[Federal Register Volume 63, Number 186 (Friday, September 25, 1998)]
[Notices]
[Pages 51356-51357]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-25636]


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FEDERAL MARITIME COMMISSION


Fact Finding Investigation No. 23--Ocean Common Carrier Practices 
in the Transpacific Trades; Order of Investigation

    Pursuant to the Shipping Act of 1984, 46 U.S.C. app. 1701 et seq. 
(``Act''), the Federal Maritime Commission (``Commission'') is 
responsible for administering a nondiscriminatory regulatory process 
for the common carriage of goods by water in the foreign commerce of 
the United States. Section 10 of the Act contains specific prohibitions 
against conduct which would conflict with this system of common 
carriage.
    During the past few weeks, the Commission has received information 
and allegations that ocean common carriers in the eastbound 
Transpacific trades have engaged in activities that may be inconsistent 
with their obligations as common carriers, and that may be in violation 
of certain section 10 prohibitions. The activities are said to include 
various forms of refusals of space for cargo unless the shipper agrees 
to significantly increase rates or charges, and/or the imposition of 
novel charges such as an ``Additional Space Protection Surcharge'' or 
``Container Repositioning Charge.'' Ocean carriers engaged in this 
activity appear to include conference lines as well as independents, 
and may include carrier actions taken individually or collectively. 
There are some indications that these activities are targeted solely 
toward small and medium sized shippers and non-vessel-operating common 
carriers. Large, ``champion'' accounts are said to be exempt from these 
pressures to pay additional or increased charges to obtain bookings.
    The current situation in the inbound Transpacific trades is 
reported to be one of excess cargo and insufficient vessel space. The 
primary causes of this situation are said to be weak Asian economies, a 
strong U.S. dollar, and the holiday cargo surge. Exacerbating this 
inbound surplus of cargo is a significant decline in westbound 
shipments, causing an imbalance in cargo and in the need for carrier 
equipment. Nevertheless, ocean common carriers operating in U.S. trades 
have an obligation to treat shippers in a fair and non-discriminatory 
manner in the acceptance, handling and carriage of cargo. If there is 
insufficient space for the amount of cargo tendered, carriers may not 
refuse to accept cargo or bookings because of the level of revenue to 
be achieved by the particular shipment.
    In Banana Distributors, Inc. v. Grace Line, 5 FMB 615, 620 (1959), 
the Commission was faced with a situation in which the amount of cargo 
exceeded the carrier's available space. The Commission found that: 
``Where the demand for space exceeds the supply, the law is clear: a 
common carrier must equitably prorate its available space among 
shippers. Penna. R.R. Co. v. Puritan Coal Co., 237 U.S. 121 (1915); 
Patrick Lumber Co. v. Calmar S.S. Corp., 2 U.S.M.C. 494 (1941).'' Id. 
at 625. While that decision was rendered under the Shipping Act, 1916, 
nothing contained in the 1984 Act, or in subsequent case law, would 
appear to alter this obligation of common carriers subject to 
regulation by the Commission to ``equitably prorate'' available space.
    In view of these allegations and information, the Commission has 
determined to commence this nonadjudicatory investigation to gather 
facts related to recent practices by ocean common carriers in the 
transpacific trades. Specifically, the Investigative Officer named 
herein is to develop a record on various practices allegedly engaged in 
by ocean common carriers in recent weeks, either individually or 
collectively, to obtain, or attempt to obtain, higher rates or charges 
for carrying cargo in the inbound trades from the Far East to the 
United States, including:
    1. Demands for rates other than those set forth in applicable 
tariffs or service contracts;
    2. Refusals to accept cargo or provide service absent payment of 
higher rates;
    3. Demands for renegotiation or amendment of service contracts 
under threat of non-acceptance of cargo;
    4. Improper termination of service contracts and application of 
higher tariff rates;
    5. Acceptance of low rated cargo as misdescribed higher rated 
cargo;
    6. ``Voluntary'' rate increases;
    7. Unlawful preference or discrimination by exempting large 
shippers or ``champion accounts'' from rate increases or service 
refusals;
    8. The imposition of unreasonable increases in rates or charges; 
and
    9. Other, similar, practices which may be violative of the Act or 
Commission regulations.
    The Investigative Officer is to report to the Commission within the 
time specified herein, with recommendations for any further Commission 
action, including any formal adjudicatory, injunctive or rulemaking 
proceedings, warranted by the factual record developed in this 
proceeding.
    Interested persons are invited and encouraged to contact the 
Investigative Officer named herein, at (202) 523-5721 (Phone) or (202) 
523-0298 (Fax), should they wish to provide testimony or evidence, or 
to contribute in any other manner to the development of a complete 
factual record in this proceeding.
    Therefore it is ordered, That pursuant to sections 6, 10, 11, 12 
and 15 of the Shipping Act of 1984, 46 U.S.C. app. 1705, 1709, 1710, 
1711 and 1714, and Part 502, Subpart R of Title 46 of the Code of 
Federal Regulations, 46 CFR 502.281, et seq., a nonadjudicatory 
investigation is hereby instituted into practices of ocean common 
carriers in the Transpacific trades, to develop the

[[Page 51357]]

issues set forth above and to provide a basis for any subsequent 
regulatory, adjudicatory or injunctive action by the Commission.
    It is further ordered, That the Investigative Officer shall be 
Commissioner D.J.H. Won of the Commission. The Investigative Officer 
shall be assisted by staff members as may be assigned by the 
Commission's Managing Director and shall have full authority to hold 
public or non-public sessions, to resort to all compulsory process 
authorized by law (including the issuance of subpoenas ad testificandum 
and duces tecum), to administer oaths, to require reports, and to 
perform such other duties as may be necessary in accordance with the 
laws of the United States and the regulations of the Commission;
    It is further ordered, That the Investigative Officer shall issue a 
report of findings and recommendations no later than 90 days after 
publication of this Order in the Federal Register, and interim reports 
if it appears that more immediate Commission action is necessary, such 
reports to remain confidential unless and until the Commission provides 
otherwise;
    It is further ordered, That this proceeding shall be discontinued 
upon acceptance of the final report of findings and recommendations by 
the Commission, unless otherwise ordered by the Commission; and
    It is further ordered, That notice of this Order be published in 
the Federal Register.

    By the Commission.
Joseph C. Polking,
Secretary.
[FR Doc. 98-25636 Filed 9-24-98; 8:45 am]
BILLING CODE 6730-01-P