|May 12, 2000|
Volume 4, Number 5
SIGNALS provides detailed information on the regulations and activities of the US Federal Maritime Commission (FMC), and related developments in the ocean freight industry. For past issues, please consult our index.
In this issue, we discuss these industry developments:
|FMC Narrows its Definition of Ocean Common Carrier: Docket 99-10 Finalized|
Ocean carriers whose vessels do not directly call US ports will be required by the FMC to comply with NVOCC licensing and bonding regulations as of August 7, 2000. After more than a year of consideration, the FMC has finalized a new definition of "ocean common carrier" (OCC). According to FMC Docket 99-10, only an ocean common carrier whose vessels call US ports directly in at least one US trade will be allowed to register with the Commission as an OCC - formerly known as "vessel operating common carrier" (VOCC). Ocean carriers issuing bills of lading to or from the USA who do not satisfy this definition will be subject to FMC regulations that apply to Non-Vessel Operating Common Carriers (NVOCCs), including licensing and bonding requirements. As NVOCCs, these carriers will no longer enjoy the opportunity to enter into service contracts with their shippers, and will not be able to participate in agreements with other OCCs.
The FMC made no provision to "grandfather" carriers who have long served the US trades. Even carriers who are parties to carrier-to-carrier vessel sharing agreements filed with the Commission, or transshipment agreements, will be required to comply. For example, carriers whose vessels sail between Europe and Africa have for many years used connecting carriers to carry their cargo from US ports to European ports, where cargo is transferred to their vessels sailing for African ports. As of August 7, 2000, these carriers can continue to issue through bills of lading from the USA to Africa only if they file NVOCC bonds, cancel any service contracts and FMC agreements they have filed, and obtain the Ocean Transportation Intermediary (OTI) license for their US offices.
The new definition will be inserted in the FMC regulations governing service contracts, tariffs, OTI licensing, and carrier agreements. These are filed under Title 46, US Code of Federal Regulations, Subchapter C, Parts 515, 520, 530, and 535. The new definition reads as follows:
Ocean common carrier means a common carrier that operates, for all or part of its common carrier service, a vessel on the high seas or the Great Lakes between a port in the United States and a port in a foreign country, except that the term does not include a common carrier engaged in ocean transportation by ferry boat, ocean tramp, or chemical parcel-tanker.
Carriers who have questions about their status with FMC, or the OTI-NVOCC requirements may contact Distribution-Publications for more information, and for assistance with the required filings.
|Hyundai and Med Shipping Pay FMC $100,000 Settlement: Docket No. 97-07|
A compromise agreement between the Federal Maritime Commission (FMC), Hyundai Merchant Marine Company, Ltd. (Hyundai) and Mediterranean Shipping Co., S.A. (Med Shipping) has settled allegations these carriers operated under an unfiled agreement in violation of the Shipping Act. According to FMC Docket 97-07, FMC alleged Hyundai and Med Shipping failed to file a true and complete copy of their slot charter agreement in the US/North Europe trade. FMC further alleged these carriers operated under an agreement that had not yet become effective under the Shipping Act, and operated in a manner not in accordance with the agreement. Hyundai and Med Shipping agreed to file agreements which accurately reflect their operations, and they jointly paid FMC $100,000 to settle these allegations. The carriers did not admit any violations of the Shipping Act.
|Maersk, P&O Nedlloyd & Sea-Land Pay FMC $100,000 Settlement: Docket No. 97-08|
A compromise agreement between the Federal Maritime Commission (FMC), A.P. Moller-Maersk Line (Maersk), Sea-Land Service, Inc. (Sea-Land), and P & O Nedlloyd Limited (P&O Nedlloyd) has settled allegations these carriers operated under an unfiled agreement in violation of the Shipping Act. According to FMC Docket 97-08, FMC alleged these carriers failed to file a true and complete copy of their space charter agreement in the US Pacific Coast/ North Europe trade. The carriers contested these allegation, but agreed file an amendment to their agreement, and they jointly paid FMC $100,000 to settle these allegations. The carriers did not admit any violations of the Shipping Act in this proceeding or any other context.
|FMC Clarifies Electronic Tariff Regulations: Circular Letter No. 00-01|
The FMC's Executive Director has reminded all Carriers of their obligation to publish complete and accurate tariffs, and make these available electronically to the Commission and the Shipping Public at reasonable charge. FMC Circular Letter No. 00-01 was distributed during April by the FMC Office of Service Contracts and Tariffs to carriers, conferences and tariff publishers. Professional tariff publishers handle 99% of FMC tariffs. The specific problems and concerns noted in the Circular are:
Instructions: some tariff systems do not contain adequate instructions for the use of tariff information.
Commodity Index: each tariff must include a searchable commodity index. Some systems do not provide an alphabetical commodity index and fail to provide adequate commodity search features.
History: some tariff systems do not allow users to easily change access date to view complete tariff history.
Software: the FMC has found some systems require considerable time to download software and/or tariff information, or operate at exceeding slow speeds. These delays add to the public's expense when tariff systems charge per minute access fees, limit the public's access to tariffs.
Fees: the Commission will soon issue a rulemaking on tariff access fees. At a recent meeting, FMC Commissioner Brennan noted one carrier required an advance payment of USD 1347 before it will provide access to its tariff, and this suggests the carrier was trying to discourage public access to its tariff.
Here at DPI, we have found no problems in complying with the electronic tariff regulations. Our web site at www.dpiusa.com is accessed regularly by the FMC staff; and we have been complimented by the FMC on its ease of use, comprehensiveness, and reasonable access fee. We are concerned, however, about tariffs whose rates have not been updated timely. Each FMC tariff must include complete and accurate freight rates and surcharges. These filings must be made not later than the date cargo is received for shipment. Increases to rates and surcharges must be filed 30 days prior to their effective date. Rates must be on file for a minimum of 30 days.
Carriers who fail to update their tariffs risk substantial penalties. The FMC Bureau of Enforcement has an on-going audit program, and one of its components is identifying tariffs that have not been updated. A tariff with no freight rates, or a single Cargo, NOS rate of USD 500 WM for worldwide shipments is very obvious to the Bureau. A tariff such as this could be correct only for an inactive carrier. The FMC can easily discover the extent of any carrier's shipping activity by accessing on-line databases. In Docket 97-19, for example, the FMC acknowledged it used trade statistics provided by the Journal of Commerce PIERS database, and a computer analysis of inbound shipments conducted by the U.S. Customs Service. With the assistance of U.S. Customs, the FMC isolated shipments that were mis-described by an NVOCC to the ocean carrier.
SIGNALS is provided as a service to its customers by Distribution-Publications, Inc. © 2000. All rights reserved.
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The information contained herein is obtained from reliable sources. It is subject to change at any time, however, depending on changes in laws and regulations. While we continually attempt to monitor this information, we do not guarantee its accuracy and are not responsible for any damages suffered by any party in reliance on it.