In response to FMC allegations of possible violations of the Shipping Act, Maersk Line recently entered into a settlement agreement whereby it agreed to pay FMC $925,000, and the FMC agreed to discontinue Docket 99-07. The FMC began this investigation in April 1999 to determine if Maersk violated section 10(b)(1) of the Shipping Act of 1984 by charging, demanding, collecting or receiving less or different compensation than the rates and charges shown in its tariffs or service contracts. The investigation also focused on whether Maersk violated section 10(b)(2) of the Shipping Act by rebating, refunding or remitting a portion of its tariff or service contract rates. Additionally, the FMC’s Bureau of Enforcement alleged Maersk collaborated with shippers, including NVOCCs, in arrangements involving commodity and measurement discrepancies, thereby allowing those shippers in many instances to obtain substantial freight savings to which they were not entitled, and in violation of Section 10(b)(4) of the Shipping Act.

In the settlement agreement Maersk cooperated with the Commission, and terminated the alleged malpractices, and also agreed to institute measures to eliminate illegal practices in the future. Maersk did not admit any violations of the Shipping Act. FMC Administrative Law Judge Fredrick M. Dolan, Jr., approved the agreement on September 15, 1999, but it is not yet administratively final.

The US Senate recently approved the FMC Authorization Act, which allows federal funds to be spent to fund the Federal Maritime Commission for fiscal year 2000 and fiscal year 2001. The Senate agreed with President Clinton’s proposed increase to the FMC’s annual budget. Under this new budget the FMC will be allocated US$15.3 million, an increase of $1.15 over the fiscal year ending Sep. 30, 1999.

Under this recently docketed proceeding the FMC instituted a formal investigation to determine whether Imex Shipping, Inc. violated the Shipping Act. Imex Shipping is a NVOCC based in Newark, NJ.

Based on evidence available to the Commission, it is alleged that from September 1996 through April 1998, Imex received rebates from a vessel-operating common carrier (VOCC) in the trade between the United States and South America. This rebate arrangement allowed Imex to be charged rates lower than the applicable service contract rates for shipments transported between various ports and points in the United States and South America. Imex initially paid the applicable service contract rates, but later received a refund for the difference between the service contract rates and the agreed upon rates.

Documents provided to the Commission indicate that Imex’s malfeasance extends to the movement of over 100 shipments. The FMC’s investigation will determine if Imex violated the section 10 of the Shipping Act; if violations are found, the FMC could assess civil penalties of up to $27,500 for each violation knowingly and willfully committed, cancel Imex’s tariff, and its OTI license.

According to this FMC Docket issued October 5, 1999, the FMC has ordered an investigation and hearing to determine possible violations of the Shipping Act by Stallion Cargo, Inc., a Miami based NVOCC.

According to information available to the Commission, Stallion regularly ships cargo in the trade from Port Everglades to the port of Oranjestad, Aruba. Based on evidence available to the Commission, it appears that during September and October 1998, Stallion engaged in a scheme of misdescribing commodities on shipments carried by King Ocean Service de Venezuela, S.A. and SeaFreight Line, Ltd.

The FMC alleges that on at least eight (8) occasions, Stallion consolidated its shipments such that each container consisted of several commodities. However, it appears that Stallion declared only one type of commodity to King Ocean and SeaFreight, who subsequently rated the commodities in accordance with the inaccurate description. Stallion’s house bills of lading, which describe the specific commodities being shipped, indicate that Stallion was fully cognizant that the shipments actually consisted of commodities different from those listed on King Ocean’s and SeaFreight’s bills of lading.

Docket 99-18 also alleges that during the same time period Stallion processed eighty-two (82) shipments for which it issued its own NVOCC bills of lading with respect to the commodities being transported.

It appears that the rates assessed and collected by Stallion from its customers for these shipments bear no relation to the rates set forth in Stallion’s ATFI tariff on file with the Commission. The FMC’s investigation will determine if Imex violated the sections 10(a)(1) and/or 10(b)(1) of the Shipping Act.

In the event the alleged violations are proven, the FMC could assess civil penalties of up to $27,500 for each violation knowingly and willfully committed, cancel Stallion’s tariff, and revoke its OTI license.

Here at Distribution-Publications, Inc. (DPI) we are often asked how to contact the FMC for assistance in resolving a dispute. The Commission’s Office of Informal Inquires Complaints (OIIC), headed by Joseph T. Farrell, is often the best choice. This purpose of this office is to assist in facilitating conflict resolution through informal and non-binding approaches. Consumers of shipping services can sometimes utilize OIIC’s services to avoid unnecessary litigation or before resorting to the Commission’s more formal processes. For example, the Office can assist in attempts to secure the recovery of funds improperly collected by carriers or forwarders.

OIIC also provides interested parties with information and referrals in response to a wide range of informal inquiries and, where appropriate, advises inquiring persons that they may file formal complaints which entitle them to initial decisions of administrative law judges which can be appealed to or reviewed by the Commission. To contact the FMC Office of Informal Inquires and Complaints telephone (202) 523-5807, fax: (202) 523-0014, or e-mail: josephf@fmc.gov