APL URGES FMC TO LIMIT SINOTRANSÆ U.S. PRICING EXEMPTION
Claiming that the China National Foreign Trade Transportation (Group) Corp., known as Sinotrans, operates primarily as a non-vessel-operating common carrier and only runs one ship in the U.S. foreign trades, American President Lines has urged the Federal Maritime Commission to put limits on Sinotrans' request to reduce rates or match published tariff rates of competing ocean carriers at one days’ notice.
Sinotrans recently filed an application to the FMC seeking an exemption to the U.S. Controlled Carriers Act, which requires foreign state-owned carriers to wait 30 days before matching competing carrier tariffs in the United States. Sinotrans is asking for exemption with identical conditions to those imposed by the FMC on China Ocean Shipping Co.
The FMC granted COSCO an exemption to match competing tariffs in one day on condition that the company only match the rates of competing carriers and not the rates of non-competing carriers or the rates of NVOCCs. The FMC also said that COSCO could only match published rates, not quoted rates. COSCO must file a form each time a rate is reduced.
APL told the FMC that Sinotrans should not be allowed the same leeway. 'There is a significant difference between COSCO and Sinotrans that the commission must take into account in fashioning an appropriate exemption,” APL attorney David B. Cook said.
“COSCO is a vessel operating common carrier in the traditional sense,” operating numerous vessels in the U.S. foreign trades, Cook said, while Sinotrans operates only one ship calling at U.S. ports and acts primarily an NVOCC in the United States.
The FMC, as far back as 1992, has recognized the potential for unfair competitive practices when a government-owned, vessel-operating common carrier and a government-controlled NVOCC coordinate pricing and other activities. “The commission needs to be especially vigilant in monitoring Sinotrans’ actions under any exemption,” Cook said.
APL argues that any exemption granted to Sinotrans should be limited to rates in the single trade route served by its one U.S. trade vessel, meaning rates between ports actually called by that vessel.
In addition to each common carrier rate reduced by Sinotrans, the company should be required to file with the FMC an information form that identifies each NVOCC rate applicable to the same commodity in the same trade lane as well as any changes in NVOCC rates during the previous 30 days and any planned changes in such rates, Cook said.
Sinotrans has gathered support from COSCO and the Pacific Coast Tariff Bureau in its request to be granted an exemption identical to the one granted COSCO.