Federal Maritime Commission Reaps Another Million+ Dollars from Ocean Freight and Logistics Groups

US – The Federal Maritime Commission (FMC) has recovered a total of $1,227,500 in civil penalties after completing several separate compromise agreements with various ocean freight companies. The agreed penalties resulted from investigations conducted by the Commission’s Area Representatives from around the country and the parties, seven non-vessel-operating common carriers (NVOCCs) and one vessel-operating common carrier (VOCC), settled and agreed to penalties, but, as with so many other previous and similar cases, did not admit to violations of the Shipping Act or indeed agree with the Commission’s regulations. FMC Chairman Mario Cordero however said:

"I commend the staff at FMC in fulfilling their responsibility to protect the American shipping public from entities who may be in breach of the Shipping Act. The compromise agreements demonstrate how serious we are about protecting the international shipping marketplace from fraud and threats to cargo security, and in our commitment to shield the many lawful participants in international trade from commercial deception and other unlawful trading practices."

The eight compromise agreements are as follows:

United Arab Shipping Company (UASC) – a VOCC based in Dubai. It was alleged that UASC violated 46 U.S.C. 41104(1) by unlawfully rebating to its NVOCC customer, Falcon Maritime and Aviation Inc., a portion of the applicable service contract rate in the form of an administrative fee not identified in the service contract, and for which no services were provided. UASC also violated 46 U.S.C. 41104(2) by providing transportation not in accordance with the rates and charges in its published tariff. Under the terms of the compromise, UASC paid $537,500.

City Ocean Logistics, City Ocean International and CTC International – City Ocean Logistics is a bonded NVOCC located in Shenzhen, China; City Ocean International is a licensed NVOCC and freight forwarder based in Diamond Bar, California; and CTC International is a licensed NVOCC and freight forwarder co-located with City Ocean International in Diamond Bar, CA.

Commission staff alleged that City Ocean Logistics and City Ocean International knowingly and wilfully obtained ocean transportation for property at less than the rates and charges that would otherwise be applicable by improperly utilising rates limited to certain ‘named accounts’ in service contracts, and through the collection of forwarder compensation on export shipments in which City Ocean Logistics acted as NVOCC. In addition, CTC International unlawfully collected forwarder compensation on shipments in which City Ocean Logistics, City Ocean International and/or CTC International had a beneficial interest. The three companies also provided transportation in the liner trade that was not in accordance with the rates and charges set forth in their published tariffs. In addition to surrendering the ocean transportation intermediary (OTI) license of CTC International, Respondents made a payment of $325,000 in compromise of these allegations.

Oriental Logistics Group – a tariffed and bonded NVOCC located in Taipei, Taiwan. Commission staff alleged that Oriental Logistics Group violated 46 U.S.C. 41102(a) by knowingly and wilfully obtaining transportation at less than applicable rates by misrepresenting the names of shipper accounts under one of its service contracts, and by misrepresenting cargo under such contract. Oriental Logistics Group also violated 46 U.S.C. 41104(2) by providing transportation not in accordance with the rates and charges in its published tariff. A payment of $100,000 was made in compromise of these allegations.

Hyundai Logistics (USA) – a tariffed and bonded NVOCC and freight forwarder located in La Mirada, California. Commission staff alleged that Hyundai Logistics violated 46 U.S.C. 41102(a) by knowingly and wilfully obtaining transportation at less than applicable rates by means of improperly allowing third parties to access service contracts to which Hyundai Logistics (USA) was the contract signatory. Under the terms of the compromise, Hyundai made a payment of $100,000.

Falcon Maritime and Aviation – a licensed NVOCC based in Jamaica, New York. It was alleged that Falcon Maritime and Aviation violated 46 U.S.C. 41102(a) by unlawfully obtaining rebates from a VOCC of a portion of the applicable service contract rate in the form of an administrative fee not identified in the service contracts of United Arab Shipping Company, and for which no services were provided. Under the terms of the compromise, Falcon Maritime and Aviation paid $85,000 to the Commission.

Sea Gate Logistics – a licensed NVOCC and freight forwarder based in Valley Stream, New York. Commission staff alleged that Sea Gate Logistics violated 46 U.S.C. 41102(a) by knowingly and wilfully obtaining transportation at less than applicable rates by means of improperly obtaining access to service contracts to which Sea Gate Logistics was not the contract signatory. Sea Gate also violated 46 U.S.C. 41104(2) by providing transportation not in accordance with the rates and charges in its published tariff. Under the terms of the compromise, Sea Gate Logistics made a payment of $80,000.