FMC fines MOL $1.2 million

FMC fines MOL $1.2 million    The U.S. Federal Maritime Commission said Thursday it has reached a compromise agreement under which Japanese liner company MOL has paid $1.2 million in civil penalties.
   The FMC said the compromise agreement “resolved allegations that MOL violated numerous provisions of the Shipping Act” including:
   ' Misdescription of commodities.
   ' Unlawful equipment substitution.
   ' Providing transportation services to and entering into service contracts with unlicensed, untariffed and unbonded ocean transportation intermediaries.
   ' Permitting use of service contracts by persons who were not parties to those contracts.
   ' Providing transportation not in accordance with rates and charges set forth in MOL's published tariffs.
   The FMC alleged the practices persisted over a period of several years and involved numerous service contracts.
   Peter J. King, director of the FMC's Bureau of Enforcement, said his office became convinced MOL knew about some of the abuses it uncovered by non-vessel-operating common carriers or shippers.
   But while MOL agreed to pay penalties and cooperate, it did not admit to violations of the Shipping Act or FMC regulations.
   Under the agreement, MOL furnished the FMC with information and substantive documentation regarding the service contracts and shipments at issue. MOL also agreed to cooperate with any further FMC investigations or enforcement actions with respect to these activities.
   MOL said the agreement with the FMC “resolves all issues” and said it was “committed to providing safe, efficient, reliable, and legally compliant transportation services.”
   King said the Bureau of Enforcement has been focusing attention on possible violations by NVOs and on shipments to the United States from China, particularly the Shanghai area, as well as Hong Kong.
   King did not speak in detail about the allegations against MOL, but explained some of the abuses the Bureau of Enforcement has seen from NVOs or shippers.
   For example, an NVO or shipper may say it has loaded a container with a commodity that commands a low rates, and then substitute goods that a container line would demand more money to move.
   A liner company will sometimes provide larger equipment than a customer ordered — say a 40-foot high-cube container rather than a regular 40-foot container at the same price for operational reasons (a shortage of regular 40-foot boxes, for example). But the liner company will provide the bigger box with the proviso that the NVO only load it with the amount cargo that would fit normally fit in a regular 40-foot box. Some NVOs will take advantage of the fact that they have been given larger equipment and stuff it with additional cargo.
   In other cases, companies that are not registered or licensed as NVOs will consolidate cargo from others, but pretend they are a shipper.
   The container carrier is victimized by such practices, but King said if the bureau of enforcement sees a pattern of practices, it may launch an investigation of the carrier itself.
   In recent months the FMC has announced penalties or actions against several Chinese NVOs, though it is not known if any of them were customers of MOL.
   ' In March the FMC alleged Centurion Logistics Services Ltd., an unlicensed, bonded foreign-based NVO located in Hong Kong, obtained ocean transportation at less than the rates and charges that would otherwise be applicable by unlawfully accessing service contracts to which they were not a signatory, by misdescribing commodities shipped, and abusing rules and practices relating to equipment substitution. Under terms of the compromise, the Centurion companies paid penalties of $150,000.
   ' In February, an administrative law judge approved a $115,000 settlement between the FMC and Sinicway International Logistics Ltd., a Shanghai-based NVO, to resolve allegations by the Bureau of Enforcement that Sinicway misdescribed cargo, allegations that Sinicway did not admit. However, the order from the judge said Sinicway “terminated the practices at issue” and took measures to eliminate them from occurring.
   ' In March, the FMC also ordered an investigation of another Shanghai-based NVO, Worldwide Logistics Co. Ltd., saying “it appears that Worldwide originated and substantially participated in an ongoing practice of misdescribing cargo to the transporting ocean common carrier since at least April 2008.” For example, shipments described as fabric or cotton fabric actually were loaded with garments or other finished textile goods.
   FMC Chairman Richard A. Lidinsky Jr. said MOL’s “penalties should serve as a reminder that the commission's hard-working area representatives and Bureau of Enforcement remain vigilant on the shipping public's behalf. If you're violating the law, sooner or later, we will find you, and the consequences can be serious.” ' Chris Dupin