The Federal Maritime Commission (FMC) voted
February 18, 2010 to draft a proposed rule that, if adopted, would offer licensed NVOCCs an exemption from the
requirement to publish and adhere to tariff rates. The detailed rule making proposal has not yet been released by
the Commission, but key features have been announced. Instead of publishing tariff rates, licensed NVOCCs would
have the option to utilize “unpublished rate arrangements” provided these are agreed to by shippers in writing
before cargo moves. These rate arrangements must be retained by the NVOCC for FMC inspection. The motion to draft the proposed new rule was approved by a 3 to 1 vote, with FMC Chairman
Lidinsky in the majority. It directs the FMC staff to prepare a notice of proposed rulemaking that would
offer the exemption, while imposing several conditions, including:
- The exemption would be voluntary; i.e. NVOCCs could choose to continue publishing rates in their tariffs or they
could use “unpublished rate arrangements” that satisfy FMC requirements;
- The exemption would only apply to NVOCCs holding the Ocean Transportation Intermediary (OTI) license;
- The exemption would be limited to tariff rates; NVOCCs would still be required to continue to publish and
maintain tariff rules that comply with Section
8 of the Shipping Act;
- The proposed rule would exempt licensed NVOCCs from the tariff rate publication requirements of Section 8 of the
Shipping Act and from Section 10(b)(2)’s requirement to adhere to published rates. The proposed rule making will
request comments on whether the exemption should also extend to Sections 10(b)4 and 10(b)8 of the Shipping Act
which prohibit unfair and unjust discriminatory practices.
If adopted, the exemption would require NVOCCs who choose to utilize it to observe the following requirements:
- Tariff rules must be maintained and note that the NVOCC has chosen to operate under the exemption;
- Public access to tariff rules must be provided by the NVOCC free of charge to the public;
- Unpublished rate arrangements must be agreed to and memorialized in writing, including the applicable rate for
each shipment, by the date cargo is received by the carrier at the origin. The proposed rule making will request
comments on additional terms that should be required in the unpublished rate arrangement documentation.
- Records of unpublished rate arrangements and associated communications must be retained by the NVOCC for five
years and made available for inspection by the FMC as required by its licensing regulations.
The FMC’s action in this matter was prompted by a Petition filed in July 2008
by the National Customs Brokers and Freight Forwarders Association
of America, Inc. The Petition requested that rate disputes between NVOCCs and their shipper customers be
settled solely under contract law and not the tariff provisions of the Shipping Act of 1984. Commissioner
Joseph E. Brennan voiced strong opposition to the Petition and the motion approved at the FMC meeting of
February 18. He released a statement in which he explained he opposes the petition on the basis of both law and policy.
In Commissioner Brennan’s view, exempting NVOCCs from tariff rate requirements represents a step backward from the
standpoint of consumer protection. He urged the Commission to hold a public hearing on this matter.
On February 23, 2010 the FMC Secretary issued a news release to remind NVOCCs that these potential new regulations do not yet apply. At this
time, NVOCCs must continue to comply with the Commission’s current tariff regulations. Changes to the NVOCC tariff publication requirements will occur
only after the Commission publishes a Notice of Proposed Rulemaking, considers public comments on that proposal, and
publishes a Final Rule.
The carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223,
serving the East Asia/USA trade lane announced several changes to fuel surcharges effective April 1, 2010. The TSA
Carriers also applauded the decision of Federal Maritime Commission, after a 45-day review, to allow its members to
discuss and coordinate strategies that will reduce air and water pollution, as well as vessel fuel consumption.
Bunker Adjustment Factors (BAF) calculated using TSA’s old monthly formula will decrease effective
April 1, 2010 to US$ 688 per 20ft ctr, US$ 860 per 40ft ctr, US$ 968 per 40ft hi-cube ctr, US$ 1089 per 45ft ctr,
and US$ 19 per WM (LCL). However, the “New Formula BAF” for the April-June 2010 quarter will
increase slightly to US$ 368 per 40ft ctr to US Pacific Coast Ports and US$ 727 per 40ft ctr to US Atlantic and Gulf
ports, with other container sizes charged accordingly. Inland Fuel Charges (IFC) will increase
April 1, 2010 to US$ 211 per ctr for shipments to IPI destinations served via West Coast Ports, US$ 106 per ctr for
shipments to RIPI destinations served via East Coast Ports, and US$ 61 per ctr for shipments to Group 4 Points in
California, Oregon and Washington and to East Coast local store door points.
The Emergency Revenue Charge (ERC) of US$ 320 per 20ft ctr; US$ 400 per 40ft ctr, US$ 450 per 40ft
high-cube, and US$ 505 per 45ft ctr that was recently implemented by most of the TSA Carrier members remains in
effect. The ERC is an interim charge that is distinct from the previously announced 2010 General Rate Increase
(GRI) of US$ 800 per FEU for West Coast port-to-port and local cargo, and US$ 1,000 per FEU for all
other all-water and intermodal shipments. Several of the TSA Carriers have said the ERC will expire upon execution
of new contracts in 2010. However, their tariffs do not yet reflect expiration dates for the ERC or new rules for
the 2010 GRIs – these are expected soon.
The amendment to the TSA Carrier agreement that allows the carriers to coordinate their implementation of slow
steaming took effect on February 6, 2010 without opposition from the FMC. Slow steaming allows vessels to save
fuel, which reduces their emissions and provides substantial cost savings. TSA’s 15 members are American
President Lines, China Shipping (CSCL), CMA-CGM, COSCO Container Lines, Evergreen Marine, Hanjin Shipping,
Hapag-Lloyd Container Line, Hyundai Merchant Marine, “K” Line, Maersk Line, Mediterranean Shipping, NYK
Line, OOCL, Yang Ming Marine and Zim Integrated Shipping Services. Visit www.tsacarriers.org
The Westbound Transpacific Stabilization Agreement (WTSA), FMC Agreement No. 011325, whose member
lines serve the U.S. export trades from the USA to East Asia, announced another general rate increase (GRI), as well
as increases to Bunker Surcharges, Inland Fuel Charges and Documentation Fees.
Traffic to/from and via:
US Atlantic/Gulf Coast Ports
US Pacific Coast Ports
US$ 834 per 20ft dry ctr
US$ 420 per 20ft dry ctr
US$ 1042 per 40ft/45ft dry ctr
US$ 525 per 40ft/45ft dry ctr
US$ 1387 per 40ft/45ft reefer ctr
US$ 739 per 40ft/45ft reefer ctr
The Inland Fuel Charge (IFC) for April-June 2010 will increase to US$ 211 per ctr for rail and
intermodal rail/truck shipments, and US$ 61 per ctr for local/regional truck shipments. Currency
Adjustment Factors (CAF) for the same period are: Taiwan 5% and Singapore 17%. The US Origin
Documentation Fee for all cargo will increase to US$ 50 per bill of lading on April 1, 2010.
Another GRI has been filed by the WTSA Carriers. Effective April 1, 2010 this GRI will increase
all rates for dry cargo by US$ 240 per 20ft ctr and US$ 300 per 40ft ctr. Rates for refrigerated cargo will
increase by US$ 300 per 20ft ctr from US Pacific Coast Ports and by US$ 500 per 40ft container from US Atlantic
and Gulf Coast Ports and from all inland locations. The WTSA’s 10 member carriers are American President
Lines, COSCO Container Lines, Evergreen Marine Corp., Hanjin Shipping, Hapag-Lloyd Container Line, Hyundai
Merchant Marine, “K” Line, NYK Line, OOCL and Yang Ming Marine. For
more info visit www.wtsacarriers.org.
| FMC Announces Settlement Agreements: $625,000 in Civil|
Penalties Paid ( This article is released 15Mar2010 )
The Federal Maritime Commission (FMC) has
announced four compromise
agreements in which an ocean carrier and intermediaries agreed to pay a total of $625,000 in civil penalties
for alleged violations of the Shipping Act of
1984. The agreements were reached with a vessel-operating common carrier (VOCC) and three ocean
transportation intermediaries (OTIs). The agreed penalties resulted from investigations conducted by the
Commission’s Area Representatives in Los Angeles, Seattle, South Florida, and Washington, D.C. Staff attorneys
with the Bureau of Enforcement
negotiated the compromise agreements. The parties settled and paid penalties, but did not admit to violations of
the Act or the Commission’s regulations. The compromise agreements are:
China Shipping Container Line: China Shipping Container Line is an ocean common
carrier headquartered in Shanghai and controlled by the government of the People’s Republic of China. China
Shipping agreed to pay $440,000 as part of a compromise agreement. That agreement settled alleged violations of
the Shipping Act of 1984 that involved more than one thousand shipments over four years. These alleged violations
included: (1) providing transportation services to intermediaries that did not have tariffs, licenses, or bonds as
required by the statute; (2) misdescribing cargo they shipped; (3) allowing use of service contracts by persons
who were not parties to those contracts; and (4) providing transportation that was not in accordance with the
rates and charges set forth in published tariffs. China Shipping provided the Commission with information
regarding the activities at issue, terminated those activities, and agreed to cooperate fully with any further
Commission investigation regarding those activities.
A.T.I. U.S.A. Inc.: A.T.I. U.S.A. Inc. is a licensed and bonded Non-Vessel Operating Common
Carrier (NVOCC) and freight forwarder based in Elizabeth, New Jersey. A.T.I. paid $115,000 in civil penalties
pursuant to a compromise agreement. The Commission alleged that A.T.I. violated sections 10(a)(1), 10(b)(1), and
10(b)(2)(A) of the Shipping Act of 1984 by obtaining transportation services at less than applicable rates and
charges for ocean common carriers, and by charging rates that did not comply with its published tariffs.
Specifically, the Commission alleged that ATI misdeclared the measurements of certain shipments of motor vehicles
and permitted use of service contracts by persons who were neither signatories nor affiliates to those contracts.
MT Global Freight Solutions Inc.: MT Global is a licensed and bonded NVOCC located in Grapevine,
Texas. MT Global entered into a compromise agreement with the Commission, and pursuant to that agreement, made a
payment of $35,000. The Commission alleged that MT Global violated section 10(a)(1) of the Shipping Act by
obtaining transportation services at less than applicable rates and charges by unlawfully accessing service
contracts to which MT Global was not a signatory or affiliate, and violated section 10(b)(2)(A) of the Act by
providing ocean transportation services at other than the rates or charges provided in its published tariffs.
Cosa Freight Inc.: Cosa Freight Inc. is a licensed and bonded NVOCC located in Pomona,
California. Cosa Freight made a payment of $35,000 pursuant to a compromise agreement. The Commission alleged that
Cosa Freight obtained, and allowed others to obtain, ocean transportation for property at less than the rates and
charges that would otherwise be applicable by improperly accessing and allowing others to access service contracts
to which Cosa Freight was not a signatory, in violation of section 10(a)(1) of the Shipping Act. The Commission
also alleged that Cosa Freight violated section 10(a)(1) of the Shipping Act by misdescribing commodities that
In its announcement of these settlement agreements FMC Chairman Richard A.
Lidinsky, Jr. praised the Commission’s Area Representatives and Bureau of Enforcement for their hard work
protecting competition and the shipping public: “These penalties should serve as a reminder to any carriers
or intermediaries who may be tempted to disregard the Commission’s rules against unfair or deceptive practices.
The Federal Maritime Commission’s team on the front lines will be vigilant in protecting the emerging green shoots
of recovery in the ocean shipping industry, international trade, and the larger economy.”
This is the first announcement of settlement agreements since Chairman Lindinsky joined the Commission and since
Peter J. King was named Director of the Bureau of Enforcement. Mr. King was previously FMC’s General Counsel. In
August 2009 the Commission announced eight compromise agreements, resulting in the collection of $748,000 in civil penalties from
one ocean carrier, one OTI-Forwarder, six OTI-NVOCCs and one unlicensed entity.
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