Tuesday, May 17, 2016

US Freight Forwarders and Ocean Shipping Lines Hit with Huge Fines for Rate Cutting Deals

Yet More Cash for the FMC's Coffers
Shipping News Feature
US – The Federal Maritime Commission (FMC) has recovered a total of $840,000 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 five ocean transportation intermediaries (both non-vessel-operating common carriers (NVOCCs) and freight forwarders), settled and agreed to the fines but did not admit violations of the Shipping Act or Commission Regulations. FMC Chairman Mario Cordero said:

“The Federal Maritime Commission is responsible for the regulation of ocean-borne transportation in the foreign commerce of the US. The FMC is working to fulfil our core mission, which is to foster a fair, efficient, and secure maritime transportation system. The agreements and penalties announced today demonstrate our staff’s dedication and continuing commitment to protect the American shipping public."

The compromise agreements are as follows:

Hecny Shipping – a registered foreign-based NVOCC, with its principal office located in Hong Kong. Commission staff alleged that Hecny Shipping obtained ocean transportation for property at less than the rates and charges otherwise applicable by misrepresenting cargo to be that of certain named shippers to obtain the benefit of lower rates applicable under a service contract with UASC. In addition, Hecny Shipping provided OTI services to its customers at rates not in accordance with its NVOCC tariff. Hecny Shipping made a payment of $300,000 in compromise of these allegations.

American Global Logistics (AGL) – a licensed and bonded NVOCC based in Atlanta, Georgia. Commission staff alleged that AGL obtained ocean transportation for property at less than the rates and charges otherwise applicable by improperly obtaining access to numerous service contracts, including carriers UASC, COSCO, Evergreen, Zim and Yang Ming, to which AGL was not a contract signatory. Staff also alleged that AGL provided transportation to its customers at rates not in accordance with AGL’s NVOCC tariff. Under the terms of the compromise, AGL paid $350,000.

Round The World Logistics – a licensed NVOCC and freight forwarder located in Dallas, Texas. Commission staff alleged that the company obtained ocean transportation for property at less than the rates and charges otherwise applicable by unfairly utilising rates limited to certain ‘named accounts' under an Evergreen service contract. Round The World Logistics made a payment of $80,000 in compromise of these allegations.

Walker International Transportation – a licensed freight forwarder and NVOCC based in Valley Stream, New York. Commission staff alleged that the company obtained ocean transportation for property at less than the rates and charges otherwise applicable by improperly obtaining access to MSC and Zim service contracts to which Walker International was not a party. Walker International paid $60,000 in compromise of these allegations.

Razor Enterprise Inc. dba Razor Cargo Services – a licensed and bonded NVOCC and freight forwarder located in Jamaica, New York. Commission staff alleged that Razor Cargo Services obtained ocean transportation for property at less than the rates and charges otherwise applicable by improperly obtaining access to a Safmarine/Maersk service contract to which Razor Cargo Services was not a party. Staff also alleged that Razor Cargo Services provided transportation to its customers at rates not in accordance with its NVOCC tariff. Under the terms of the compromise, Razor Cargo Services paid $50,000 in compromise of these allegations.