[Updated 29th February] Last week the US Federal Maritime Commission (FMC) announced it had collected $520,000 in civil penalty payments from five ocean carriers, including Volkswagen Konzernlogistiks (Group Logistics), which provides ro-ro services for new and used vehicles, and other rolling stock.
The other companies involved were Orient Star Transport International, Ba-Shi Yuexin Logistics Development, Thornley & Pitt, and Razor Enterprise (operating as Razor Cargo Services).
The FMC said that the penalties resulted from investigations into unfair practices pursued by its area representatives in Seattle and New York, and by Washington DC headquarters staff.
According to the FMC, the parties settled and agreed to the penalties but did not admit to violations of the Shipping Act or Commission regulations.
"The agreements and penalties announced today demonstrate the continued hard work and vigilance of the Commission’s area representatives and Bureau of Enforcement to protect the shipping public from fraud and unfair practices,” said FMC chairman Mario Cordero. “Our objectives are to ensure fair trade and compliance by all segments of the maritime industry, vessel operators and OTIs alike."
Volkswagen Konzernlogistiks, a vessel-operating common carrier based in Wolfsburg, Germany, paid $170,000, the highest individual payment from the companies involved. According to the FMC, the carrier “voluntarily disclosed” that over an extended period, it “operated pursuant to unfiled space charters with other operators of ro-ro vessels, or pursuant to agreement amendments which were filed with the Commission but not yet effective under section 6 of the Shipping Act.”
A spokesperson for Volkswagen Group explained that over the past few years, Volkswagen Group Logistics had not submitted to the FMC adequate reports on free freight capacity on vessels used by Volkswagen for vehicle shipment between Germany and the USA.
"Group Logistics reported this matter to the FMC on its own initiative and has already implemented measures to avoid such failures in future," the spokesperson told Automotive Logistics. "In combination with a one-off agreed payment of $170,000 by Volkswagen, the FMC adopted a favourable view of this approach by Volkswagen."
According to the FMC, under the US Shipping Act (46 U.S.C. 40101 et seq.), agreements among ocean common carriers must be filed with the FMC if the parties will, among other things, engage in ongoing cooperative working arrangements among themselves.
"Space charter arrangements, where one carrier contracts to obtain carriage on the vessels of another ro-ro operator, comprise one such category of cooperative working arrangements," Karen Gregory, the FMC's secretary told Automotive Logistics. "In the case involving [Volkswagen Konzernlogistiks], it was alleged that [its] practices violated the agreement filing requirements of the Shipping Act, but were not associated with other adverse competitive impacts upon the US trades or upon other carriers."
Meanwhile, Orient Star and Ba-Shi Yuexin Logistics Development were alleged to have charged rates not in accordance with their own non-vessel-operating common carrier (NVOCC) tariffs through ‘unfair devices’ or by means of utilising rates limited to certain ‘named accounts’. For Orient, those named accounts included UASC service contracts and for Ba-Shi Yuexin Logistics Development the named account was NYK Line.
Orient Star made a payment of $135,000 in compromise of the allegations and agreed to cooperate with on-going investigations into the transport activities of other parties. Ba-Shi paid $100,000 in penalties.
The FMC alleged that Thornley & Pitt knowingly and wilfully obtained transport “at less than applicable rates by means of improperly obtaining access to service contracts to which Thornley & Pitt was not the contract signatory”. Under the terms of the compromise, the carrier made a payment of $65,000. Similar allegations were made against Razor Cargo Services and it made a payment of $50,000.