[Federal Register Volume 62, Number 109 (Friday, June 6, 1997)]
[Notices]
[Pages 31100-31101]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-14758]


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FEDERAL MARITIME COMMISSION

[Docket No. 97-10]


Apex Maritime Co., Inc., Possible Violations of Section 10(a)(1) 
of the Shipping Act of 1984 and 46 CFR 510.22(i); Order of 
Investigation and Hearing

    Apex Maritime Co., Inc. (``Apex'') is a tariffed and bonded non-
vessel-operating common carrier (``NVOCC'') and a licensed ocean 
freight forwarder located at 206 Utah Avenue, South San Francisco, CA 
94080. Apex currently holds itself out as an NVOCC pursuant to its 
Automated Tariff Filing and Information System (``ATFI'') tariff, FMC 
No. 008937-002, effective November 30, 1993. Apex's NVOCC bond, No. 
0074, is in the amount of $50,000 and was issued by American Motorists 
Insurance Company, located in New York. In addition, Apex maintains its 
ocean freight forwarder license, FMC No. 3338.
    The Federal Maritime Commission's (``Commission'') rules, at 46 CFR 
510.22(i), provide that ``(n)o licensee shall render, or offer to 
render, any freight forwarding service free of charge or at a reduced 
fee in consideration of receiving compensation from a common carrier or 
for any other reason.'' \1\ Between January 1, 1993 and April 30, 1997, 
Apex appears to have provided freight forwarding services free of 
charge or at reduced fees to certain preferred shippers in violation of 
46 CFR 510.22(i). In 1993, Apex provided freight forwarding services to 
certain customers but apparently failed to charge forwarding fees for 
those services. In 1994, Apex provided forwarding services to certain 
customers but failed to charge forwarding fees for those services until 
contacted by the Commission. After being contacted by the Commission, 
Apex seems to have charged these shippers reduced forwarding fees for 
their 1994 shipments.
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    \1\ This Commission rule was promulgated in accordance with the 
Shipping Act of 1984.
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    In addition, it appears that Apex, in concert with Topocean 
Consolidation services Ltd. of Taiwan (``Topocean Taiwan''), obtained 
or attempted to obtain ocean transportation for cargo at less than the 
applicable rates in violation of section 10(a)(1) of the 1984 Act, 46 
U.S.C. 1709(a)(1), by means of misdescription of commodities for 
numerous shipments transported by ocean common carriers between 
September 1, 1995 and April 30, 1997. Section 10(a)(1) of the 1984 Act 
prohibits any person knowingly and willfully, directly or indirectly, 
by means of false billing, false classification, false weighing, false 
report of weight, false measurement, or by any other unjust or unfair 
device or means, to obtain or attempt to obtain ocean transportation 
for property at less than the rates or charges that would otherwise be 
applicable.
    It appears that the misdescribed shipments originated in Taiwan or 
Hong Kong, and were discharged at or via United States west coast 
ports. In each of these instances, Topocean Taiwan usually was listed 
as shipper on the ocean carrier's bill of lading, and the destination 
agent, Apex, acted as the consignee or notify party. Each shipment 
generally reflects that Topocean Taiwan ``house'', or NVOCC, bill of 
lading, which correctly describes the commodity shipped, was issued for 
tender by the ultimate consignee to Apex upon arrival of the cargo at 
destination. The commodity descriptions on the NVOCC bills of lading do 
not match the commodity descriptions set forth on the ocean common 
carriers' bills of lading. According to the ocean common carriers' 
tariffs and service contracts, the commodities described in the NVOCC's 
bills of lading.
    It further appears that the ocean common carriers rated the 
commodities in accordance with the inaccurate descriptions, while Apex 
accepted delivery of the cargo and paid ocean freight to the ocean 
common carriers on the basis of the lower rates attributable to the 
inaccurate commodity descriptions. Contemporaneous with the payment of 
freight, Apex issued arrival notices to the U.S. importers, which 
correctly described the commodity based on actual contents shipped. The 
resulting profit on these shipments would be divided equally between 
Apex and Topocean Taiwan. Thus, Apex appears to have increased its 
profits on these shipments because of the misdescriptions. Therefore, 
it seems that Apex obtained or attempted to obtain ocean transportation 
for property at less than the applicable rates in violation of section 
10(a)(1) of the 1984 Act.
    Between September 1, 1995 and April 30, 1997, Apex, in concert with 
Topocean Taiwan, appears to have obtained or attempted to obtain ocean 
transportation for property at less than the applicable rates by means 
of false cargo measurements.
    Between September 1, 1995 and April 30, 1997, it appears that Apex, 
in concert with Topocean Taiwan, knowingly and willfully obtained or 
attempted to obtain ocean transportation for property at less than the 
applicable rates in violation of section 10(a)(1) of the 1984 Act by 
means of false cargo measurements. In each instance, the ocean common 
carrier substituted a larger container for the container presumably 
requested by Topocean Taiwan. In accordance with the ocean common 
carrier's ``equipment substitution'' rule, the ocean freight for the 
requested container would be charged if the cargo's measurement did not 
exceed that which could be loaded into the requested container. The 
shipment record indicates that the substituted container was loaded 
beyond the cubic capacity of the requested container, but the ocean 
common carrier's bill of lading shows a cargo measurement which is less 
than that which could have been loaded into the requested container. As 
a result, Apex paid the ocean freight for the requested containers 
rather than the higher ocean freight for the substituted containers.
    The shipment records demonstrate the Apex was cognizant that the 
shipments had been misdeclared as to the cubic measurement and were 
loaded at higher measurements only possible through the provision of a 
larger container. However, Apex apparently paid the ocean freight 
according to the inaccurate measurement shown on the ocean common 
carrier's bill of lading. Therefore, it appears that Apex knowingly and 
willfully obtained or attempted to obtain ocean transportation for 
property at less than the applicable rates between September 1, 1995 
and April 30, 1997 in violation of section 10(a)(1).
    Section 13 of the 1984 Act, 46 USC app. 1712, provides that a 
person is subject to a civil penalty of not more than $25,000 for each 
knowing and willful violation of the 1984 Act or Commission rule 
promulgated in accordance with the 1984 Act. Section 19(b) of the 1984 
Act, 46 USC app. 1718(b), states that the Commission shall revoke or 
suspend an ocean freight forwarder license where the forwarder 
``willfully failed to comply'' with the 1984 Act or with a lawful rule 
of the Commission. In addition, section 23 of the 1984 Act, 46 USC app. 
1721, provides that the Commission may

[[Page 31101]]

suspend or cancel a NVOCC's tariff where a NVOCC has violated section 
10(a)(1) of the 1984 Act.
    Now therefore, it is ordered, That pursuant to sections 10, 11, 13, 
14, 19 and 23 of the 1984 Act, 46 USC app. 1709, 1710, 1712, 1713, 1718 
and 1721, and 46 CFR 510.22(i), an investigation is instituted to 
determine:
    (1) Whether Apex Maritime Co., Inc. violated section 10(a)(1) of 
the 1984 Act between September 1, 1995 and April 30, 1997, by directly 
or indirectly obtaining or attempting to obtain ocean transportation at 
less than the rates and charges otherwise applicable by means of 
misdescribing the commodities actually shipped;
    (2) Whether Apex Maritime Co., Inc. violated section 10(a)(1) of 
the 1984 Act between September 1, 1995 and April 30, 1997, by directly 
or indirectly obtaining or attempting to obtain ocean transportation at 
less than the rates and charges otherwise applicable by means of false 
cargo measurements;
    (3) Whether Apex Maritime Co., Inc. in its capacity as an ocean 
freight forwarder, violated 46 CFR 510.22(i) between March 1, 1993 and 
April 30, 1997, by rendering freight forwarding services free of charge 
or at a reduced fees;
    (4) Whether, in the event violations of section 10(a)(1) of the 
1984 Act and 46 CFR 510.22(i) are found, civil penalties should be 
assessed against Apex Maritime Co., Inc. and, if so, the amount of 
penalties to be assessed;
    (5) Whether, in the event violations of section 10(a)(1) of the 
1984 Act are found, the tariff of Apex Maritime Co., Inc. should be 
suspended or canceled;
    (6) Whether, in the event violations of 46 CFR 510.22(i) are found, 
the ocean freight forwarder license of Apex Maritime Co., Inc. should 
be suspended or revoked; and
    (7) Whether, in the event violations are found, an appropriate 
cease and desist order should be issued against Apex Maritime Co., Inc.
    It is further ordered, That a public hearing be held in this 
proceeding and that this matter be assigned for hearing before an 
Administrative Law Judge of the Commission's Office of Administrative 
Law Judge at a date and place to be hereafter determined by the 
Administrative Law Judges in compliance with Rule 61 of the 
Commission's Rules of Practice and Procedure, 46 CFR 502.61. The 
hearing shall include oral testimony and cross-examination in the 
discretion of the Presiding Administrative Law Judge only after 
consideration has been given by the parties and the Presiding 
Administrative Law Judge to the use of alternative forms of dispute 
resolution, and upon a proper showing that there are genuine issues of 
material fact that cannot be resolved on the basis of sworn statements, 
affidavits, depositions, or other documents or that the nature of the 
matters in issue is such that an oral hearing and cross-examination are 
necessary for the development of an adequate record;
    It is further ordered, That Apex Maritime Co., Inc. is designated 
as Respondent in this proceeding;
    It is further ordered, That the Commission's Bureau of Enforcement 
is designated a party to this proceeding;
    It is further ordered, That notice of this Order be published in 
the Federal Register, and a copy be served on parties of record;
    It is further ordered, That other persons having an interest in 
participating in this proceeding may file petitions for leave to 
intervene in accordance with Rule 72 of the Commission's Rules of 
Practice and Procedure, 46 CFR 502.72;
    It is further ordered, That all further notices, order, and/or 
decisions issued by or on behalf of the Commission in this proceeding, 
including notice of the time and place of hearing or prehearing 
conference, shall be served on parties of record;
    It is further ordered, That all documents submitted by any party of 
record in this proceeding shall be directed to the Secretary, Federal 
Maritime Commission, Washington, D.C. 20573, in accordance with Rule 
118 of the Commission's Rules of Practice and Procedure, 46 CFR 
502.118, and shall be served on parties of record; and
    It is further ordered, That in accordance with Rule 61 of the 
Commission's Rules of Practice and Procedure, the initial decision of 
the Administrative Law Judge shall be issued by June 2, 1998 and the 
final decision of the Commission shall be issued by September 30, 1998.
Joseph C. Polking,
Secretary.
[FR Doc. 97-14758 Filed 6-5-97; 8:45 am]
BILLING CODE 6730-01-M