FMC PROBES TRANSPACIFIC CARRIER CONTRACTING PRACTICES WITH NVOS
The U.S. Federal Maritime Commission has initiated a formal investigation into the service contract practices of the transpacific carriers as they relate to the non-vessel-operating common carriers operating in this trade.
The agency based its decision to go forward with the investigation from a May 10 petition jointly filed by the National Customs Brokers and Forwarders Association of America and the International Association of NVOCCs, which alleged that liner carrier members of the Transpacific Stabilization Agreement used discriminatory practices against the NVOs during the 2002-03 contract season.
The NCBFAA and IANVOCC said the TSA members decided through “an internal agreement” to finish their contracts with their shipper customers before dealing with the NVOs. The industry groups also said TSA members “colluded” by setting higher rates for NVOs than what were offered to the shippers.
“The manner in which TSA members allegedly implemented this agreement was through the discriminatory subjection of NVOCCs, through their service contracts, to general rate increases (“GRIs”) and a peak-season surcharge (“PSS”), which were not applied to proprietary shippers through their service contracts,” the FMC said.
During an initial informal investigation, the FMC learned that the TSA had announced a second GRI, which became effective on Aug. 19.
“If the petitioners’ allegations of concerted action are correct, it would appear that this second GRI was agreed to among TSA members with the knowledge that certain shippers would be exempt from the increase by the terms of their 2002-2003 service contracts,” the FMC said. “In view of the information presently available and with due regard for the seriousness of the allegations, the commission is determined to commence this non-adjudicatory investigation to gather additional facts.”
Under section 10 of the 1984 Shipping Act, the FMC has the authority to investigate conduct that it views in conflict with the system of common carriage.
The FMC’s investigation of the 2002-03 TSA contract season will cover:
* Refusals to deal with NVOs until a substantial number of shipper contracts were complete.
* GRIs and PSS imposed on NVO service contracts and not those of shippers.
* Extent and degree to which rate increases and service contract policies, practices and guidelines of the TSA remain “voluntary and non-binding” among the liner carrier members.
* Extent and degree to which the TSA has submitted complete and accurate minutes of its meetings to the FMC.
* Development and use of “open-ended” provisions that allow the “unilateral implementation” of GRIs and PSS by TSA members with NVO service contracts, “without genuine further negotiation, while waiving or not requiring similar provisions in their service contracts for proprietary shippers.”
The FMC investigative officer will issue a report of findings and recommendations for further action to the commission by no later than Jan. 17.