FMC REJECTS NVO’S REQUEST FOR PROBE INTO U.S./CARIBBEAN TRADE

FMC REJECTS NVO’S REQUEST FOR PROBE INTO U.S./CARIBBEAN TRADE    The U.S. Federal Maritime Commission has flatly rejected a petition filed by an association of non-vessel-operating common carriers to investigate alleged violations of the 1984 Shipping Act in the U.S./Caribbean trade.
   On Monday, the FMC issued a formal order denying the petition of the South Florida NVOCC-NAOCC Association Inc., saying the “petitioner has not established sufficient facts to warrant the initiation of an investigation.”
   The NVO association had gone to the FMC to complain about a series of alleged anticompetitive activities by carriers of the Caribbean Shipowners’ Association.
   But the regulatory agency denied the NVOs’ request for injunctive relief from the effect of these activities. “There is no evidence of illegal concerted activity by Caribbean Shipowners’ Association or its members or that the agreement has resulted in or is likely to result in an unreasonable reduction in transportation service or an unreasonable increase in transportation cost,” the FMC said.
   It added that rates offered on the subject commodity descriptions are “among the lowest in the trades,” and there is substantial competition in the trades, including approximately 60 ocean common carriers.
   The South Florida NVOCC-NAOCC Association is a trade association representing ocean transportation intermediaries. The Caribbean Shipowners’ Association is a voluntary rate discussion agreement covering the trades between Puerto Rico, the U.S. Atlantic and Gulf coasts, and the Leeward/Windward Islands, Guyana, Suriname, Haiti and Jamaica. Its members are Bernuth Lines, CMA CGM, Crowley Liner Services, Interline Connection, Maersk Sealand, Seaboard Marine, SeaFreight Line and Tropical Shipping.
   The South Florida NVO association alleged that the Caribbean Shipowners’ Association and its carriers are engaged in “practices that are intentionally and unlawfully harmful to ocean transportation intermediaries,” in violation of sections of the Shipping Act. It said the Caribbean Shipowners’ Association carriers agreed to a “selective” rate increase applicable to both tariffs and service contracts, and the individual members imposed these increases on Aug. 4, on three commodity descriptions — Freight All Kinds (“FAK”), General Department Store Merchandise (“GDSM”), and reefer cargo.
   The NVO association added that with the exception of reefer cargo, these commodity descriptions are used almost exclusively by NVOCCs for shipment of less-than-containerload cargo.
   The NVO group also accused the ocean carrier group of a “price squeeze” on NVOs. It alleged that the Caribbean Shipowners’ Association members have eliminated all commodity rates, other than FAK and GDSM, in service contract offers to NVOCCs, thus depriving NVOCCs of a rate basis on which to compete for full container load single commodity shipments, while at the same time Tropical Shipping International, Ltd., an NVOCC owned by Tropical Shipping, reduced its LCL rates to shippers in the trade.
   Tropical Shipping said a notice produced by the NVO group to show that it lowered its rates concerned the St. Maarten’s trade, but the Caribbean Shipowners’ Association rate increases did not concern St. Maarten. Tropical Shipping said the allegation of a “price squeeze” is without any factual basis or foundation and should be rejected.
   The FMC’s Bureau of Trade Analysis reviewed a sample of 120 service contracts between Caribbean Shipowners’ Association member lines and both NVOCCs and proprietary shippers. It then found that 50 of the 85 service contracts with proprietary shippers were for commodities described either as FAK, GDSM, or Cargo, Not Otherwise Specified. “Consequently, it appears that proprietary shippers were at least equally impacted by the recommended rate increases,” the FMC said.
   The National Customs Brokers and Forwarders Association of America had backed the petition of the South Florida NVOCC-NAOCC Association.
   The South Florida NVOCC-NAOCC Association’s allegation of ocean carriers’ bias against NVOCCs was the second complaint of this kind in less than a year.
   In May, the NCBFAA and the International Association of NVOCCs went to the FMC to allege that the Transpacific Stabilization Agreement used discriminatory practices against NVOCCs during the 2002-2003 contract season. That complaint is now the subject of a formal investigation by the FMC.