FMC QUERY SOUGHT ON U.S./CARIBBEAN SERVICE CONTRACTING PRACTICES

FMC QUERY SOUGHT ON U.S./CARIBBEAN SERVICE CONTRACTING PRACTICES    The U.S. Federal Maritime Commission has received a petition from the South Florida NVOCC-NAOCC Association to investigate carrier service contracting practices in the U.S./Caribbean trades.
   The South Florida NVOCC-NAOCC Association alleges the members of the Caribbean Shipowners Association engaged in discriminatory service contracting and rating practices in the Caribbean trades against non-vessel-operating common carriers in violation of the 1984 Shipping Act.
   The NVOs in the U.S./Caribbean trade rely on the Caribbean Shipowners Association members for 90 percent of their ocean transport under service contracts.
   In early July, the Caribbean Shipowners Association announced “a selective rate increase plan targeting service contract and tariff rates for the commodity descriptions almost exclusively used by NVOs for consolidated containers of less than container load cargo: Freight All Kinds (F.A.K.) and General Department Store Merchandise.” The NVOs said the increases ranged from 10 to 40 percent for them but not the carriers’ shippers.
   'The NVOs also allege the Caribbean Shipowners Association had eliminated commodity rates other than F.A.K. and general department store merchandise for consolidators, depriving them rates to compete for full-containerloads.
   The NVOs said Tropical Shipping and Construction Co., the largest vessel operator in the market and a handler of less-than-containerload freight, had reduced its LCL rates, creating a “price squeeze” on the NVOs that use the carrier’s transportation services.
   In addition the NVOs said the carriers’ “unreasonable” rate increases “may foreclose U.S. exporters from certain of the involved trades” and that the purpose of the carriers’ “selective” rate increase plan is to “destroy non-conference competition” and “diminish the influence of the NVOs.”
   If the FMC’s investigation finds violations to the Shipping Act, the NVOs urge the agency to issue sanctions against the Caribbean Shipowners Association and require the members to pay reparations.
   The FMC will take comments from the industry on the investigation request through Oct. 23. Comments should be addressed to the Secretary, Federal Maritime Commission, 800 North Capitol Street, N.W., Washington, D.C. 20573-0001, or e-mail to secretary@fmc.gov.