FMC Commissioner Comments on Antitrust, Capacity & HH Goods Investigations, NRA Rule
On April 4, 2011, Federal Maritime Commissioner Michael Khouri spoke at the National Customs Brokers and Forwarders Association of America (NCBFAA) Annual Conference, where he discussed the Commission’s ongoing inquiry of the EU’s elimination of antitrust immunity, its investigations of household goods movement and vessel and equipment capacity, and the possibility of extending negotiated rate arrangement (NRA) benefits to certain foreign NVOs.
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Highlights of his written comments include the following:
Commissioner Sees Little Controversy in NRAs for Bonded/Registered Foreign NVOs
According to the Commissioner, in its Negotiated Rate Arrangement rulemaking, no interested parties expressed any serious concerns or reservations concerning the elimination of rate tariff filing for all NVOs -- that is, for foreign based, FMC bonded and registered NVOs and U.S. based, FMC bonded and licensed NVOs.
He stated that the Commission will be commencing proceedings to potentially modify the NRA final rule, including the possible extension of the NRA exemption to these foreign NVOCCs. According to the Commissioner, the FMC Chairman expressed his hope that these modifications could be reviewed and considered by the Commission within a year.
(See ITT's Online Archives or 03/02/11 news, 11030233, for BP summary of FMC's final rule on NVOCC NRA rate tariffs exemption. See ITT’s Online Archives or 04/08/11 news, 11040819, for BP summary detailing FMC’s correction to the NVOCC final rule to eliminate FMC-1 form requirement, etc.)
Monitoring of Vessel and Equipment Capacity Based on No. 26 Ongoing
Regarding the completion of Fact Finding Investigation No. 26 on vessel capacity and equipment shortages, the Commissioner states that an important outcome was the recognition that the FMC can play an important role as a “Facilitator” for joint shipper and ocean carrier problem solving without resorting to enforcement actions, fines or new rulemaking.
During the first quarter of this year, the FMC has closely monitored the vessel and equipment capacity available in the Trans-Pacific Trade. Import vessel capacity is stable, and another capacity short-fall like the one that occurred last year is not expected.
At their April 13th Commission meeting, FMC plans to consider the next steps to implement a collaborative framework exploring solutions to commercial problems experienced by American importers and exporters. (See ITT’s Online Archives or 04/07/11 news, 11040728, for BP summary of FMC’s meeting announcement.)
(See ITT’s Online Archives or 12/09/10 news, 10120912, for BP summary of FMC Commissioner Dye’s final report and recommendations for action in Fact Finding Investigation No. 26 on vessel capacity and equipment shortages.)
No. 27 is Finding Consumer Confusion on Household Goods Movement
Regarding Fact Finding Investigation No. 27, on potentially unfair, unlawful or deceptive practices in the shipping of household goods or personal property, the Commissioner noted that international shipment of household goods and personal property is a relatively small part of the total goods carried in U.S.-foreign ocean commerce; however, it has generated a substantial number of the complaints and problems over the years.
Typical complaints allege loss of cargo, delay or failure to deliver, refusal to return pre-paid freight on cancellation, significantly inflated charges after the OTI has possession of the cargo and holding cargo hostage.
In this context, Fact Finding Investigation No. 27, which was initiated last year, is close to its completion, and FMC has found that the overall process of ocean transportation is complicated and confusing to the average consumer.
According to the Commissioner, the measures to result from the investigation are expected to be organized around three principles: educating the consumer, improving the consumer experience, and protecting the consumer through coordinated agency cooperation and enforcement.
Important to addressing these issues is the partnership between the FMC and industry stakeholder. Among other things, licensed NVOCCs can assist in addressing household goods problems by not providing transportation services to unlicensed Ocean Transportation Intermediaries (OTIs).
(See ITT's Online Archives or 12/13/10 news, 10121315, for BP summary of FMC's interim report on this investigation.)
FMC Study on EU’s Elimination of Antitrust Immunity Expected this Year
According to the Commissioner, FMC staff is almost done with its inquiry into the impact of the European Union’s 2008 repeal of their liner block exemption (i.e., antitrust immunity). The study has focused on three major east/west trade lanes -- the Trans Pacific, the North Atlantic and the Far East to Europe trade. The first, the Trans Pacific, operates under the 1984 Shipping Act rules, while the other two trades have operated under EU competition rules since October 2008.
The study addresses several topics -- including rate volatility, various types of surcharges, and industry concentration.
According to the Commissioner, FMC staff is hopeful that they will be able to share some preliminary data in the Fall with stakeholders, and the current timeline calls for the study to be completed by the end of this year.
(See ITT’s Online Archives or 11/02/10 news, 10110204, for BP summary of FMC’s notice of inquiry (NOI) seeking information and comments on the effects on the U.S. trades of the EU’s 2008 repeal of their “liner conference block exemption” (aka antitrust immunity).
See ITT’s Online Archives or 02/03/11 news, 11020330, for BP summary of comments the FMC received in response to its NOI.)
Reminder on FMC’s Dispute Resolution Services
The Commissioner added that the FMC’s Office of Consumer Affairs and Dispute Resolution Services can address a variety of disputes, including rates and charges, demurrage and per diem issues, cargo delays, cargo loss and damage, service issues, OTI licensing, civil penalty demand letters, and passenger/cruise vessel issues.
CADRS function as a neutral and confidential facilitator, as a mediator, as an Arbitrator, or, lastly, through the informal docket process for claims under $50,000. CADRS can facilitate resolution of disputes in a manner that avoids more costly and time-consuming litigation.
1The Commissioner states that these written remarks reflect his personal views and not those of the FMC.
(See ITT’s Online Archives or 01/27/11 news, 11012715, for BP summary of FMC Commissioner Khouri’s previous remarks on the FMC’s final rule on NVOCC tariff filing exemption, Fact Finding Investigation No. 27 on international household goods movers, etc.)