[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]
=======================================================================
-----------------------------------------------------------------------
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