FMC Nets Almost A Million Dollars as Freight Forwarders and Ocean Shipping Groups Stand Accused

US – WORLDWIDE – The Federal Maritime Commission (FMC) has recovered a total of $962,500 in civil penalties after completing several 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 involved, namely one vessel-operating common carrier (VOCC) and nine ocean transportation intermediaries, both non-vessel-operating common carriers (NVOCC) and ocean freight forwarders, all of whom settled and agreed to penalties, but, as is so often the case, did not admit to violations of the Shipping Act or Commission regulations. In making the announcement, FMC Chairman, Mario Cordero stated:

"Through the investigative and enforcement efforts which have given rise to these agreements, the Commission strives to address past violations, as well as to deter similar conduct throughout the industry. The hard work of our Area Representatives and Bureau of Enforcement ensures that the entities we regulate operate within the boundaries established by the Shipping Act, in furtherance of our statutory mission to foster a fair, efficient and secure maritime transportation system for all."

The compromise agreements are as follows:

Honour Lane Shipping, registered with the Commission as a foreign-based NVOCC with its principal office in Hong Kong, Global Ocean Agency Lines (GOAL), a licensed NVOCC with its principal place of business in Barrington, Illinois and World Express Shipping, Transportation and Forwarding Services (WEST), located in Middleburg Heights, Ohio, licensed as an NVOCC and ocean freight forwarder were charged together.

It was alleged that the three entities collaborated in an arrangement whereby Honour Lane knowingly and wilfully allowed GOAL and WEST access to certain contracts between Honour Lane and several ocean carriers to which neither GOAL nor WEST was a party and that GOAL and WEST, in turn, obtained transportation of property at less than the rates and charges that were otherwise applicable by improperly accessing those contracts. The three companies collectively made a monetary payment in the amount of $300,000 in compromise of these allegations.

It was alleged that RS Logistics (RS), another foreign-based NVOCC located in Hong Kong and registered with the Commission, knowingly and wilfully obtained ocean transportation at rates and charges less than would otherwise be applicable by accessing service contracts to which it was not a signatory. RS also provided service in the liner trade and charged its NVOCC customers rates and charges that were not in accordance with its published tariff. Under the terms of the compromise agreement, RS paid $75,000 in penalties.

Hyundai Glovis, a South Korean company registered with the Commission as a VOCC, which, among other things, provides RoRo services from Korea to the US and elsewhere. It was alleged that Glovis violated the Shipping Act by participating under certain space charter agreements with other carriers which had not been filed with the Commission or not yet become effective. Glovis paid $157,500 in compromise of these allegations.

It was alleged that Worldwide Container Transfer (WCT), a licensed NVOCC in South San Francisco, California and U-Ocean USA, a licensed and bonded ocean freight forwarder, also in South San Francisco obtained ocean transportation at less than applicable rates and charges by improperly accessing service contracts to which it was not a signatory, in addition to providing service in the liner trade that was not in accordance with the rates and charges in its published tariffs. It was also alleged that both WCT and U-Ocean operated without a Qualifying Individual for a period in excess of one year in violation of Commission regulations. Respondents made a joint payment of $220,000 in civil penalties.

United Transport Tankcontainers (UTT), a licensed NVOCC based in Houston, Texas stood accused that it operated without a Qualifying Individual for a period in excess of one year. Pursuant to the terms of its compromise agreement, UTT paid a penalty of $30,000.

LF Logistics (China), based in Shanghai, operates as a foreign-based NVOCC registered with the Commission whilst LF Logistics USA is a licensed NVOCC located in Jamaica, New York. Both companies were alleged to have knowingly and wilfully obtained ocean transportation at less than rates and charges that would be otherwise applicable by improperly using rates limited to certain named accounts in their service contracts for cargo of other accounts. It was also alleged that respondent companies allowed other ocean transportation intermediaries to access certain of their service contracts to which such other OTIs were not signatories or affiliates. Respondents collectively made a monetary payment of $180,000 in compromise of these allegations.