The Federal Maritime Commission recently announced eight compromise agreements and recovered a total of $477,500 in civil penalties for alleged violations of the Shipping Act. The agreements were reached with ten non-vessel-operating common carriers (NVOCCs) and related companies providing ocean transportation services. The agreed penalties resulted from investigations conducted by the Commission’s Area Representatives in Los Angeles, New York, Seattle, South Florida, and Washington, D.C. Staff attorneys with the Commission’s Bureau of Enforcement negotiated the compromise agreements. The parties settled and agreed to penalties, but did not admit to violations of the Act or the Commission’s regulations. The compromise agreements are as follows.
AE Eagle America Inc., AE Eagle Cargo, Inc., and AE Eagle International Freight Shanghai, Co. Ltd. AE Eagle America is an NVOCC located in New York; AE Eagle Cargo Inc. is a licensed NVOCC in California, which serves as consignee for AE Eagle shipments, while AE Eagle International Freight Shanghai serves as shipper and origin agent for shipments from China. FMC alleged that these three companies violated the Shipping Act by knowingly and willfully obtaining transportation at less than the rates and charges that would otherwise be applicable by unlawfully accessing service contracts to which they were not a signatory, and by misdescribing the commodities shipped. FMC further alleged that AE Eagle America also violated the Shipping Act by providing service that was not in accordance with the rates or charges contained in its NVOCC tariff. The companies made payment to the Commission in the amount of $87,500.
Ba-Shi Yuexin Logistics Development Co. Ltd., trading as Bus Logistics, is a licensed NVOCC with offices in California. Commission staff alleged that Bus Logistics violated the Shipping Act by knowingly and willfully obtaining transportation at less than the applicable rates by misdeclaring the cubic measurements of certain shipments in order to obtain discounted rates under a carrier’s equipment substitution provisions, and by providing service not in accordance with its NVOCC tariff. Under the terms of the compromise, Ba-Shi Yuexin Logistics paid $85,000 in civil penalties.
Oceane Marine Shipping Inc. is a licensed NVOCC based in Georgia. Commission staff alleged that Oceane Marine violated the Shipping Act by knowingly and willfully allowing other persons to obtain transportation at discounted rates, by giving rebates, and by paying for trucking services not performed. Additionally, staff alleged that Oceane Marine violated the Shipping Act by allegedly transporting cargo for the accounts of unlicensed ocean transportation intermediaries. Under the terms of the compromise, Oceane Marine paid $70,000 in civil penalties.
S.E.S. International Express Inc. is a licensed NVOCC based in California. Commission staff alleged that S.E.S. International violated the Shipping Act by knowingly and willfully obtaining unlawful access to certain service contracts for its shipments, and by misdeclaring the cubic measurements of certain shipments in order to obtain discounted rates under a carrier’s equipment substitution provisions. S.E.S. International also charged its customers ocean freight rates that were not listed in its NVOCC tariff. S.E.S. International made a payment of $62,500 in compromise of these allegations.
MB Logistics International Inc. is a licensed NVOCC based in New York. FMC staff alleged that MB Logistics violated the Shipping Act by knowingly and willfully obtaining freight transportation at less than the applicable rates or charges established by ocean common carriers by misdeclaring commodities, allowing other NVOCCs to access its service contracts, and providing service not in accordance with its NVOCC tariff. MB Logistics paid $50,000 in civil penalties.
Sinotrans Express Inc. is a licensed NVOCC based in California. Commission staff alleged that Sinotrans Express violated the Shipping Act by knowingly and willfully obtaining ocean transportation at rates and charges that were lower than would otherwise be applicable by misdescribing cargo under its service contracts. In compromise of these allegations, Sinotrans Express paid the Commission $50,000.
Cargo Alliance Inc. is a licensed NVOCC based in California. FMC staff alleged that Cargo Alliance violated the Shipping Act by knowingly and willfully obtaining unlawful access to certain service contracts for its shipments to the United States, providing transportation as an NVOCC at rates not in accordance with its published tariff, and providing service as a freight forwarder without a valid freight forwarder license or applicable bond. Cargo Alliance made a payment of $40,000 in compromise of these allegations.
Orion Cargo Services Inc. is a licensed NVOCC based in New Jersey. FMC alleged that Orion Cargo violated the Shipping Act by transporting cargo for the account of unlicensed ocean transportation intermediaries. In addition, Orion Cargo provided transportation in the liner trades that was not in accordance with the rates and charges in its published tariff, in violation of the Shipping Act. Under the terms of the compromise, Orion Cargo paid $32,500 in civil penalties.
The Federal Maritime Commission has issued a proposed rulemaking to amend its rules regarding certainty of terms of service contracts and non-vessel-operating common carrier service arrangements. The proposed rule, issued in Docket 11-17, is intended to provide common carriers and their customers with certainty and flexibility if they decide to use long-term contracts that adjust based on a freight rate index that reflects changes in market conditions.
The FMC reports that an increasing number of service contracts filed with the Commission reference freight rate indices. These indices include the China Containerized Freight Index (CCFI), the Shanghai Containerized Freight Index (SCFI), the Drewry Freight Insight Index, and the Transpacific Stabilization Agreement (TSA) Index. The ocean freight rates in these service contracts adjust in increments based upon the changes in the referenced index levels, or their annual or quarterly averages. Some carriers and shippers are seeking rate stability through long-term contracts, while trying to preserve flexibility to adjust contract rates reflecting changes in market conditions.
Current FMC regulations require indices referred to in service contracts and NVOCC service arrangements to be widely available to the public. The Commission now proposes to change this regulation to allow parties to service contracts and NSAs to refer to indices not widely available to the public, so long as the indices are available to the FMC and the terms of the agreements are filed with the FMC. The Commission is interested in public comments on the possible methods by which contracting parties could ensure that the information referred to in service contracts is readily available to the Commission. Comments may be submitted to the FMC Secretary until November 28, 2011; email: firstname.lastname@example.org
The carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223, serving the East Asia/USA trade lane will increase their Alameda Corridor Charge (ACC) applicable on shipments moving to US inland points via rail through the ports of Los Angeles and Long Beach, CA. Effective December 1, 2011 the ACC will increase to USD 21 per 20’ container, USD 42 per 40’ container and USD 45 per 45’ container.
The TSA’s 15 carrier members are American President Lines, 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. The group’s web site at www.tsacarriers.org provides additional information.