD provides no such authority.

In the view of the FMC, the differences between the ROD and the FMC filed agreement between Maersk, P&O (now P&O Nedlloyd) and Sea-Land, appear to extend beyond routine operational or administrative matters and concern activities which affect competition in the US Pacific Coast/North Europe trade. The FMC questions whether the filed agreement is the true and complete agreement or agreements among the parties. Neither the ROD nor subsequent operations by the parties indicate that the parties agreed to, or have engaged in, reciprocal space chartering in this trade. It appears, instead, that P&O and Sea-Land may have terminated direct vessel service to and from certain US Pacific Coast ports in connection with this charter of space on Maersk vessels. Thus, the FMC filed agreement may not reveal the true competitive impact of the parties’ arrangements. Moreover, there is nothing in the FMC filed agreement which would indicate that the parties had already entered into and implemented a specific agreement under which Maersk became a member of the North Europe-USA Rate Agreement.

Docket No. 97-06 : Shipman International (Taiwan) Ltd., Order of Investigation and Hearing

An enhancement to the Internet World Wide Web site of Distribution-Publications, Inc. makes back issues of SIGNALS Ô more widely available. Web users will find these at SIGNALS™ Index For the most timely delivery of new issues of SIGNALS Ô request the e-mail version. The DPI web site can also be accessed via a hyperlink provided by SeaLink Information Technologies, a one-stop Internet service for shippers, carriers and forwarders located at http://www.sealink.com The SeaLink web site provides carrier sailing schedules, shipment tracking, cargo reservation, shipping instructions, and a services directory for carriers and forwarders active on the Internet’s World Wide Web.

According to a recent report in the Hong Kong Shipping Gazette, shipping lines at Hong Kong have publicly expressed their support for compulsory freight forwarding licensing. Claus Hemmingsen, vice-chairman for the Hong Kong Liner Shipping Association said this type of regulation could help stabilize Hong Kong’s freight market and at a critical time. The hand over of Hong Kong to China on July 1, 1997 has prompted many observers to speculate on how to best regulate Hong Kong’s vibrant freight industry.

On May 1, 1997 the Senate Committee on Commerce ordered this proposed legislation “to be reported with an amendment in the nature of substitute favorably.” In other words, the Committee agreed an amended version of the bill should be scheduled for debate and a vote by the full Senate. At this writing, the Ocean Shipping Reform Act of 1997, (Senate Bill No. S.414), has not found a place on the Senate’s calendar. Other legislation has taken priority, and S.414 might not reach the Senate floor until after the summer recess.

The substitute amendment makes controversial changes to S.414. The bill introduced by Sen. Kay Bailey Hutchison (R-TX) on March 10, 1997 allowed independent carriers to enter into confidential contracts with shippers, which would not be filed with any government agency. The substitute amendment requires all carriers to file service contracts and make some contract details public. Sen. Slade Gorton (R-WA), a cosponsor of the bill, has publicly stated his objections to these changes, and pledged to debate these on the Senate floor. Here is a summary of key changes made by the substitute amendment to S.414: