|April 5, 1999||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.
May 1, 1999 Deadline for OTI Licensing: new regs for NVOCCs
NVOCC and Freight Forwarder Bond Requirements Increase
OTI-Ocean Freight Forwarders in the USA: USD 50,000 plus USD 10,000 per branch office;
OTI-NVOCCs in the USA: USD 75,000 plus USD 10,000 per branch office;
NVOCCs outside the USA: USD 150,000 (no branch office bonding requirement).
Ocean Freight Forwarders and NVOCCs that do not comply with the new bonding requirements and continue to operate in the foreign commerce of the USA risk cancellation of their licenses and tariffs. In the past, the FMC has always acted quickly in these cases. Here at DPI we expect aggressive enforcement of the new bonding requirements by the FMC during immediately after the May 1st deadline.
FMC Chairman Creel "Anxious for May 1 to Arrive"
According to Docket 98-28 nearly 2,000 NVOCCs are expected to submit applications for the new OTI license. Vessel Operators are expected to dramatically increase the number of service contracts filed with the Commission. Chairman Creel also noted the FMC will "in some circumstances have a more difficult time identifying violations and discerning distortions that are taking place in the marketplace," but he expects the Commission staff will rise to the challenge.
FMC Authorizes Actions Based on TransPacific Investigation No. 23
At a meeting on March 9, 1999, the FMC directed its Bureau of Enforcement to prepare and undertake specific enforcement proceedings and actions to address malpractices reported by Commissioner Delmond Won in Transpacific Fact Finding Investigation No.23.
Commission Secretary Bryant Van Brakle indicated the FMC authorized both formal and informal enforcement actions involving carrier practices that undermine shipper rights secured in service contracts in violation of Section 10 of the Shipping Act of 1984. As of April 5 details of formal proceedings have not yet been announced.
The full details of Commissioner Won’s report have not been released to the public. A summary released on March 12, 1999 indicates the FMC has gathered allegations that during the peak shipping season of July-Dec. 1998 carriers in the Transpacific Eastbound imposed rate increases or premiums under existing service contracts in return for space, and discriminated against some NVOCCs and shippers' associations in providing space or demanding higher rates than those applicable under service contracts.
Commissioner Won also reported that some shippers were subjected to higher rates than those apparent or specified in service contract essential terms by carriers who "opted out" of the contract rate to substitute tariff rates. Furthermore, Commissioner Won reported that on several occasions carriers appeared to have held discussions or engaged in meetings which were not reported to the Commission, as required by the Commission's rules. These allegations have drawn the attention of Rep. Henry Hyde (R-ILL), Chairman of the House Judiciary Committee. In late March Rep. Hyde requested the complete confidential report, and indicated his committee plans to hold hearings on the anti-trust exemption extended to carrier conferences and agreements under of the Ocean Shipping Reform Act of 1998.
FMC Budget Advances In Congress:increased funding for FY2000 approved
The House Committee on Transportation and Infrastructure voted to increase the fiscal year 2000 budget for the Federal Maritime Commission. The budget proposal calls for an increase of USD1.4 million over fiscal year 1999 to USD 15,685,000. It is expected this budget will be approved by the full House, and move to the Senate for confirmation. The US government’s fiscal year begins October 1st.
New North Atlantic Agreement Delayed by FMC:additional info requested
The new agreement of ocean carriers operating between the USA and Northern Europe has been required to submit additional information to the FMC before it begins operation. The new North Atlantic Agreement (NAA) was scheduled to start in late March. NAA allows its member carriers to discuss capacity issues and rates. It is comprised of 20 carriers, including all 16 members of the Trans-Atlantic Conference Agreement (TACA), which will be replaced by NAA. The National Industrial Traffic League (NITL) recently petitioned the FMC to review the potential anti-competitive impact the NAA might have on the trade. FMC’s review is expected to take at least 45 days.
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SIGNALS the newsletter of Distribution-Publications, Inc.
Vol. 3, No. 4, April. 5, 1999