June 6, 1997   Oakland, California

SIGNALS™ provides detailed information on the regulations and activities of the US Federal Maritime Commission (FMC), and related developments in the ocean freight industry.

  • Docket No. 97-07 - FMC Order of Investigation and Hearing, Possible Unfiled Agreements between Hyunda Merchant Marine and Mediterranean Shipping Co.
  • Docket No. 97-08 - FMC Order of Investigation and Hearing, Possible Unfiled Agreements between Maersk Line, P&O Nedlloyd and Sea-Land Service
  • FMC Bureau of Enforcement Activity - April and May 1997
  • SIGNALSä On The Internet
  • STB Ex Parte No. 618 - Revised Regulations for Domestic Water Carrier Tariffs
  • Forwarder Regulation Proposed in Hong Kong - Supported by HK Liner Shipping Association
  • S. 414: Ocean Shipping Reform Act of 1997 - Amended by Senate Committee
  • Notable New/Amended Agreements Filed with FMC - April and May 1997

    Docket No. 97-07 - FMC Investigation of Possible Unfiled Agreements between Hyundai Merchant Marine and Mediterranean Shipping Co.


    The FMC has opened a formal investigation to determine whether Hyundai Merchant Marine (Hyundai) and/or Mediterranean Shipping Co. (MSC) are violating or have violated pertinent provisions of the 1984 Act and Commission regulations by operating pursuant to an agreement in the Trans-Atlantic trade not filed with the Commission, the terms of which may be substantively different from those contained in the parties' agreement that is on file with the Commission (FMC Agreement No. 217-011512) and effective pursuant to the 1984 Act. This proceeding will determine whether civil penalties (fines) should be assessed, in what amount, and whether a cease and desist order should be issued.

     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.

    Docket No. 97-08 FMC Order of Investigation and Hearing, Possible Unfiled Agreements between Maersk Line, P&O Nedlloyd and Sea-Land Service


    This docketed proceeding calls for an FMC investigation and hearing to determine whether Maersk, P&O Nedlloyd and/or Sea-Land are violating or have violated pertinent provisions of the 1984 Act and Commission regulations by operating pursuant to an agreement in the US Pacific Coast/North Europe trade not filed with the Commission, the terms of which may be substantively different from those contained in the parties' agreement that is on file with the Commission (FMC Agreement No. 203-011299) and effective pursuant to the 1984 Act. This proceeding also will determine whether civil penalties (fines) should be assessed, in what amount, and whether a cease and desist order should be issued.

    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.

    Bureau of Enforcement Activity April and May 199


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


    Evidence collected by the Bureau indicates this Non-Vessel Operating Common Carrier (NVOCC) based in Taipei, Taiwan may have committed violations of Sections 10(a)(1) and 10(b)(1) of the Shipping Act of 1984, and violated FMC regulations as published in US Code of Federal Regulations 46CFR Part 514. According to this docket, Shipman International, acting as a shipper in relation to an ocean carrier, misdescribed the commodity on numerous shipments transported from Taiwan to the USA in 1996. Acting as an NVOCC, Shipman International assessed and collected freight charges which bore no relation to the rates set forth in its FMC tariff. Additionally, for a period of 54 days Shipman International operated as an NVOCC without an effective tariff on file. The matter has been assigned to an FMC Administrative Law Judge who will issue a decision in the matter and determine civil penalties, if applicable, by March 31, 1998.

    SIGNALS™ On The Internet


    An enhancement to the Internet World Wide Web site of Distribution-Publications, Inc. makes back issues of SIGNALSÔ more widely available. Web users will find these at SIGNALS™ Index For the most timely delivery of new issues of SIGNALSÔ 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.

    STB Ex Parte No. 618 - Revised Regulations for Domestic Water Carrier Tariffs


    The Surface Transportation Board (STB) of the US Department of Transportation has revised its tariff filing regulations to remove obsolete provisions, to provide carriers with additional flexibility to establish appropriate formats for the filed tariffs that continue to be required, and to reflect changes introduced by the ICC Termination Act of 1995. The new regulations are contained in the US Code of Federal Regulations 49 CFR Part 1312. These rules became effective May 18, 1997. They apply to vessel operating ocean common carriers providing freight transportation between the mainland USA and Alaska, Hawaii, Puerto Rico, the US Virgin Islands, Guam, American Samoa and other US territories.

    Forwarder Regulation Proposed in Hong Kong Supported by Hong Kong Liner Shipping Association


    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.

    S. 414: Ocean Shipping Reform Act of 1997 - Amended by Senate Committee
    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:

  • Service Contract Filing and Publication: all ocean carriers would be required to file service contracts with the Intermodal Transportation Board (the FMC's successor), and publish tariffs available to the general public providing the essential terms of these contracts. The essential terms made public would be reduced from ten (10) to these four (4) terms: US port range, commodity, volume or portion, and contract duration.

  • NVOCC Service Contracts: the substitute amendment would allow NVOCCs to enter into service contracts with shippers, subject to the same regulations as vessel operating common carrier contracts.

  • No More "Me Too" Service Contracts: carriers would not be required to provide access to service contracts to "similarly situated shippers."

  • Notice Requirements on Rate Increases: 30 calendar days notice would be required.

  • Prohibited Acts: conferences and agreements would be prohibited from requiring members to disclose service contract negotiations with shippers. Also, conferences and agreements would be required to allow members to sign independent service contracts. All carriers would be prohibited from engaging in "any unfair or unjustly discriminatory practice in the matter of rates or charges with respect to any location, port, class or type of shipper or ocean transportation intermediary, or description of traffic."

    Under Section 10 (b) 11 and 12, ocean common carriers would be specifically prohibited from transporting cargo for ocean transportation intermediaries who do not have a tariff and a bond as required by sections 8 and 19 of the Act. Also, carriers would be prohibited from entering into service contracts with ocean transportation intermediaries who do not have a tariff and a bond.

  • Ocean Transportation Intermediary (OTI): Ocean Freight Forwarders and Non-Vessel Operating Common Carriers (NVOCCs) would be grouped together and defined as "Ocean Transportation Intermediaries." All references in S.414 to freight forwarders would be changed to read ocean transportation intermediary. Licensing and bonding requirements for OTIs would be similar to those for forwarders in the Shipping Act of 1984. Notice requirements on claims against bonds would be amended to allow insurers to consider a claim valid when the bonded party fails to respond to notifications.

  • NVOCC Tariffs: The bill's definition of a common carrier does not change the Shipping Act of 1984. Therefore, it appears NVOCCs could continue to issue bills of lading as common carriers, and claim the legal protections offered to common carriers under the Carriage of Goods at Sea Act (COGSA) and other statutes; NVOCCs would be subject to the same tariff publication requirements as vessel operating common carriers.

    Notable New/Amended Agreements Filed with FMC - April and May 1997


    The FMC has given notice in the Federal Register of the filing of the following agreements under the Shipping Act of 1984. Agreements approved by the FMC take effect 45 days after publication in the Federal Register, unless a shortened review period is granted. Copies of agreements can be retrieved from FMC's public files by interested parties who appear in person. Distribution-Publications, Inc. (DPI) provides retrieval services for all information made public by the FMC, including agreements.

    Agreement No.:202-011259-012Federal Register Date: April 4, 1997
    Title:United States/Southern and Eastern Africa Conference.
    Parties:Empresa De Navegacao Internacional (Navinter), Lykes Bros. Steamship Co., Inc.,
    Mediterranean Shipping Company S.A., Safbank Line, Ltd. (Safbank), Wilhelmsen Lines A/S.

    Synopsis: The proposed amendment restates the Agreement and deletes Eastern Africa from the geographic scope of the Agreement. It also makes changes to the Agreement's name and various Agreement articles to reflect this change. The parties have requested a shortened review period.


    Agreement No.:203-011569Federal Register Date: April 23, 1997
    Title: Amazonas Service Agreement.
    Parties: Di Gregorio Navegorio Navegacao Ltda., Amazon Lines Limited.

    Synopsis: The proposed Agreement permits the parties to enter into a cooperative working arrangement that includes space charter, equipment interchange, sailing, and voluntary rate making authority in the trades between U.S. ports and inland points and ports and inland points in Brazil, including Amazon River ports. The parties requested short review.


    Agreement No.203-011570Federal Register Date: April 29, 1997
    Title: Hanjin/DSR-Senator Cooperative Management Agreement
    Parties: Hanjin Shipping Co., Ltd., DSR-Senator Lines GMBH

    Synopsis: The proposed Agreement would permit the parties to charter space aboard one another's vessels; to rationalize and jointly advertise their sailings; to discuss and agree upon the leasing, interchange, and pooling of equipment; to share terminals and use common agents; to share operating and administrative expenses; to enter into joint service contracts; and to agree upon rates, charges, and conditions of service in all trade areas served by the parties.

    Adherence to any agreement reached by the parties is voluntary. The parties have requested a shortened review period.

     

    Note: During May 1997, DSR-Senator Line filed amendments to several existing agreements, including the various Tricon Service Agreements, to provide that nothing in these agreements precludes it from engaging in activities authorized by the new Hanjin/DSR-Senator Cooperative Management Agreement.


    Agreement No.202-011572Federal Register Date:April 29, 1997
    Title: Colombia Independent Carrier Agreement
    Parties: Frontier Liner Services, Seaboard Marine Ltd.

    Synopsis: The proposed Agreement would permit the parties to discuss and agree upon rates, charges, terms and conditions of service in the trade between United States Atlantic and Gulf ports, including Puerto Rico and the U.S. Virgin Islands, and inland points via such ports, and ports and points on the North Coast of Colombia. The parties may also enter into space chartering and service rationalization arrangements with members of the Colombia Discussion Agreement (FMC Agreement No. 203-011367).


    Agreement No.:203-011574Federal Register Date: May 29, 1997
    Title:Blue Star/South Seas Cooperative Working Agreement
    Parties: Blue Star Line (North America) Limited, South Seas Steamship Co. Ltd

    Synopsis: The proposed Agreement permits the parties to discuss and enter into non-binding arrangements on rates and service contract terms, to charter space from each other, and to interchange equipment in the trade between the United States and Cook Islands, Fiji, New Caledonia, Vanuatu, Western Samoa, Solomon Islands, Society Islands, Tonga, Kiribati, Tuvalu and Papua New Guinea.


    Agreement No.:217-011575Federal Register Date: May 29, 1997
    Title: Maersk/OOCL Space Charter Agreement
    Parties: A.P. Moller-Maersk Line ("Maersk"), Orient Overseas Container Line ("OOCL")

    Synopsis: The proposed Agreement would authorize Maersk to charter space to OOCL and for the parties to agree on administrative matters in the trade from ports in California, and inland and coastal points served via such ports, and ports and points in Northern Europe. The parties have requested short review.


    Agreement No.:202-011576Federal Register Date:May 29, 1997
    Title:South America Independent Lines Association
    Parties: Interocean Lines, Inc., Seaboard Marine, Ltd., Trinity Shipping Line, S.A.

    Synopsis: The proposed Agreement would establish a conference agreement in the trade between United States Atlantic and Gulf Ports, and inland U.S. points via such ports, and ports and points in Chile, Ecuador, and Peru. The Agreement would permit the parties to discuss and agree upon rates, terms, and conditions of service in the trade as well as service contracts. It would also permit them to enter into agreements with carriers not members of the Agreement and to charter space among themselves. the parties have requested a shortened review period.


    Agreement No.:232-011577Federal Register Date:May 29, 1997
    Title:The ZIM/HMM Space Charter Agreement
    Parties:Zim Israel Navigation Co., Ltd., Hyundai Merchant Marine Co., Ltd.

    Synopsis: The proposed Agreement authorizes the parties to charter space to and from each other and to rationalize their services in the trade between ports on the U.S. Pacific and Atlantic Coasts, including Alaska and inland U.S. points served via such ports, and ports in Asia. The parties have requested short review.

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    SIGNALS™ the newsletter of Distribution-Publications, Inc.
    Vol. 1, No. 4, June 6, 1997