02-26246. Petition of the South Florida NVOCC-NAOCC Association, Inc. for an Investigation of the Service Contracting and Rating Practices of the Caribbean Shipowners Association; Notice of Filing and Request for Comments

Notice is hereby given that, by petition filed October 8, 2002, the South Florida NVOCC-NAOCC Association, Inc. (“Petitioner”) has petitioned the Commission for an investigation under section 11(c) of the Shipping Act of 1984 (“Shipping Act”) of certain activities by the members of the Caribbean Shipowners Association (“CSA”).

In particular, Petitioner requests the Commission to determine whether CSA's members have violated the Shipping Act through discriminatory service contracting and rating practices in the Caribbean trades that intentionally discriminate against Ocean Transportation Intermediaries (“OTIs”) in violation of sections 10(c)(1), 10(c)(3), 10(c)(7) and 10(c)(8) of the Shipping Act. Petitioner contends that these practices reduce competition in the involved trades and produce unreasonable reductions in transportation service and unreasonable increases in transportation cost to OTIs, their shippers and the shipping public within the meaning of section 6(g) of the Shipping Act. Petitioner further alleges that CSA and its members may be in violation of section 5(c) of the Shipping Act by either adopting mandatory agreements relating to OTI rates and services or failing to file true copies of their voluntary guidelines thereon with the Commission. Petitioner finally alleges that, in taking these actions, CSA is operating in violation of its agreement and is therefore also in violation of section 10(c)(3) of the Shipping Act.

In support of these contentions, Petitioner claims that Non-Vessel-Operating common carrier OTIs (“NVOs”) depend upon CSA members to transport their shipments, approximately 90% of which move under service contracts. On or about July 1, 2002, CSA members announced a selective rate increase plan targeting service contract and tariff rates for the commodity descriptions almost exclusively used by NVOs for consolidated containers of less than container load (“LCL”) cargo: Freight All Kinds (“FAK”) and General Department Store Merchandise (“GDSM”). Petitioner states that the increases were substantial (from 10% to 40%); however, CSA purportedly did not take across-the-board increases for any other commodities or categories of shippers. Petitioner asserts that CSA's members' service contract offers to NVOs have eliminated all commodity rates other than FAK and GDSM, thereby depriving NVOs of a rate basis on which to compete for full container load (“FCL”), single commodity shipments. Petitioner further alleges that, at the same time, a wholly-owned NVO subsidiary of CSA member Tropical Shipping and Construction Co., Ltd. (“Tropical”) (described by Petitioner as the largest vessel-operating carrier in most of the involved markets and virtually the only CSA member competing in the LCL market) reduced its LCL rates. Petitioner argues the combination of CSA members raising the FAK and GDSM rates on which NVOs base their LCL rates, and Tropical lowering its LCL rates, has created a “price squeeze” on the NVOs. Petitioner alleges that CSA's members' “obviously coordinated series of actions” has severely and unfairly injured the ability of Petitioner's members to compete. Moreover, Petitioner suggests that CSA's members' unreasonably raising rates may foreclose U.S. exporters from certain of the involved trades. Finally, Petitioner states that it has been advised that the CSA's goal and purpose in adopting the “selective” rate increase plan is to “destroy non-conference competition” and “diminish the influence of the NVOs”.

If the Commission's investigation concludes that Shipping Act violations have occurred, Petitioner urges the Commission to: (1) Issue sanctions against CSA and its members pursuant to section 13 of the Shipping Act for violations found; (2) require CSA member lines to pay reparations pursuant to section 11(g) of the Shipping Act to those OTIs who have been damaged;^[1] and (3) seek appropriate injunctive relief to enjoin further operation of CSA pursuant to sections 6(g) and (h) of the Shipping Act.

The Petition was filed under Rule 69 of the Commission's Rules of Practice and Procedure, 46 CFR 502.69, and states that it was served upon CSA. Replies to the petition, as provided by Rule 69 and Rule 74, 46 CFR 502.74, are due October 23, 2002. In order for the Commission to make a thorough evaluation of the petition, the Commission is also inviting interested persons to submit their comments on the petition no later than October 23, 2002. Comments shall consist of an original and 15 copies, or, if e-mailed, as an attachment in WordPerfect 8, Microsoft Word 97, or earlier versions of these applications; be directed to the Secretary, Federal Maritime Commission, 800 North Capitol Street, NW., Washington, DC 20573-0001 (e-mail to: [e-mail]); and be served on Petitioner's counsel: David P. Street, Galland, Kharasch, Greenberg, Fellman & Swirsky, P.C., 1054 Thirty-First Street, NW., Washington, DC 20007-4492; and on CSA, Suite 414, Galleria Professional Building, 915 Middle River Drive, Fort Lauderdale, FL 22204-3561.

Copies of the petition are available at the Office of the Secretary of the Commission, 800 N. Capitol Street, NW., Room 1046, by telephone request at 202-523-5725 or through email request directed to [e-mail].

Parties participating in this proceeding may elect to receive service of the Commission's issuances in this proceeding through e-mail in lieu of service by U.S. mail. A party opting for electronic service shall advise the Office of the Secretary in writing and provide an e-mail address where service can be made.

Bryant L. VanBrakle,

Secretary.

Footnotes

1.  Section 11(g) of the Shipping Act, 46 App. U.S.C. 1710(g), provides that, for any complaint filed within 3 years after the cause of action accrued, the Commission shall, upon petition of the complainant and after notice and hearing, direct payment of reparations to the complainant for injury caused by a violation of the Act.