VI TABLE OF CASES REPORTED

Micronesia Interocean Line Inc Discal Corp v

Micronesia Interocean Line Inc Enterprise Shipping Corp v

Micronesia Interocean Line Inc Ghiselli Bros Inc v

Micronesia Interocean Line Inc Hawaii State Steel Co Ltd v

Micronesia Interocean Line Inc 1 G E Export Division v

Micronesia Interocean Line Inc International Materials Corp v

Mtcronesia Interocean Line Inc Walter Plunkett Co v

Nedlloyd Hoegh Lines Harrisons Crosfield Pacific Inc v

New Haven Terminal Inc Pittston Stevedoring v

Nippon Yusen Kaisha Lines Ltd Chevron Chemical Co Ortho Division v

Norton Lilly Co Inc Robert S Osgood Inc Los Angeles v

Pacific Coast European Conference Agreement No 520026

Pittston Stevedoring Corp v New Haven Terminal Inc

Port of New York Authority Ballmill Lumber Sales Corp v

Rejection of Tariff Filings of Sea Land Service Inc

Robert S Osgood Inc Los Angeles v Norton Lilly Co Inc as Agents

Shipping Corp of India Ltd SC1 Line 197

Sea Land Service Inc Rejection of Tariff Filings 200

Siegler Carlton J v Micronesia Interocean line Inc 107 257

Transmares Freight Forwarder License 30

Truck Loading and Unloading Rates at New York Harbor 51

U S Pacific Coast Australia New Zealand South Sea Islands Trade

Unapproved Agreements 139

Walter Plunkett Co v Micronesia Interocean Line Inc 101

Wilson Violet A d b a Transmares Freight Forwarder License 30

Page

114

105

179

95

111

117

101

176

33

47

197

16

33

262

200
DOCKET NUMBERS OF CASES REPORTED

405

406

Rarrisons Crosfield Pacific Inc v Nedlloyd Hoegh Lines

Chevron Chemical Co Ortho Division v Nippon Yusen KaLsha

Lines Ltd

Hawaii State Steel Co Ltd v Micronesia Interocean Lines Inc

Carlton J Siegler v Micronesia Interocean Line Inc

International Materials Corp v Micronesia Interocean Line Inc

B H Loveless Co v Micronesia Interocean Line Inc

B H Loveless 00 v Micronesia Interocean Line Inc

Walter Plunkett 00 v Micronesia Interocean Line Inc

Ausor Corp v Micronesia Interocean Line Inc

I G E Export Division v Micronesia Interocean Line lnc

Discal Corp v Micronesia Interocean Line

Inc

Ghiselli Bros Inc v Micrones a lnterocean Line Inc

Enterprise Shipping Corp v Micronesia lnterocean Line Inc

Oarlton J Siegler v Micronesia Interocean Line lnc

Messrs DaPrato Florence as Buying Agents of Messrs United

China and Glass CO New Orleans v Med Gulf Conference on

Behalf of Messrs Lykes Bros Steamship 00

Robert S Osgood Inc Los Angeles v Norton Lilly Co Inc as

Agents Shipping Corp of India Ltd SOl Line

Davies Turner Co as Agents for Robert S Shlesinger Owner

v Atlantic Lines Ltd

Truck Loading and Unloading Rates at New York Harbor

Ballmill Lumber Sales Corp v The Port of New York Authority

Weyerhaeuser Co Atlantic Terminals Inc and Maher Lumber

Terminal Corp

Pittston Stevedoring Corp v New Haven Terminal Inc

Free Time and Demurrage Oharges on Export Ca rgo

Assembly TimePort of San Diego

C H Leavell Co v Hellenic Lines Ltd

US Pacific Coast Australia New Zealand South Sea Island

TradeUnapproved Agreements

A P St Philip Inc v The Atlantic Land and Improvement Co and

Seaiboard Ooast Line R R 00

In the Matter of Agreement No T 2214 Between the City of Long

Beach California and Transocean Gateway Corp

In the Matter Agreement No 520026 Pacific Coast European

Conference

Independent Ocean Freight Forwarder License Application Violet

A Wilson d b a Transmares

407

408

409

410

411

412

413

414

415

416

417

418

419

420

422

6546

665

67 56

689

6813

6814

6829

69 2

694

697

6922

VII

Page

176

47

95

107

117

92

98

101

189

111

114

179

105

257

135

197

279

51

262

33

207

1

76

139

166

70

16

30




FEDERAL MARITIME COMMISSION

DOCKET No 68 13

ASSElIBLY TIlIE PORT OF SAN DIEGO

D ecided July 18 1969

A tariff rule providing an additional 10 days free time exclusive of Saturdays

Sundays and holidays at the Porot of San Diego on commodities shipped for

the account of the United States Government found not to be violative of

section 16 First or section 17 of the Shipping Act 1916

A tariff rule granting 10 days processing time inaddition to the present 10 days

free time provided by the Port of San Diego on commercial bulk cargo

bagged on the Port premises moving in single consignments of 10000 tons

or more found not to be violative of section 16 First or section 17 of the

Shipping Act 1916

Aaron W Reese and Joseph D Patello for respondent Port of San

Diego

vVilliam A Imhof Neal A Jackson and Oharles W Bucy for inter

venor United States Department ofAgriculture

A iriam E Wolff for intervenor San Francisco PortAuthority

Albert E OroniJn Jr and Walter H MerymaJn for intervenor

Stockton Port District

J Robert Bray for intervenor Virginia State Port Authority

James H IfcJwnkiJn and Leslie E Still for intervenor Portof Long

Beach

J Kerwin Rooney and John E NolaJn for intervenor Port of

Oakland

NOrmaJn D line James N Albert and Donald J B1wnner as Hear

ing Counsel

REPORT

By THE COlOIISSION John Harllee Ohairman James V Day Vice

Ohairman Ashton C Barrett George H Iearn James F

Fan

seen Oommissioners

Ve instituted this investigation by Order of March 7 1968 to dete

mine whether a tariff rule proposed by the Port of San Diego au

13 F M C 1
2 FEDERAL MARITIME COMMISSION

thorizing an additional 10 days assembly time for consignments

of not less than 3 000 net tons of bagged or Government owned or

sponsored outbound cargo is contrary to section 16 First and section

17 of the Shipping Act 1916 and whether and in what respect the

Commission should modify its order in Docket No 1217 lnvestiga

tion of Free Ti lne Practices Port of SJJn Diego 9 F MC 525 1966

to permit the proposed assembly time practice

United States Department of Agriculture USDA City of Long

Beach City of Oakland San Francisco Port Authority Stockton

Port District and Virginia State Ports Authority intervened in the

proceeding

An Initial Decision was issued by Examiner John Marshall to

which exceptions and replies thereto werefiled and oral argument was

heard

BACKGROUND AND FACTS

On May 23 1966 this Commission after an exhaustive analysis

of prior free time decisions handed down its decision in Docket No

1217 supra wherein we held that 10 days for outbound cargo exclu

sive of Saturdays Sunday and holidays was a reasonable amount

of free time necessary for the assembly or removal of shippers goods

prior to the loading and subsequent to unloading of vessels at San

Diego In striking down San Diego s practice of granting 30 days

free time the COlnmission found that the unreasonable extension of

free time beyond 10 days either violated section 16 First because it

shifted the burden of defraying the cost ofproviding what amounted

to free storage to nonusers of the service or ffthe cost of providing

this service was not shifted to nonusers it constituted an unreasonable

practice within the meaning of section 17 because the service was

being granted at charges less than that which it cost the terminal to

provide thus jeopardizing the efficiency economy and soundness of

the terminal operations and endangering stability and predictability

of terminal rates and charges without any transportation justification

Some 18 months after our decision in Docket No 1217 was served

the Port of San Diego entered into a five year lease a

greement with

Freight Handlers Inc l

for some 21 000 square feet of space in the

port area upon which Freight Handlers constructed a fertilizer bag

ging facility Consideration of this operation was prompted by the

fact that the closing of the Suez Canal had caused ocean freight

rates from U S Gulf ports to Southeast Asia to become somewhat

1Freight Handlers Inc is a

subsidiary of Crescent Wharf and Warehousing Companv

which functions primarily as a

stevedoring contractor at the ports of San Diego Los

Angeles and Long Beach

13 F M C
ASSEMBLY TIME PORT OF SAN DIEGO 3

higher than from West Coast ports A particular commodity initially

of interest was potash from the Carlsbad New Mexico area which

was being exported to India for use as fertilizer Since then potash

from Utah diammonimll phosphate from Idaho soda ash from

1Vyoming and different grades of borax from undesignated sources

all used as fertilizer have been added

Until the construction of the bagging plant at San Diego these

materials from the added areas were not competitive for export nlar

kets Such comnlodities cannot be shipped in bulk to a number of the

recipient countries concerned because of the lack of bulk unloading

facilities The ports are open roadsteads where the cargo must be

lifted ashore and then carried on human backs or on trains trucks

or carts to inland points for ultimate use At the time there wereno

other export oriented bagging facilities on the Pacific Coast The

Ports of Oakland and Los Angeles have since installed bagging

plants The facility at Los Angeles however was built to handle

inbound cargoes

In order to remain competitive with the Gulf ports where free

ti111e above 10 days is accorded 2

and to afford Freight Handlers the

opportunity to participate in the bagging and shipment of cargoes

which up to that time had never Inoved out of West Coast ports San

Diego on January 23 1968 petitioned the Commission for approval

of the two proposed tariff items set forth below

PROPOSED ASSEMBLY PERIOD

Item 437 An assemibly period of not to exceed ten 10 working days in

addition to the free time provided by Item 435 may be granted for theassembly

of single consignments df not less than 3 000 net tons of bagged or Government

owned or sponsored oubbound cargo The granting of such assembly time shall

be subject to the availability of space and granted only when arrangements

therefor are made in advance of arrival of cargo at Port terminal facilities

and when the need forsuch an assembly periOd for single consignments is clearly

established

PROPOSED DEFINITION OF ASSEMBLY TIME

Item 5 z AssembZy Time is a designated number of days not to exceed

ten 10 in addition to allowable free time which may be granted for the

accumulation of single lots or consignments for a particular shipper which con

stitutes a volume substantially in excess of an average shipment Such a ship

meut shall be 3 000 tons or more to qualify for assembly time Assembly time

shall be granted only when the nature of the cargo or other circumstances pre

clude its delivery at the Port s marine terminals as a single consignment at one

time

IIThe Ports of Corpus Christi Galveston New Orleans Pensacola and Tampa allow up

to 30 days free time Galveston provides that Free time for outbound cargo may be

extended 15 days for assembly of single consignments of not less than 3 000 net tons

and Houston has the Same provision for shipments of not less than 5 000 tons

13 F M C
4

FEDERAL MARITIME COMMISSION

0 7er 95 percent of the cargo bagged and shipped frOlll San Diego

has consisted of the various types of chemicals consigned to develop

ing countries for use as fertilizer pursuant to programs ofthe Agency

for International Development AID 1ost consignments range

from 10 000 to 12 000 tons this being the capacity of typical tramp

vessels chartered for the purpose The bagging facility is capable of

an output of from 600 to 650 bags per 8 hour day Thus approxi

mately 17 to 18 working days are required to bag and assemble a

consignment Operationally the normal 10 days free time presently

provided for in San Diego s tariff would appear to be adequate to bag

and assemble a 10 000 ton consignment since charter parties provide

for loading at the rate of 1 000 tons per day and demurrage does not

accrue whilea vessel is loading 3

In order to bag and load these large

consignments within the prescribed period however Freight Han

dlers has found it necessary to operate two eight hour shifts and to

wbsorb a considerable amount of overtime which they state they

cannot financially continue to do

Besides operational problems the bagging plant at San Diego ha

encountered problems in coordination The bulk fertilizer moving

to the San Diego bagging facility COlnes from distant inland points

and there are c1elftys in arrival of fertilizer bags and vessels Co

ordinating the flow of USDA cargoes is especially troublesome

The problem here is due in part to the large number of suppliers

and persons facilitating the movement of the commodities For

exalnple in the case of bagged grain products and nonfat dry n1ilk

there are times when single consignments may originate from as many

as a dozen suppliers 4

Thus effective coordination of such shipments

is notalways possible

Between mid August 1967 and the latter part of February 1968

Freight Handlers bagged and shipped in excess of 80 000 tons of

cargo Had it not been for the bagging facility this cargo could not

have moved through San Diego and it probably would not have

Inoved through any other port of the Vest Coast No showing has

been made that the operation of the bagging facility has caused any

3

San Diego s tariff prOVides forwaiver of demurrage during vessel loading Moreover an

additional 10 days free time is granted if a chartered ship is delayed

Itis a basic goal of USDA programs to get the maximum amount of commodity per

dollar spent To this end suppliers are accorded periods varying from 3 weeks in the case

of grain to 13 weeks in the case of dry milk within which to ship the commodities The

period required to accumulate these staggered shipments at the port must also take into

account a leeway of 15 days for arrival of avessel included in most charter parties Com

pounding these problems is the requirement imposed by the Cargo Preference Act of 1904

46 U S C 1241 b that at least 50 percent of USDA cargoes move on US flag vessels

flhe resulrt is that USDA cargoes are sometimes held at the ternninal for a longer period

than would otherwise be necessary in order that they may be shipped on a US vessel

13 F M C
ASSEMBLY TIME PORT OF SAN DIEGO 5

dIversion from other California ports As a result of the bagging

facility the Port realized revenues totaling 49 783 17 which it would

not otherwise have received During fiscal year 1967 1968 Freight

Handlers bagging operations accounted for 16 percent of San Diego s

export tonnage

The USDA which vigorously supports the efforts of the Port of

San Diego to obtain authorization from the Commission to provide

up to 10 days assembly time in addition to normal free time for

Government cargoes is charged inter alia with the accomplishment

of certain foreign aid programs set forth in Titles land IIof the

Agricultural Trade Development and Assistance Act of 1954 7

U S C 1691 et seq commonly known as Public Law 480 Briefly

Title I authorizes the Commodity Credit Corporation CCC to

finance the sale and exportation of agriculture commodities to

friendly countries Title Icargoes move pursuant to sales agreements

between foreign governments and U S suppliers who are business

men selling from private stocks The commodities move under

cOIlllnercial bills of lading The foreign buyer 3Jrranges ocean trans

portation land nominates the port of loading The recipient nation is

gene rally responsible for all transportation costs The purchase and

tvansportJation is financed by v3Jrious types of loans from the U S

Government The only Title Icommodity which moved through San

Diego at east since 1965 has been cotton 3 645 long tons in bales

Under Title II commodities are exported to needy foreign coun

tries not as sales but as outright gifts in cooperation with voluntary

relief agencies Transportation is arranged by the USDA which pays

all costs including inland transportation and terminal charges Over

all supervision of Title IIprograms is vested in theAgency for Inrer

llational Development In the main these cargoes consist of bagged

grain products and vitamized nonfat dry milk

DISCUSSION AND CONCLUSIONS

In his Initial Devision Examiner John iarshall found that a

tariff rule providing for an additional 10 days assembly time at San

Diego for Government owned or sponsored cargo or for charitable

purposes is in accordance with the policy set forth in section 6 of

the Intercoastal Shipping Act 19335 and would not offend the pro

scriptions of section 16 First or section 17 of the Shipping Act 1916

5

Section 6 of the Intercoastal Shipping Act 1933 provides

That nothing in this Act shall prevent the carriage storage or handling of property free

or at reduced rates for the United States State or municipal Governments or for

charitable purposes

1S F Y C

42826471 2
6 FEDERAL MARITIME COMMISSION

Accordingly the following model tariff provision recon1ll1ended by

Hearing Counsel with the concurrence of USDA was adopted by

theEX1aminer

For good reason and upon the request of the US Government or for char

itable purposes additional free time may be granted over and above the initial

ten day free time period not to exceed ten days excluding Saturdays Sundays

and holidays

The Examiner further required San Diego to maintain records ofany

extension of free time granted pursuant to the approved rule show

ing the request reason cOlnmodity consignee and the amount ofaddi

tional free time used Such records were to be maintained for at

least two years

San Diego s

request for permission to allow up to a IO day assmn

bly time period for non government cargo was denied by the

Examiner on the ground that the relatively sma l amount of such

cargo had not been shown on the record to require any additional time

Exceptions to the EXaIniner s decision have been filed hy Stockton

Port District and San Francisco Port Authority to which the Port of

San Diego USDA and Hearing Counsel have replied

A Government Oargo

Before we touch upon other aspects ofthis proceeding as they relate

to government cargo we should like to first dispose of Stockton s

challenge to the Commission s

jurisdiction generany to authorize

additional free time for such cargo Vhile Stockton acknowledges

that section 6 of the Intercoastal Shipping Act 1933 authorizes the

granting of free or reduced rates to the U S Government it takes

the position that the Shipping Act 1916 Inakes no exception

for government cargo and for the Exmniner to make such a

recommendation would be to usurp the authority of Congress This

argument totally ignores the fact that the Intercoastal Shipping Act

1933 is but an amendment to the Shipping Act 1916 This fact is not

only supported by the legislative history of the 1933 Act but by the

language of the preaInble to the 1933 Act which clearly states that it

is an act Amending theShipping Act 1916 emphasis

added 6It follows therefore that section 6 exempts transportation

for the United States frOln the rate provisions of the Shipping Act

1916 with the same force and effect as it does with regard to the

provisions ofthe 1933 Act 7

8In this regard see also the preamble to Commission General Order 21 where we

specifically recognized that the Intercoastal Shipping Act 1933 was but an amendment

to the 1916 Act

7 Moreover section 6 like section 22 of the Interstate Commerce Act after which it was

patterned is merely declaratory of the pre existing common law principle that the

sovereign was entitled to reduced transportation rates since at common law any statute

13 F MC
ASSEMBLY TIME PORT OF SAN DIEGO 7

Ve nlove now to the specific objections of the parties to the Exam

iner s adopted model tariff rule San Francisco while not disagreeing

in principle with the granting of additional free tinle for government

cargo objects to the Exall1iner making the rule applicable to govern

ment owned or sponsored cargo for good cause It is argued that

this language is vague unclefillecl and could result in the granting

of unjustified extensions of free tilne to strict ly commercial cargoes

Iearing Counsel agree that some of the language used in tariff rule

as interpreted by the Examiner in his decision is ambiguous and

submit that there is a valid question raised by San Francisco

as to whether these provisions apply to shipments in which the U S

Government is indirectly or remotely sponsoring a movement and is

not the actual owner orshipper In this regard itis flearing Coun

sels position that the United States should be accorded special treat

lnent under section 6 only where it is the actual shipper and ulti

mately bears the transportation costs They maintain that existing

principles of law and the prevailing custom among U S ports clearly

militate in support of this conclusion

The USDA on the other hand argues that all cargo nloying under

Title Iand Title IIof Public Law 480 should qualify for extended

free time even where the U S Government itself does not receive any

direct or actual benefit and where the United States is reimbursed

for the transportation costs They take the position that since both

programs are charitable in nlotive and designed to improve our rela

tions with recipient nations the benefits of free time should be ex

tended to aH shipments moying under Title Ior Title II regardless

of who ultimately receives the benefit of the special rate

vVhatever might be said for allowing additional free time on sIllp

ments for which the United States does not ultimately incur the cost

of transportation on purely humanitarian or political grounds it is

abundantly clear that section 6 ofthe 1933 Act cannot be interpreted

to allow free time under such circumstances An early opinion of

the Attorney General 25 Ops Atty Gen 408 1905 declared that

the applicability of section 22 of the Interstate Commerce Act after

which section 6 is patterned depends on whether the government

reoeives the entire benefit of the reduoed rate The opinion went on

which would tend to restrain or diminish the sovereign s power rights or interest was not

binding unless the sovereign was named therein Emer Fleet Oorp v West Union 275 U S

415 1927 It would indeed seem as wepointed out in In the Matter of the Oa1 riage of

Military Oargo 10 F1IC 69 81 1966 that any denial of reduced rate trans

portation to the Government would have to be based on express statutory language

emphasis added In this connection see also Guarantee 00 v Title Guaranty 00 224

U S 152 1912 United States v Oalifornia 297 U S 175 1936 and Paul v United

State8 371 24 1963

13 F M C
8 FEDERAL MARITIME COMMISSION

to construe the words for the gov rnments or for the United

States as meaning for the benefit of the govermnents and further

specified that this benefit must be total and direct Consistent with

this Attorney Generals opinion and the principles oflaw stated there

in the ICC has historically held that it is improper to permit the

benefit of special rates on Government material to accrue to anyone

other than the Government itself Havens 00 v O N lV Ry 00

20 1C C 156 158 1911 Givens v L N R 00 140 IC C 605

1928

More recently in Interp1 etation of Gov t Rate Tariff Eastern

Oentral 323 IC C 347 1964 a case directly on point the ICC had

occasion to consider the question of whether a carrier could accord a

nongovernment commercial shipper areduced rate under section

22 ofits act if thecosts paid to the carrier by the shipper or receiver

are to be reimbursed by the Government In concluding that the

Government is entitled to free or reduced rates only where it is

completely responsible for the payment of the transportation charges

the Commission stated

W e conclude that section 22 quotations are applicable on transporta

tion services which are performed forthe government so long as the direct and

entire benefit of the special rates accrues solely to the government S ec

tion 22 rates are proper only where the government pays the charges or

directly and completely reimburses the party which initially bears the freight

charges I

Indirect cost I

is that which cannot be related specifically to a particular

item because it is incurred for common or joint objectives of both thecontractor

and the government Since the entire benefit does not accrue solely to the

government transportation which is considered a matter of indirect cost cannot

be regarded as for the government so as to qualify for special rates under

section 22 even if the indirect cost item is allowable and an allocable portion

is in fact paid by the government 323 1 0 0 at pp 350352 8

Ve agree with the reasoning and conclusions of the above opinions

and we find nothing in the wording of our statute or in its legislative

history to support a different interpretation Ye find therefore that

section 6 free or reduced rates are applicable on transportation

services which are performed for the Government so long as it derives

the direct actual and entire benefit ofthe special rate Applying this

standard to the situation before us we conclude that only those ship

ments for which the U S Government bears ultimate responsibility

8 Upon further consideration of its Easte1 nOentral decision last year the ICC in

approving the use of specific endorsements on bills of lading reaffirmed its earlier conclu

sion and again cautioned carriers to confine the application of section 22 rates

to shipments on which the government pays t e transportation charges Interpretation of

Gov t Rate Tariff Eastern Oentral 332 IC C 161 163 1968

13 F M O
ASSEMBLY TIME PORT OF SAN DIEGO

for the transportation costs can qualify for additional free time

beyond the 10 days now provided atSan Diego 9

In order to eliminate any possibility that benefits ofthe rule would

accrue to commercial shippers or to any party other than the U S

Government Hearing Counsel suggest that the tariff rule adopted

by the Examiner might be amended to read as follows

Upon request of the United States Government additional free time may be

granted oyer and above the initial ten 10 day free time period not to exceed

ten 10 days excluding Saturdays Sundays and holidays This provision shall

apply only to commodities shipped for the account of the U S Government

Ve fully endorse Hearing CounseFs recommended tariff rule It is

not only legally sound but also a nswers all of the valid objections

raised by the parties

Ve will not pretend to fully understand all of the legal intricacies

and ramifications of P L 480 programs or the distinctions between

Titles Iand IIas they relate to our decision here Suffice it to say that

the Government will have to support any request for additional free

time by demonstrating to San Diego s satisfaction that the shipments

involved are in fact being shipped for its account and that it will

derive the full benefit of the additional free time In order that we

might be in a better position to police the implementation ofthe above

tariff rule and to relieve any apprehension that these suggested rules

would be abused by the Port of San Diego by extending privileges to

cargo not entitled thereunder we are adopting the Examiner s re

quirement that the Port maintain detailed records for inspection

purposes of each extension granted for at least two years

Itmust be noted significantly here that other than the requirement

that an extension offree time be grantedonly on those cargoes shipped

for the account of the U S Government we have imposed no condi

tions on the future use of the additional free time Thus the adopted

rule is not limited in application to U S Government cargo bagged on

the premises but would apply to any cargo shipped for the account of

the U S Government moving through the Port of San Diego This

position we find to be consistent with the statutory policy described

above

Besides clearly indicating that the free time benefits would not

extend to parties other than U S Government Hearing Counsels

suggested rule also effectively eliminates other posisble ambiguities

91This is also consistent with the interpretatlollJ already placed on such provisions at

other U S ports For example witnesses testifying on behalf of Virginia ports stated that

under the rule in their tariff special treatment would be limited to shipments where the

Government was the actual shipper and paid for the costs of transportation and not where

it is merely lending money to foreignl nations for purchase of American commodities

13 F MC
10 FEDERAL MARITIME COMMISSION

Inthe first place the above provision eliminates reference to the intro

ductory phrase For good reason which San Francisco contends to be

subjective and improper for inclusion in tariffs We concur with

Hearing Counsel that there is no real need for the phrase since it is

the policy and custom to grant special treatment to Governnlent car

goes without further reason

Itwill alsobe noted that Iearing Counsel remove frOln the ambit of

the rule requests for charitable purposes vVhile they explain that

they do not oppose such language in principle since policy and

custonl support it they do agree with San Francisco that the term

is not defined in therecord and there is no evidence ofrecord concern

ing any charitable commodities shipped through San Diego Since

San Diego did not request special treatment for charitable cargoes

nor does there appear to be any practical need for such an exception

fronl established practices at the port we find Hearing Counsel s dele

tion ofthe ambiguous language to be fully proper

Moreover we find that the granting of additional free time for U S

Government cargo at San Diego has not been shown to be an unjust

or unreasonable practice relating to the handling of property within

the nleaning of section 17 of the Act There is no indication whatever

in the record that the implementation of an additional free time rule

for U S Government cargo would in any way interfere with and

disrupt the normal flow of other cargo otherwise contribute to con

gestion at the Port or impose any additional expense on other cargo

Without deciding whether section 16 First oftheAct requiring the

equality of treatment between any particular person locality or

description of traffic could ever be violated by according free or

reduced rates to US Government cargo pursuant to section 6 we

further find and conclude that there is no evidence to indicate that

undue or unreasonable preference or prejudice in violation of section

16 First would result from the incorporation of the above extended

free time provision into San Diego s tariff

B OommercialOargo

The Examiner in his decision found that nongovernment or com

mercial C1rgo constituted something less than 5 of the total out

bound cargo bagged and shipped at San Diego and that this

relatively small portion ofthe total could not on this record

be found to require or to be entitled to additional free time for assem

bly Considering the fact that our interpretation of what constitutes

government property within the Ineaning of section 6 of the Inter

coastal Shipping Act 1933 is manifestly more restrictive than the

Examiner s this finding has been rendered a little less than accurate

1Vhile a complete and precise breakdown of U S Government com

13 F M C
ASSEMBLY TIME PORT OF SAN DIEGO 11

mercial cargo moving through San Diego is not contained in the

record it is nevertheless clear that there is sufficient commercial

cargo being bagged and shipped at that port to warrant our con

sideration ofSan Diego s petition

As itrelates to commercial cargo the essence of San Diego s initial

petition is arequest to proVlide a specified period oftime in addition

to tjhe free time presently allowed during which bulk cargo alriving

at the port could be bagged or procesesd on port preIl1ises without

accruing wharf demurrage orother terminal charges Now whatever

else this period of time might be considered whether itbe assembly

bagging or processing time it clearly does not fall within our

definition of free time In Investigation of Free Time Practices

Port of San Diego supra we defined the nature of free time as

follows

Free time is nota gratuity butitis required as a necessary part of the carrier s

transportation obligation which includes a duty on the carrier to tender for

delivery all cargo carried by it absent a special contract to the contrary I lIe

Thus the establishment of the minimum amount of free time which under the

law must be granted by carriers is a relatively simple proposition the period

must be realistically designed to allow the consignee sufficient time to pick up

his cargo taking into account physical limitations of the facilities other delays

etc ie the so called transportation necessities of the particular port or ter

minal I I

Thus free time is limited strictly to that period oftime required by

the shipper to assemble or the consignee to Iremove his cargo prior to

itbeing loaded or subsequent to its being discharged from the vessel

Olearly it wasnever intended to encompass the period oftime required

by theshipper to bag or otherwise process his cargo while on terminal

premIses

Processing time as we shall refer to it herein is not required as a

necessary part ofthe carrier stransportation obligation The carrier

has absolutely no obligation transportational or otherwise to provide

a

shipper any time beyond what is reasonable and necessary for the

shipper to assemble or the consignee to pick up his cargo Nor is the

port itself in any way required to allow a shipper s goods to occupy

terminal space beyond the normal free tiIne period free of teTminal

charges whileit is being processed An allowance of processing time

is provided gratuitously to the shipper as a service and so long as it is

not unlawful itis solely within the managerial discretion ofthe port

Oonsidered as a terminal practice the validity of providing such a

service is dependent on its reasonaJbleness under section 17 and its

reasonableness under this section is based in turn on a broad consid

eration of many factors relating to the conditions existing at the port

13 F M C
12 FEDERAL MARITIME COMMISSION

and the characteristics of the traffic involved Viewed in the light of

the foregoing and for reasons set forth below we find that the record

in this proceeding fully supports and justifies San Diego s allowance

or time free of terminal charges for the processing of bulk cargo

under certain conditions Inthe first place we fully recognize that San

Diego is not here involved as it was in Docket No 1217 in a pro

motional give a

vay program or valuable port storage space at

noncompensatory rates calculated solely to attract cargo to the port

and give it the competitive edge over neighboring ports San Diego s

position in this proceeding represents and effort to meet specific

operational needs which ex ist at the port in order to assure the con

tinued movement through the port of a specific and limited type of

cargo for which special transportational requirements exist

The record is clear that the chemical fertilizers which represent at

least 95 percent of the total cargo bagged by Freight Handlers at San

Diego cannot move in bulk to the ports of the recipient countries be

cause ofdeficient or nonexistent bulkunloading facilities at those ports

To the extent that these commodities lnust be bagged prior to ship

ment they do in fact as San Diego has contended throughout this

proceeding constitute a new and unique type of cargo

Although mathematically the normal10 day free time period should

be adequate to proces a 10 000 ton consignment it has been shown that

this does not always prove true in practice Infact the record indicates

that the capacity of the plant is limited and the facility has been

severely taxed to bag and load 10 000 ton lots within the normal free

time Or as the Examiner found in his decision

There are conditions beyond the control of either the exporter orFreight Han

dlers which arise from time to time rendering the normal ten day free time

allowance inadequate for bagging and assembling large consignments Included

are unpredictable lapses in the availability of materials at the source and delays

in the receipt from the manufacturer of the particular size bags specified in a

particular bagging contract The bags areactually procured by the exporter As

the bagging oftJhis cargo is a necessary step in transporting it from source to

destination these aretmnsportation problems and arenothased on merchandising

considerations or matters of commercial convenience While the present ten day

free time allowance may prove adequate in most instances additional time must

be made available when it is notreasonably possible to receive bag and assemble

large consignments that quickly

And as one witness testified the coordinating problems that arise are

the product of uncontrollable factors in the shipping process a nd

cannot be attributed to fault on the part of any party

The only reason that Freight Handlers has generally been able to

bag assemble and load a 10 000 ton shipment within the presently al

lowable 10 day free time is because it has operated two eight hour shifts

13 F M C
ASSEMBLY TIME PORT OF SAN DIEGO 13

and has absorbed the overtime Freight IIandlers has testified how

ever that they cannot remain in business in San Diego if they must

continue to absorb losses yhen conditions conspire to prevent the

processing and assembly ofshipments vithin the regular time period

Under these circumstances we think it plain that a 10 day processing

time period for single consignments of 10 000 tons or more is neither

unrealistic norexcessive

Atthis juncture we might point out that the 3 000 ton minimum on

single consignment proposed by San Diego is manifestly unrealistic

and unsupportable on the record Inthe first place the record clearly

demonstrates that under actual experience the present 10 day free

time period is more than sufficient to process a shipment as small as

3 000 tons Secondly the commodities in question here generally move

in approximately 10 000 ton lots because this represents the normal

capacity of the vessels which are chartered In this regard one of

San Diego s own exhibitsshowing the actual experience of the bagging

facility indicates that of 11 vessel loadings only in 4 instances was

tJhe tota l

tonnage loaded less than 10 000 tons and one of these came

about as a result of some 194 tons being shut out of an eadier loading

For this reason we find that the 10 000 ton minimum recommended

by I

Iearing Counsel at San Francisco s suggestion is more consistent

with the record

Besides being required by existing circumstances there is no indica

tion that the establishment of a 10 day processing period at San Diego

yould in any way operate to the detriment or otherwise adversely

affect the efficiency economy and financial soundness of port opera

tions at San Diego The operations of Freight Iancllers have not

caused displacement of any other cargoes normally being shipped

or received at San Diego The record is clear that the port space that

has been utilized by Freight Handlers for the bagging and acoumula

tion ofbagged cargo wasnot needed for any other cargo Nor is there

any indication that the establishment of a processing period would in

the future displace or impede the flow of other cargoes

As far as the economy andfinancial soundnessofthe port is concern

ed the construction of the bagging facility has provided new sources

ofrevenue to the port and has brought cargo to the port which would

not have otherwise moved out of the Vest Coast There has been no

evidence that there has been any diversion of cargo from aJ1Y other

Vest Coast port as a result of the new industry at San Diego

In Investigation of F1 ee Time P1ywtices Po1 t

of San Diego stpra

at 547 we deteJlmined that as used in section 17 and as applied to termi

nail praotJices a reasonable pl a0tice most appropriately means

13 F M C
14 FEDERAL MARITIME COMMISSION

a practice otherwise lawfulhut not excessive and which is fit and ap

propriate to the end in view Inview of all that has been stated here

in we find that a provision such as the one set forth below would not

only satisfy the above criteria as to reasonableness but would also

accomplish the objectives ofthe PortofSan Diego

Processing time nOt to exceed ten 10 days excluding Saturdays Sundays

and hOlidays in addition to the free time prOvided by Item 435 may also be

granted for the baggingOf cOmmercial bulk O utbound cargo moving in single

consignments O f 10000 net tOns or mO re

11oreover it has not been shown that the implementation of a tariff

rule allowing a specified period of processing tNne for commercial

bulk cargo under the conditions set forth herein would in any way un

duly or unreasonably prefer or disadvantage any person locality or

description ottraffic withfnthe Ineaning of section 16 First oftheAct

ULTIMATE CONCLUSIONS

1 On the basis of all of the foregoing and the entire record herein

it is found land concluded th3it the tariff provisions set forth below

would not offend theproscriptions ofeither section 16 First or section

17 of theShippingAct 1916

Upon request of the United States Government additional free time may be

granted over and above the initial ten 10 day free time period not to exceed

ten 10 days excluding Saturdays Sundays and holidays This provision

shall apply only to commodities shipped for the account O f the U S Government

Processing time not to exceed ten 10 days excluding Saturdays Sundays

and holidays inaddition to the free time provided by Item 435 may also be grant

ed for the bagging of commercial bulk outbOund cargo moving in single consign

ments of 10 000 nettons or more

2 With regard to free time extensions granted for commodities

shipped for the account of the US Government San Diego will

maintain records of such extensions for at least two years These

records will reflect the request the reason the commodity the con

signee and the additional free time used

An appropriaJteorder willbeentered

Bythe Commission

SEAL Signed THOMAS LISI

Secretary

13 F MC
ASSEMBLY TIME PORT OF SAN DIEGO 15

ORDER

The Commission having this day entered its Report in this pro

ceeding which is hereby made a part hereof by reference and con

eluded the Port of San Diego s tariff rule providing an additional

10 days exclusive of Saturdays Sundays and holidays on cOlnmodi

ties shipped for account of the United States Government is not viola

tive of section 16 First or section 17 of the Shipping Act 1916 and

having further concluded that the Port of San Diego s tariff rule

granting an additional 10 days processing tinle in addition to the

present 10 days free time on comlnercial bulk cargo bagged on the

Port premises moving in single consignments of 10 000 tons or more

is not viol1wtive of section 16 First or section 17 of the Shipping Act

1916

It i8 ordeTed That the Port of San Diego amend its tariff to

provide

Upon request of the United States Government additional free

time may be granted over and above the initial ten 10 day free

time period not to exceed ten 10 days excluding Saturdays Sun

days and holidays This provision shall apply only to commodities

shipped for the account of the U S Government

Processing time not to exceed ten 10 days excluding Saturdays

Sundays and holidays in addition to the free time provided by Item

435 may also be granted for the bagging of commercial bulk out

bound cargo moving in single consignments of 10 000 net tons or

more

It is fU7 ther ordered That with regard to free time extensions

granted for commodities shipped for the account of the U S Govern

ment San Diego will maintain records of such extensions for at least

two years These records will reflect the request the reason the com

modity the consignee and the additional free time used

Bythe Commission

THolIAS LISI

Secreta7 Y

13 F M C
FEDERAL MARITIl1E COMl1ISSION

DOCKET No 69 7

IN THE MATTEROF AGREEl IENT No 5200 26

PACIFIC COAST EUROPEAN CONFERENCE

Decided July 22 1969

Where modification of conference self policing system is designed to guaranbtee a

fair and impartial hearing to an accused line and does not affect any sub

stantive right or obligation of the members under the conference agreement

such procedures may be used to investigate and prosecute breaches which

predate the approval thereof provided Commission approval under section

15 is oobtained

Approval of agreement authorizing a conference to utilize recently amended self

policing procedures to investigate and prosecute breaches of the conference

agreement which predate the approval of such amendment does not consti

tute the retroactive approval of past unauthorized activities

An amendment to a self policing system which creates no new substantive lia

bilities but merely guarantees to an accused line the right to a fair and

impartial hearing is procedural only and an agreement permitting its retro

spective application does not amount to an em post facto regulation

Where the approval of an agreement authorizing a conference to utilize its

recently amended self policing procedures retrospectively will restore the

continuity of the conference s self policing system such agreement is in

harmony with the legal requirement of section 15

Leona1 d G James F Oonger Fa l cett and John P i1 eade for re

spondents Pacific Coast European Conference and its member lines

Ge010ge F Galland and Amy Scupi for respondent States Marine

Lines

Donald J BTUnne1 and James N Albe1 t Hearing Counsel

REPORT

By THE COMMISSION John Harllee Ohai lvnwnj James V Day Vice

Ohairomanj Ashton C Barrett George H Hearn James F Fan

seen Oommi88ione1 8

Ve instituted this proceeding to deternline whetherAgreement No

520026 should be approved disapproved or modified pursuant to

16 13 F M C
AGREEMENT NO 5200 26 17

section 15 of the Shipping Act 1916 as amended The agreement if

approved would authorize the Pacific Coast European Conference to

utilize its recently amended self policingprovisions to investi

gate and prosecute pursuant to those provisions any alleged breaches

broughtto its attention at any time after 1arch 8 1967

A protest urging our disapproval of the agreement was filed by

States 1arine Lines a former member of the Conference which re

signed its membership on December 1 1967 while allegations of mal

practices were still pending against it States 1arine Lines and the

Pacific Coast European Conference and its member lines were named

as respondents in the order ofinvestigation Hearing Counsel also par

ticipated There appeared to be no genuine or material issues of fact

and the proceeding was limited to the submission of briefs and affi

davits vVe heard oral argument

THE FACTS

The Pacific Coast European Conference is a conference ofcommon

carriers by water serving the trade between US Pacific Coast and

Alaskan ports and ports in Europe and its environs The Conference

was established pursuant to Agreement No 5200 and approved by

the Commission s predecessors on 1ay 26 1937 Although Agreement

No 5200 has undergone many modifications since it was orginally ap

proved certain Articles of the Agreement hJ1ve remained virtually

unchanged from the beginning Among such provisions are Articles

2 and 3 whereby members of the Conference agree to adhere to the

Conference s published rate structure and regulations These Articles

provide in pertinent part

2 No party hereto shall engage dir tly or indirectly in the aforementioned

transportation under terms conditions and or rates different from those agreed

upon by and between the members hereto II

1

3 All freight and other charges for and in connection with such transpt rta

tion shall be charged and coll ted by the parties hereto based on actual gross

weight or measurement of the cargo or per package according to tariff and

strictly in accordance with the rates charges classifications rules and or regu

lations adopted by the parties There shall be no undue preferences or disad

vantages DOl unjust nor unreasonable discrimination orunfair practices against

any consignor or consignee by any of the parties hereto

Each of tbe Parties hereto agrees that neither it nor its principals nor asso

ciated nor affiliated companies of any of them sball give or promise either

dir tly or indirectly to any shipper or consignee or broker or prospective

sbipper or consignee or broker or to any officer employee agent or representa

1

Agreement No 5200 25 approved by order of the Commission on Noyember 15 1968

13 F M C
18 FEDERAL MARITIME COMMISSION

tive of any such shipper or consignee or broker or prospective shipper or con

signee or broker or to any member of the family of any of the aforesaid in

any manner any return commission compensation concession free or reduced

storage free or reduced passenger rates any bribe gratuity gift of substantial

value or other payment or remuneration through any device whSitsoever or

render to any of the foregoing any service outside or Ibeyond that called for

inthecontracts of affreightmentor tariffs

NOTE Free or reduced ocean passages Personal GroundsPrincipals of

Member Companies may grant free or reduced rate passages on peroonal

grounds but in no instance shall free or reduced rate passages be granted in

conflict with the above or in violation of Section 16 of the Shipping Act 1916

There shall be no payment or refund of freight or compensation received and

no absorption at loading and discharging ports of rail truck orcoastal steamer

freights or other charges directly or indirectly by any of the parties hereto

except as may be agreed to by three fourths of the parties hereto at any regular

meetingof the Conference

The parties hereto and each of them further agree that they shall not enter

into any agreement of any nature with any party or parties which would in

any way affect the integrity of this agreement or any agreements rates rules

or regulations made pursuant hereto

Until December 1 1967 respondent States 1arine Lines Inc and

Global Bulk Transport Inc operating as a joint service held a

single membership in the Conference Ithad been a member continu

ously for approximately 18 years

Prior to November 15 1968 the procedures governing the Con

ference s self policing activity consisted primarily of two Articles in

the agreement which read as follows

Article 15

BREAOH OF AGREEMENT Except as otherwise provided in

Article Four 4

liquidated damages for nonobservance of this

Agreement or of any of the rules regulations or tariffs of the Con

ference shall be not less than Five Hundred Dollars 500 00 nor

more than Ten Thousand Dollars 10 000 Ifin the opinion of the

Conference members failure to observe the Conference Agreement

or Conference rules regulations or tariffs in a particular case or

cumulatively jeopardizes the accomplishment of the basic purposes

of this Agreement the offending party may be expelled from the

Conference The determination as to nonobservance of this Agree

ment or of any rule regulation or tariff of the Conference and

whether the offending party shall pay liquidated damages or be

expelled from the Conference shall be by agreement of the parties

as provided in Article Eight 8 Should an offending party fail

to pay liquidated damages assessed hereunder to the Conference with

in five 5 days after written demand therefor the said party shall

be and become liable to civil action In no case shall the party com

13 F M C
AGREEMENT NO 5200 26 19 

plained against cast any vote on the matter under consideration No

expulsion shall become effective until a detailed statement setting

forth the reason or reasons therefor has been furnished to the ex

pelled member and a

copy of such notification mailed to the govern

mental agency charged with the administration of Section 15 of the

United States Shipping Act 1916 as amended

A1 ticle 8

DEOISIONS Decisions at Duly called meetings are to be made

by a three fourths vote of members present and entitled to vote

otherwise they are to be made by three fourths vote of all members

entitled to vote Changes in this agreement however shall be made

only by unanimous vote of all members entitled to vote

In March 1967 the United States Court of Appeals for the District

of Columbia Circuit determined 2that a conference self policing sys

tem must contain specific assurances that an accused member will be

treated fairly and provision for impartial review by a totally dis

interested person or body of any determination to penalize a member

line

Within a few days following this decision counsel for the Con

ference wrote a letter to the Conference Chairman advising that in

his opinion the self policing system should be amended to conform

to the guidelines laid down by the Court and submitted a draft re

vision for that purpose A general conference meeting on the draft

was held in London on June 28 1967 at which time 21 members of

the 22 member conference voted to adopt the proposed revision The

conference agreement requires unanimous vote to effect changes in

the basic agreement On July 6 1967 States Marine notified the

Conference that it was withdrawing its affirmative vote requesting

time to consult with counsel On July 10 1961 vVeyerhaeuser Line

the one member absent from the meeting held in June voted no to

a proposed revision

On August 22 1967 the Conference instituted a selfpolicing action

against States Marine for alleged breaches of the Conference agree

ment seeking liquidated damages in the amount of 130 000

Instead of defending against these charges on the merits States

1arine filed the complaint which became our Docket 6749 3 It also

sought and obtained an injunction against the Conference and its

member lines in the United States District Court for the Northern

District of California Southern Division No 41855 forbidding any

2

Statea Marine Linea Inc v FederaZ Maritime Oomn 376 F 2d 230 D C Cir 1967

19

tatea Marine Linea Inc et aZ v Pacifio Ooaat European Oonference et aZ 12 FMO I

13 r M O
20 FEDERAL MARITIME COMMISSION

attempt to collect penalties from States Marine until the COlnmission

hadmade its decision in Docket 6749

On August 29 1967 States J1arine did furnish the Conference with

its recommended modifications These proposals were similar to the

system which had been voted on at the London meeting but were con

siderably more detailed on the procedural safeguards to be afforded

the accused as well as the arbitration procedures

vVhile Docket No 6749 was pending before the Commission States

Marine gave notice of its intention to withdraw from conference

membership and in fact did resign effective December 1 1967

Subsequently the Conference Chairman advised States J1arine that

a meeting of the Conference would be held on January 4 1968 to

consider the outstanding charges States J1arine was invited to be

present and to participate in its defense By letter dated January 3

1968 States Marine declined to participate and suggested that the

matter be postponed until after the Commission reached its decision

in this docket

Nevertheless the meeting was held and States Marine was found

guilty and penalized by the membership in the amount of 130 000

In a letter signed by the Conference Chairman dated January 5 1968

States Marine was advised of this action In this letter States irarine

was also offered an opportunity to have the adverse determination

reviewed by an impartial board of arbitrators

Our report in Docket 67 49 was served June 27 1968 and in it we

held that the Conference s selfpolicing system as it then existed was

legally defective in that it contain edl no procedures guaranteeing

fundamental fairness as defined bythe Court in the States 111arine

case We added that Itmay not be used and the assessment against

States J1arine is void The Conference was ordered to amend its self

policing procedures

Therefore the Conference sought reconsideration of our decision and

a stay pending judicial review These requests were denied and on

October 21 1968 the Conference filedAgreement No 5200 25 which we

approved on November 15 1968

On October 28 1968 Agreement No 5200 26 now under considera

tion wasfiled for approval Itconsists of one paragraph as follows

The procedures contained in this article conform to the decision in States

Marine Lines Inc v F M O 376 F 230 D C Cir 1967 The amendment of

this rticle to so conform shall affect self regulatory procedure only and shall

effect no substantive change in the parties rights or obligations under this

agreement The amended procedures shall apply to and the Conference shall

be authorized to investigate and prosecute pursuant to these provisions any

alleged breaches broughtto its attention at any time after March 8 1967

13 F M C
AGREEMENT NO 5200 26

DISCUSSI N

The scope ofthisproceeding is limited to the followinglegal issues

21

Whether section 15 approval should be given to Agreement No 520o 6 which

contains 1 legal conclusions and 2 a provision WhiCR would give retro

active effect to a recently approved selfpolicing procedure

In their opening briefs both States Marine and Hearing Counsel

opposed the approval ofthe first two senten s contained in the agree

ment on the ground that

the legality and interpretation of an agree

ment filed under section 15 is for the Commission and the courts to de

termine andis not somethingto which the parties may agree

In its reply brief the Conference indicated its willingness to delete

these two sentences in the interests of avoidingunnecessary controversy

and suggests that Agreement 5200 26 be approved in the following

form

The amended self policing procedure approved by the Federal Maritime Com

mission on November 13 1968 shall apply to and the Conference shall be author

ized to investigate and prosecute pursuant to such provtsionlS any alleged

breaches brought to its attention at any time after March 8 1967

Since the Conference has agreed to withdraw the objectionable

language this issue has been rendered moot and nothing more need be

said

When itfiledits complaintin Docket 67 49 States Marine noted only

two deficiencies in the Conference s then existing self policing system

The first was the lack of any procedures guaranteeing the right of an

accused line to be furnished with all ofthe evidence to be relied upon

and a fair opportunity to rebut or explain such evidence The second

was the absence of any provision for an impartial tribunal vested with

the final authority to pass on questions of guilt or level of penalty tobe

assessed

States Marine did not challenge the legality of Articles 2 and 3

of the basic conference agreement defining malpractices nor did it

attackthe range ofpenalties whichmight be assessed upon acompetent

finding of guilt Its objection was addressed solely to the conference

agreement s failure to include specific procedures forthe adjudication

of alleged malpractices in accordance with the principles set down in

the opinion ofthe Court ofAppeals in the State8 Marine case 8upra

In our report in Docket 67 49 we agreed that the Conference s self

policingsystem as then constituted was

L egally defective in that it contains no procedures guaranteeing funda

mental fairness as defined by the court in the States Marine case It may not

be used and the assessment against States Marine is void

13 F M C
22 FEDERAL MARITIME COMMISSION

Having made this determination we added

This does not mean however that the Conference has lost its right of action

against States Marine for alleged wrongdoing while a Conference member It

could well be that the Conference may still enforce Conference obligations in

curred by States Marine prior to its resignation from the Conference

The legal defect of the Conterence s f

qner sel polici11g system

consisted solely in its lack of a procedural systenl whereby a fair and

impartial hearing vould be guaranteed to the accused member and

only so much of the system which required the conference members

themselves to sit in final judgement was affirmatively found to be

illegal in Docket 67 49

Since its original self policing system was first approved the Con

ference has always had the legal right and obligation to investigate

malpractices and bring charges against members where probable cause

existed

Thus not all actions taken under that earlier system were illegal

The method ofinvestigating and bringing formal charges wasneither

challenged nor at issue It wasonly the lack of fair procedures and an

impartial tribunal which prevented the Conference once having

initiated a self policing proceeding from seeing the case through to a

final decision In short the Conference s old self policing system was

not totally illegal merely inadequate Thile the deficiency in the old

self policing system was serious enough to effectively block any final

action against an accused line thisdisability was removed when Agree

ment No 5200 25 was approved on November 15 1968

However since States iarine resigned frOln the Conference on

December 1 1967 it was not a party to Agreement No 5200 25 and

contends that it can never be ti ied under the new procedures Itposes

the problem in the form of a dilerilma Under the old self policing

system the Conference washelpless to try States iarine since its pro

cedures were legally inadequate in the light of the procedural stand

ards required by the States JrfaJine case Vhile the Conference still

had its illegal self policing system States 1arine withdrew from

membership By the time the Conference amended its agreement so

as to comply with the States Marine case States iarine was no longer

amemberand therefore cannot be bOUlld by its terms

In asserting that the Conference has never had valid self policing

jurisdiction States iarine misconstrues our holding in States illa1 ine

v Pacific Ooast European Oonf 1ence Sup1a Its argument js premised

on the erroneous assumption that the Conference was stripped of all

self polici ng altthority by reason ofourconclusion in Docket 6749 that

the procedures were inadequate

13 F M C
AGREEMENT NO 5200 26 23

The validity of an allegation of breach of a conference agreement

1 a malpractice thereunder is not affected by the illegality of the

procedural machinery under which such charges areto be tried Thus

a valid charge i e one which ifproved constitutes a breach for which

penalties may be properly assessed stands until adjudicated Any

such adjudication ofcourse had to awaitthe adoption and approval of

legal procedures

Inthe instant case there has never been a valid assessment of penal

ties nor has there been a competent final determination that States

1arine is guilty of any conduct which vould justify such an assess

ment How ver there are charges regular on their face outstanding

against Sta tes Marine These charges were equally legal under the

old and new procedures and have lost none of their vitality by virtue

of the amended procedures contained in Agreement No 5200 25 An

that was lacking was the existence of a valid tribunal before which

to try the charges and appropriate procedures to protect the accused

This is all that our report inDocket 6749 stands for

Accordingly we conclude that the Conference has never lost the

legal right to police its own membership although it has been under a

legal disability to conduct a valid adjudicatory proce ding under its

old self policing procedures This temporary disability was removed

upon the approval of Agreement No 5200 25 which created a viable

set of procedures fully in accord with the Court s decision in the States

jJfanne case supra

States 1arine contends however that the Co nmission cannot ap

prove Agreement No 5200 26 because to do so would confer retro

active section 15 a

pproval

In support of this argument it cites the following cases illediter

ranean Pools Investigation 9 F 1 C 264 1966 Ag reements No

T 108 and T Zl08 A andAg reement Np T 138 Dockets No 68 26

and 68 27 12 F 1C 104 ancl110 1968 RiVe Plate B1 aziZ Oonf v

P essed Steel Oa1 00 227 F 2d 60 2nd Cir 1955 and Ca1 nation

00 v Pacific tVestbound Oonference 383 U S 213 1966 All of these

cases stand for the proposition that the Oommission has no authority

to approve any conduct under a section 15 type agreement which trans

pired prioi to approval In each ofthe cited case tJler wasan attempt

to legitimize acti ity which had already taken place

In this case the Conference has done nothing under Agreement

5200 26 nor is it asking the Commission to approve any conduct which

has taken place in the past The only activity contemplated under

Agreement 5200 26 is the future investigation and prose 1ltion ofmal

practices and the utilization or newly amended procedures for the

adjudication of such allegations

F M n
24 FEDERAL MARITIME COMMISSION

It could be argued that an amendment such as Agreement 5200 26

which makes no substantive changes in the self policing system Le

one which neither adds nor deletes offences for which sanctions may

be imposed is automatically applicable to prior breaches as well as

those which take pll tce after approval

Agreement No 520025 however is silent onwhether the new pro

cedures contained therein may be used to investigate and adjudicate

offences which occurred prior to its effective date

In States Marine Lines Inc v Trans Pac Freight Oon 7 F MC

204 216 1962 we had occasion to comment on the possible application

ofnewly approvedself policingprocedures to past offenses

Ilf it is the purpose of a

conference to have Hs neutral1body or other self

policing system deal with past events this purpose should be specificaUy in

cluded in the agreement establishing the self policing system when it is sub

mitted for approval

We perceive no reason to deviate from that position andin theinter

ests of c arity it is better that itbe spelled out in the form of an amend

ment such as theone which is before us

As we stated in Joint AgreementFar East Oon and Pac W B

Oonf 8 F M C 553 558 1965

Any interested party Should be able by a reading of the agreement to ascer

tain how the agreement is to work without resort to inquiries of the parties or

an investigation by the Commission

In its opening brief States Marine asserts that the order ofinvesti

gation should have included the issue of whether the agreement is

discriminatory and unfair as between carriers operates to the detri

ment of the commerce of the United States and is contrary to the

public interest

Because this issue was not specifically included in the order o

investigation States Marine simply declined to brief it

There are two reasons either onef which is sufficient why this

argument should be rejected

Ifa party with an interest in an agreement is dissatisfied with the

scope of an order of investigation or in doubt as to its scope the

appropriate vehicle for relief is the filing of a timely motion States

Marine waited until its opening brief to raise this issue for the firs

time although a full month had elapsed after service of the order o

investigation

Secondly acursory examination of this so called issue reveals tha

it is a dubious one at best The order of investigation specifically states

that the legal issue is

13 F M C
AGREEMENT NO 5200 2 6 25

Whether section 15 approval should be given to Agreement No 520026 wJ 1ich

contains 1 legal conclusions and 2 a provision which would give retroactive

effect to a recently approved self policing procedure

Thus the issue before the Commission in this case is the approva

bility of Agreement 5200 26 under the legal standards imposed by

section 15 Or in other words would the agreement be discriminatory

orunfair as between carriers operate to the detriment ofthe commerce

of the United States or be contrary to the public interest within the

meaning of section 15 Thus the only way to urge disapproval ofthe

agreement in question wasto argue the very issues allegedly precluded

by our order

The Conference has made it clear that if Agreement No 5200 26

is approved it intends to utilize its recently approved selfpolicing

procedures to adjudicate the charges which were outstanding against

States l1arine at the time itresigned its membership

States l1arine howeyer insists thatthe entire purpose of the agree

ment is to further the Conference s vendetta against States Marine

and that it is illegal on its face

This is essentia lly the same accusation which States l1arine made in

Docket No 6749 In that case it wason firmer ground since the then

existing procedures lent themselyes to the possibility of arbitrariness

This argument has lost its yitality since the approval of Agreement

No 5200 25

The charges outstanding against States Marine have been held in

abeyance for precisely the reason that without adequate procedural

protection and without an impartial tribunal the possibility of arbi

trary and discriminatory treatment was indeed real Vith the advent

of a procedural system which even States Marine concedes 4

is fair the

possibility of injustice has been minimized if not entirely removed

Ifthe Conference follows its own self policing procedures conscien

tiously as itmust under the law States Marine will be afforded very

procedural protection and the right to an impartial determination of

the charges outstanding against it Nevertheless if it should happen

that the Pacific Coast European Conference uses its self policing

system as an instrument of oppression States Marine or any other

line so victimized would not be without recourse

States MarIne was a party to the proceed tng which resulted In the approval of Agree

ment 520025 and voiced no objectIon to It Moreover counsel for States MarIne In the

oral argument in thIs case stated

lItfiled a new self policing system which States Marine did not oppose

It was Agreement No 5200 25 and it was approved by the Commission on Novem

ber 15 1968 States MarIne makes no contention that this new agreement Is illegal

13 F M C
26 FEDERAL MARITIME COMMISSION

In Modification of Agreement 5700 4 10 F M C 261 274 1967

we said in language which is equallypertinent here

lhe remaining reasons advanced by States Marine for an evidentiary hearing

arepremised on the assumption that the self policing formula will not be applied

justly and ingood faith This is mere speculation on the part of States Marine

In short States Marine s objections to the self policing system consist mainly

of conjectures as to how the self policing system might be used as an instrument

of oppression Ve are duly concerned about the rights of an individual member

of a conference and the doors of the Commission arealways open to anyone with

a legitimate complaint Ifa conference does not administer its approved system

of self policing in a fair manner this would surely support a finding of H I

inadequate policing of the obligations under it for which the mandatory

penalty is disapproval of the entire conference agreement

States Marine admits that the Conference has not lost its right of

action against it if the cOliference agreement was breached In its

opening brief repeated again in its reply brief States l1arine

asserts

I I lit IfStates Marine had indeed violated the conference agreement the

conference has a cause of action at law enforceable in court against States

Marine

This statement while true is a gross oversimplification of the law

governing the right of a conferenceto discipline its members

Ifa memberof a conference breaches the agreement or engages in an

act defined therein as a nlalpractice itis accountableto its fellow mem

bers in accordance withthe terms and conditions ofthe agreement The

fact that amember ofthe conference terminates its membership in the

organization in no way changes the right of the conference members

to proceed against the former member for breaches or Inalpractices

which occurred during the accused nlelnber s period of membership

any more than a fornler menlber of a private club can escape liability

for obligations incurred during nlembership The courts have uni

formly held that a private club or association must first exhaust its

own internal administrative processes before seeking judicial aid to

enforce a

right or action against a member 6 Anl J Ul2d Associations

and Ohtbs 39 p469 Thus even ifthe Pacific Coast European Con

ference were a purely private organization it would be required to

exhaust its own internal remedies hefore going into court

Needless to say a conference is more than a mere private organiza

tion Ve have repeatedly held that a section 15 agreement is a

public contract impressed with the public interest and permitted to

exist only so long as it serves that interest InBe Pacific Ooast E tJ1 O

pean Oonference 7 F MC 27 37 1961

Then Congress amended section 15 in 1961 5

it clearly directed the

15 This language was added to section 15 in 1961 by P L 87 346 sec 2 75 Stat 764

1 1i Mn
AGREEMENT NO 5200 26 27

conferences themselves to policethe malpractices oftheir ownmembers

We are required to disapprove any agreement on a

finding of inade

quate policingofthe obligations under it

Pursuant to this amendment and our general rulemaking authority

under the Act we promulgated General Order 7 on August 22 1963 6

saying in part

This provision in demanding the adequate policing of the obligations under

the agreement clearly presupposes the establishment of some procedure for

thatpurpose

IntheStates i1farine case supra the Court admonished that

T o place the Commission in the role of an on going appellate panel

intimately involving it in a case by case review of the Conferences Neutral

Body system would hardly be consistent with Congress intent that the Con

ferences engage inself regulation 376 F 2d 230 at 242

States Nlarine s suggestion that the Conference may bring a law

suit for breach of the conference agreement runs directly counter to

the Congressional mandate that the conferences regulate themselves as

well as the common law governing the right of associations to disci

pline their members vVhile a conference is by no means barred from

seeking judicial aid it should do so only after first utilizing the

procedural scheme contained in its own basic agreement

These charges against States 1arine are still outstanding The

situation is precisely the same as it wasJanuary 1968 with one impor

tant exception The Conference now has adopted and we have

approved an agreement to the basic conference agreement 1

which re

quires the Conference to followcarefully defined procedures governing

the conduct ofself policingcases all of which are designed to afford a

fair hearing to an accused member The legal disability which arose

by reason of the lack of adequate self policing procedures has been

removed and the Conference is free to police its members obligations

within the limits of its approved agreement Moreover upon the

approval of Agreement 5200 26 these procedures may be used to

investigate and prosecute offences which are alleged to have occurred

any time after 1arch 8 1967 including the charges outstanding

against States 1arine

Of course States 1arine may not be tried for any offence which

did not constitute a breach at the time it was alleged to have occurred

Similarly States 1arine may not be subjected to any penalty save

those which were specified in the conference agreenlent at that time

628 F R9257

7

Agreement No 5200 25 supra

13 F MC
28 FEDERAL MARITIME COMMISSION

Aside from this there is no reason in logic or in law why States

Marine may not be tried under amended procedures as approved by

the Commission even though it is no longer a member ofthe Confer

ence and therefore did not agree to these amendments

For the reasons stated herein we will approve Agreement No

520026 An appropriate order will be entered

By the Commission

SEAL Signed THOMAS LISI

Secretary

13 F M C
FEDERAL MARITIME COMl1ISSION

DOCKET No 69 7

IN THE MATTER OF AGREEMENT No 5200 26

PACIFIO COAST EUROPEAN CONFERENCE

ORDER

The Commission having this day entered its report in this proceed

ing which is hereby made a part hereof by reference and concluded

that Agreement No 520026 should be approved under section 15

Shipping Act 1916

Now therefore it is ordered That Agreement No 520026 be and

the same hereby is approved in the following form

The amended self policing procedure approved by the Federal Maritime Com

mission on November 13 1968 shall apply to and the Conference shall be author

ized to investigate and prosecute pursuant to such provisions any alleged

breaches broughtto its attention at any time after March 8 1967

By the Commission

SEAL Signed THOMAS LISI

Secretary

13 F M C 29
FEDERAL l1ARITIl1E COM11ISSION

NO 69 22

INDEPENDENT OCEAN FREIGHT FamVARDER LICENSE Apl l ICATION

VIaLET A TILSON D n A TRANSlIARES

Adopted July 23 1969

Applicant Violet A Tilson d b a Transmales will be an independent ocean

freight forwarder ai defined in the Shipping Act 1916 is fit willing and

able properly to carryon the business of forwarding and to conform to the

provisions of this Act and the requirements rules and regulations of the

Commission issued thereunder the proposed forwarding business will be

consistent with the national maritime policies declared in the Merchant

Marine Act 1936 and will be issued a license as provided in section 44 b

of theShipping Act 1916

17 ioletA TVilsonan her awn behalf

Jal11e8 Albe1 andDonald J Bntnne1 as I

Iearing Caunsel

INITIAL DECISION aF PAUL D PAGE JR CHIEF EXAlIINBR

1

This investigatian was ardered because it appeared that applicant s

husband 2Cristobal 1andry has in the past few years conducted

freight farwarding without being licensed and has in ather ways sa

conducted himself that a license should be denied if he as to take

any part in applicant s activity as a forwarder The recard fully bears

aut the Cammissian s misgivings with respect to 1r 1andry s un

fitness and the applicatian would be denied ifthe record did not estab

lish as it daes that 1r wranelry will nat haye any part in transacting

applicant s

forwarding business

Atthe canclusian ofthe hearing the follawingquestians were asked

and answered

1

This decision became the decision of the Commission July 23 1969

II Applicant will be doing business as Transmares aname formerly utilized by Cristobal

Mandry Mrs Mandry as applicant uses her maiden name Violet A Wilsof Sometimes in

the record and in this decision applicant is called Mandry and sometimes Wilson

30 13 F M C
LICENSE APPLICATION VIOLET A WILSON D B A TRANSMARES 31

EXAMINER PAGE Do you fully understand Mrs l1andry that if you are

licensed by the Commission that such a license will be issued rely ing on your

representation that your husband has no part whatsoever in the business and

will playno part inyouractivities as a forwarder

Do you fully understand that

MRS WILSON Yes sir

DXAMINER PAGE And that if that unclerstanding should not be kept of

course your licensewould be forfeited promptly

MRS WILSON Yes Iunderstand

Turning now to nils Vilson s qualifications in her own right the

evidence is undisputed and conclusive that she is a qualified applicant

fit willing and able properly to carryon the business of forwarding

and to conform to the provisions of this Act and the requir ements

rules and regulations of the Commission issued thereunder and that

the proposed forwarding business is or will be consistent with the

national maritime policies declared in the n1erchant niarine Act 1936

This is disclosed by the testimony of Robert E Sunkel the Com

mission s chief investigator in the New Orleans Office detailing a

thorough and careful investigation made by him His testimony is that

to the best of his knowledge nilS Vilson was not active in the un

licensed fonvarding as she became ill in the early part of the 1960 s

was no longer active in the forwarding business and yorked at home

as a seamstress

M r Sunkel contacted several groups about nilS Vilson VTith re

spect to steamship companies and agents there were responsible

officials of Strachan Shipping Company United Fruit Company

Amarand Shipping Company and Ayers Shipping Company lIe

summed up what he learned from them as follows

All of these people furnished recommendations as to nilS niandrys

abilities as a

freightforwarder

Essentially all of them stated that they have known her for many

years datingback into the early to mid fifties

They all stated that they considered her an excellent fonvarder

and completely capable of hanelling her own forwarding business

They had never experienced any difficulties with any documentation

work she had done on shipments going forward on their lines

Each and everyone ofthem recommended that she be licensed

The Vhitney National Bank The International Bank and the

Ilibernia Iomestead gave satisfactory reports and at none of them

was any derogatory information discovered

Thile stating that they had no personal acquaintance with nilS

Tilson nil T R Spedden president of the New Orleans Freigl t

Forwarders Association he holds Ii M C License No 1 and another

13 F M C
32 FEDERAL MARITIME COMMISSION

officer of the same association 1r Valter Flower both stated that

they knew no reason why she should notbe licensed

Hearing Counsel summed up is feeling as to applicant s qualifica

tions as follows

Ipersonally feel as though Mrs Mandry should be given a license

on thebasis of the record we have before us today as well as informa

tion that has come to my knowledge to Mr Sunkel and throughIUY own

investigation

He was careful to point out that 1rs Vilson s community property

interest in her husband s unlicensed forwarding in the past was a

negative factor which might be grOlmd for denying a license

Upon the whole record it does not appear that this lady should

be punished for activities in which she had no part and which took

place while she was in bad health and working as a seamstress The

important point is that she is fully qualified to go into the forwarding

business to be jOinedas she testified by her son upon his graduation

from high school and fit to act in the important fiduciary position of

independent freightforwarder s

ULTIMATE CONCLUSIONS

Applicant VioletA vVilson d b aTransmares will be an independ

ent ocean freight forwarder as defined in the Shipping Act 1916

is fit willing and able properly to carryon thehusiness of forwarding

and to conform to the provisions of this Act and the requirements

rules and regulations of the Commission issued theretmder the pro

posed forwarding business will be consistent with the national mari

time policies declared in the Merchant Marine Act 1936 and will

be issued a license as provided in section 44 b of theShipping Act

1916

Signed PAUL D PAGE Jr

ohiefEwaminer

It is orde1 ed That Violet A Vilson db a Transmares Inc is

granted an independent ocean freight forwarder license pursuant to

Section 44 oftheShippingAct 1916

Itis further ordered That thisproceeding is discontinued

By theCommission

Signed THOMAS LISI

Secretary

8 It is both a duty and a pleasure to commend the performance of Mr Albert and

Mr Sunkelin this case The latter investigated fully and fairly and as a witneSs testified

ImpreB61vely The former while overlooking nothing adverse to the applicant who appeared

without ceunsel took no advantage and at the end of the testimony stated his opinion

that applicant should be licensed

13 F M C
I EDEI AL MARITIl1E COMl1ISSION

DOCKET No 6756

PITTSTON STEVEDORING CORPO AION

V

NEW HAVEN TERMINAL INC

Initial Decision Adopted August 8 1969

Usage c arge of 1 00 per 1 000 board feet of lumber assessed by New Haven

Terminal Inc against Complainant s stevedoring operation at Respondents

terminal has not been shown to be reasonably related to the services and

facilities furnished and accordingly found to be an unjust and unreasonable

practice within themeaning of section 17 of theShipping Act 1916

Respondent s assessment of a usage charge of 1 00 per 1 000 board feet of lumber

found to be unduly and unreasonably prejudicial or disadvantageous in

violation of section16 First of the Shipping Act 1916

Reparation found to be due butamount thereof cannot be ascertained upon pres

ent record Proceeding remanded to Examiner for determination of

reparation

Oharles M Mattingly Jr and Richard P Lerner Tor Complainant

John W Barnettand DJfi id P Faulknerfor Respondent

John Ownnitngham and Mark P Schle er for intervener Nacirema

Operating Company

Donald J Brunner and G Edward Borst Jr Hearing Counsel

REPORT

By THE COMMISSION John Harllee Ohairmanj James V Day Vice

Ohairmanj Ashton C Barrett George H Hearn James F

Fanseen Commissioners

This proceedi g

wasinitiated by thecomplaint of Pittston Stevedor

ing Corp Pittston against New Haven Terminal Inc New Haven

alleging that New Haven s assessment of a usage charge subjected

Complainant to an undue or unreasonruble prejudice or disadvantage

within the meaning of section 16 of the Shipping Act 1916 the Act

18 F Y Oe 33
34 FEDERAL MARITIME COMMISSION

and constitutes a practice which is unjust and unreasonable in COil11 C

tion with the receiving handling or delivery of property within the

meaning f section 17 of the Act Complainant seeks reparation in

the amount of 100 000 and an order requiring Respondent to cease

and desist from levying the charge Nacirema Operating Company

Inc a Port of New York terminal operator and stevedoring company

and Hearing Counsel intervened in the proceeding

In his Initial Decision served April 23 1969 Examiner Herbert Ie

Greer ordered New Haven to cease and desist from imposing its usage

charge Inso doing theExaminer concluded that a

usage charge of 1 00 per 1000 board feet of lumber assessed by respond

ent against complainant s stevedoring operation at respondent s terminal bears no

reasonable relationship to th use by or services render d to complainant and

imposing it constitutes an unjust and unreasonable practice in connection with

the receiving of property in violation of section 17 of the Shipping Act 1916

The Examiner further found that whilePittston was entitled to repa

ration the amount could not be fairly determined without considera

tion being given to a

fai l

and l eoJonable cha1 Je against complainant

for use of respondent s facility emphasis added oR determination

which could not be made on the present record Accordingly he di

rected the Complainant to prepare a statement and otherwise comply

with section 15 b of the Commission s Rules of Practice and Proce

dure and added that if necessa ry further hearing will be held

for thepurpose ofhearing evidence orargument on reparation

The proceeding is now beforeus upon exceptions to the Initial Decision

Respondent s exceptions are generally directed to the Examiner s

nding that the su ject usage charge was not related to the services

rendered In essence these exceptions constitute nothing more than a

l eargument fissues and contentions which were exhaustively briefed

and considered and resolved by the Examiner in his Initial Decision

A careful consideration ofthe record in this proceeding leads us to the

cOllclusion that the Examiner s disposition of these issues and conten

tions was proper and veIl founded except to the extent that he failed

to find that New Haven s assessment of the subject usage charge was

violative ofsection 16 First oftheAetas well as section 17

The Examiner in effect rejected the allegation that the assessment

of the usage charge also violated section 16 of the Act Heacknowl

edged that Complainant had raised the issue of self preference but

eoncluded that no authority is cited or found which would

require a terminal operator to charge itself for theuse ofits own facil

ities Pittston in its exceptions reasserts its position that the

implementation and selectiv applieation of he usage charge resulted

13 l

9
PITTSTON STEVEDORING CORP V NEW HAVEN TERMINAL INC 35

in an undue unreasonable preference in violation of section

16J Iearing Counsel concur with Pittston that New Haven violated

section 16 1V0 also find considerable merit in Complainant s position

The language of section 16 fOlbidding any undue or unreasonable

prejudice or disadvantage in mlY respect whatsoever is specifically

directed against every form ofunjust discrimination against the ship

ping public AJ Jnst1 ong Oode 00 v A1nerican Hawaiian Stea17 ship

00 1 U S M C 719 723 1938 This principle ofequality forbids any

difference in charge which is not based upon a difference in service

Eden Mining 00 v Bluefields Fruit S S 00 1 D S S B 41 45

1922 The record is abundantly dear that Respondent s exaction

of a usage charge was applied only to movements of lunlber and to

no other commodities It follows therefore that unless the services

and facilities rendered incident to Complainant s unloading and han

dling oflumber justifiedthe cha rge assessed discriminaton within the

contemplation of the statute is established From the facts of record

in this proceeding before us it is manifest as theExaminer found thal

the Respondent has not justified the imposition of a usage charge

on lumber Ve conclude therefore that to the extent Respondent s

usage charge has been found unrealistic in terms of the terminal facili

ties and services furnished it subjects a description oftraffic namely

lumber to an undue and unreasonable prejudice or disadvantage

in violation of section 16 of theAct

VVe are remanding this proceeding to the Examiner for determina

tion ofreparation consistent with his finding that theamount ofrepa

ration must take into consideration any amount determined to be a

fair and reasonable charge against complainant

Accordingly and to the extent that it is not inconsistent with the

foregoing we adopt the Examiner s Initial Decision a copy of vhich

is attached hereto and made a part hereof as our own

An

appropriateorder will be entered

By the Commission

THOMAS LISI

Secretary

ORDER

This proceeding being at issue upon complaint having been duly

heard and full investigation having been had and the Commission on

this day having made and entered a Report stating its findings and

conclusions which Report is hereby referred to and nlade a part

hereof

13 F l1C
36 FEDERAL MARITIME COMMISSION

Therefore itis ordered That New Haven Terminal Inc cease and

desist from imposing a

usage charge of 1 00 per 1 000 board feet of

lumber as set forth in its Lumber Tariff No 1 and

Itis further ordered That the proceeding in Docket No 67 56 be

and hereby is remanded to the Examiner for determination of repara

tion due Complainant as a result of Respondent s assessment of an

unlawful usage charge Reparation should be determined pursuant

to Rule 15 of the Commission s Rules of Practice and Procedure if

possible but ifnecessary further hearing may be held for the purpose

ofhearing evidence orargument onreparation

Bythe Commission

SEAL Signed THOMAS LISI

Secretary

13 F M C
FEDERAL MARITIME COMMISSION

No 67 56

PITTSTON STEVEDORING CORPORATION

V

NEW HAVEN TERMINAL INC

A terminal operator may impose a usage charge on persons com ng onto its facility

for a gainful purpose however such charge is subject to the just and

reasonable requirements set forth in section 17 of the Shipping Act 1916

Usage charge of 1 00 per 1000 board feet of lumber imposed on stevedores doing

business at a terminal in competition with terminal operator s stevedoring

operation found not reasonably related to the services furnished and its

imposition by respondent constitutes an unjust and unreasonable practice

which violates section 17 of the Act Cease and desist order entered

Oharles M Mattingly Jr and Richard P Lerner for complainant

John lV Barnett and DavidP Faulhner for respondent

John Ounningham and Mark P Schlefer for intervener N acirema

Operating Company

Donald J B7WT1 ner and G Edward Borst Jr Hearing Counsel

interveners

INITIAL DECISION OF HERBERT K GREER

PRESIDING EXAMINER 1

Pittston Stevedoring Corp complains that the lumber tariff filed

by respondent New Haven Terminal Incorporated which imposes

a

charge of 100 per thousand gross feet of iumber on stevedores rail

carriers truckers shippers or cosignees loading orunloading railcars

vessels or trucks subj ects complainant to an undue or unreasonable

prej udice or disadvantage within the meaning of section 16 of the

Shipping Act 1916 the Act and constitutes a practice which is

unjust and unreasonable in connection with the receiving handling

or deliv ry of property within the meaning of section 17 of theAct

Complainant asks for reparation in the amount of 100 000 and for

an order requiring respondent to cease and desist from levying the

charge

1

This decision became the decision of the Commission August 8 1969

13 F M C

428 264 714

37
38 FEDERAL MARITIME COMMISSION

I

Iearing Counsel and Nacirema Operating Co Inc intervened

TIIE FACTS

1 Pittston Stevedoring Corporation Complainant is a New York

corporation engaged in the business of furnishing stevedoring services

to common carriers operating in the foreign and donlestic commerce

ofthe United States

2 New Haven Terminal Inc Respondent a person subject to

theAct is a corporation operating a terminal facility at New Haven

Connecticut furnishing wharfage dock varehouse and otherterminal

facilities in connection with common ca rrier by water and also fur

nishing stevedoring services

8 For approxima tely fifteen years prior to December 11 1968 com

plainant operated at respondent s New Huven facility unloading

lumber from vessels to a place of rest on the dock From this place of

rest respondent backhauled stored and delivered the lumber to con

signees who were charged for such service in accordance with rates

set forth in respondent s tariff

4 Vilford and l1cKay an agent of the carriers engaged com

plainant to stevedore vessels at respondenfs facility

5 Prior to November 1 1967 complainant operated at respondent s

New flaven facility without being subjected to a

usage charge On or

about September 1 1967 respondent issued iFl1C Lumber Tariff No 1

cancelling all prior lumber tariffs and levying a

new charge of 100

per thousand gross feet of lumber for

The use of terminal facilities by rail carrier stevedoring company truckers

shippers or consignees their agents servants and or employees when they per

form their own loading or unloading of railroad cars vessels trucks or the use

of said facilities for which a charge is not othen ise specified

6 On September 1 1967 in response to complainants

inquiry as to

hat services were not compensated for under respondent s former

tariff respondent wrote

Our present tariff includes rates for backhandling which includes vharfage

storage dockage loading trucks and ships on overtime Items such as services

supplied to longshoremen for their llseand convenience are not included in the

listed rates The Usage charge covers all th se services provided for the

longs horemen

7 The services supplied by respondent for the convenience of long

shoremen and complainant s three supervisory personnel weretl e same

before and after the effective date of the usage cllarge Complainant s

timekeeper used aspace 6 x 6 feet in a 20 x 25 foot shed on the pi r

13 It lLd
PITTSTON STEVEDORING CORP V NEW HAVEN TERMINAL INC 39

the balance of the space in the shed being used by respondent A tele

phone was in the shed but was used by the timekeeper only about 10

times each year Ordinarily calls were made from public telephones

two of which were in a shack on the pier vhich was also available to

longshoremen for use during coffee breaks andlunch hour The shack

contained a water cooler Three of respondent s personnel used park

ing spaces on the installation Toilet facilities were available C01n

plainant had not at any time requested respondent to provide services

or facilities for longshoremen The facilities used by complainant s

personnel were also available to stevedores employed by respondent

8 In addition to the above described facilities respondent fur

nished a stacker 7112 ton forklift to unload and load forldifts which

complainant brought by truck to New IIaven from other localities

The stacker was operated by either respondent s or complainant s

employee and the loading or unloading consumed from 15 to 30

minutes Respondent in determining its stevedoring costs used 150

per hour for one forklift which included 50i for gas and oil

9 A lumber stevedoring gang consists of 14 longshoremen a fore

11lan and a driver Complainant when operating at respondent s facil

ity obtained longshoremen from the same union respondent obtained

stevedores for its own operation In addition to using the local long

shoremen complainant sent from its New York office a mechanic

timekeeper and a superintendent the superintendent not being present

during 25 of complainant s New Haven operations

10 Agang of stevedores unloa ds an average of 30 000 board feet of

lumber per gang hour The number of gangs employed to unload a

vessel varies according to the nmnber of hatches to be served The

usage charge is determined by number of board feet unloaded not on

the number of gangs working on the vessel persons using the

conveniences or days involved

11 Subsequent to the effective date of the usage charge complainant

continued to operate at respondent s facility During the period Janu

ary 1 to September 30 1968 complainant unloaded 49 715 430 gross

feet of lumber Complainant continued to opei ate at New IIaven until

December 10 1968 Respondent billed complainant for 72 075 36

usage charge and complainant paid 6 165 85 but refused to make fur

ther payment Because of this refusal respondent denied complainant

further use of its facility

12 Prior to the imposition ofthe usage charge complainant s New

Haven operation yielded a profit of 50i per 1000 feet oflumber steve

dored during 1964 45i during 1965 and 41i during 1967

13 F ltC
40 FEDERAL MARITIME COMMISSION

13 Respondent s bookkeeping method resulted in showing a profi

of 115 per 1000 board feet during 1967 and 97during 1968

1 During the period January 1 toSeptember 30 1968 complainan

would have suffered a loss of 33 960 54 if all usage charges assessed

had been paid

15 Complainant is unable to compete with respondent for steve

doring at the New Haven installation for the reason that the usage

charge exceeds complainant s profit and the cha rge is not applioaJble

to respondent s stevedoring operation

16 Respondent performs stevedoring services at its terminal othe

than lumber stevedoring

17 Terminals other than respondent include usage charges in thei

tariffs however these charges may not be compared with respondent 

usage charge because of varying methods employed

18 Lumber terminals are available to vessels and shippers at New

London Connecticut 48 miles from New Haven and Bridgeport

Connecticut 20 miles from New Haven

19 Wilford and l

cKay agents ordinarily select the stevedore to

handle vessels transporting lumber from Canada

20 The costs incurred in stevedoring operations relate principally

to labor Respondent s overall stevedoring costs are to some degree

less than complainant s costs due to location and to an arrangemen

with Excello Corporation having common officers and stockholders

for the furnishing ofequipment The difference in profit computations

submitted by the parties is mainly due tothe difference in accounting

methods and assigning or apportioning of costs

POSITION OF THE PARTIES

oomplainant

Complainant contends that the usage charge when considered alone

violates section 16 of the Act in that it creates a self preference in

respondent which is undue and unreasonable Itis pointed out that re

spondent in addition to being a terminal operator is also a stevedore

competing with complainant and that while complainant must pay

the usage charge respondent does not impose the charge upon itsel

nor upon its lumber stevedoring customers which situation complain

ant asserts results in prejudice to its operation Complainant maintains

that respondent is receiving compensation for services furnished

stevedores by including a charge thereof in its wharfage backhauling

and storage tariff although such service is not specified in the tariff

Complainant argues that the usage charge bears little or no relation

to the services rendered and thus violates section 17 of theAct as an

13 F M C
PITTSTON STEVEDORING CORP V NEW HAVEN TERMINAL INC 41

imjust and unreasonable practice It is contended that the purpose

and effect of the usage charge is to create amonopoly in respondent to

perform all stevedoring services at its New Haven installation con

trary to thenational policy which favors free and healthy competition

and that respondent has failed to establish benefits which will flow

from a monopoly to justify the disadvantages which will result to

Complainant the carriers involved and the public Respondent s

accounting method is said to be unrealistic and demonstrates a profit

loss not supported by reliable fiscal evidence

Respondent

Respondent argues that a practice in the industry recognized by

this Commission establishes that when a terminal s facilities are used

for any gainful purpose a charge for such use is permissible It is

contended that the 100 usage charge is reasonable in that it falls

withinthe dollar amount ofcontribution to unalloca ted overhead and

profit which respondent itself obtains from its own stevedoring reve

nue that is when a

competitor stevedors at the New Haven terminal

respondent is losing the opportunity to defray its overhead and or

contribute to its profit in an amount which exceeds the amount ofthe

usage charge Respondent contends that sections 16 and 17 ofthe Act

are designed to protect shippers shipowners cargoes and consignees

from burdensome or discriminatory regulations and practices which

might jeopardize freedom of commerce or safety on the high seas but

that such considerations are not here involved Respondent distin

guishes prior Commission precedent relating to the ship master s right

to select a stevedore on the ground that this proceeding involves only

unloading not loading a vessel for carriage of cargo on the high seas

The usage charge is said to be non discriminatory because it applies

equally to all persons using respondent sfacility that the charge

does not constitute an unjust or unreasonable practice or regulation

because it has been f

irly determined Complainant s accounting

method of showing its costs is challenged Respondent questions the

commission s authority to inquireinto rate levels in a proceeding based

on sections 16 and 17 oftheAct

a

earing Oounsel

Intervening Hearing Counsel consider the usage charge not justified

on a cost basis and the profit to respondent emanating therefrom to

be artificially high Itis maintained that thecharge results in amonop

oly in respondent inasmuch as complainant has demonstrated that

it cannot operate at the New Haven facility if the charge is imposed

and proposed that such monopoly is detrimental to the commerce of

13 F M C
42 FEDERAL MARITIME COMMISSION

the United States as well as constituting undue prejudice to complain

ant in violation of section 16 of the Act Hearing Counsel urge tha

the charge be found in violation of the Act without prejudice to th

institution of a cha rge related to the cost of providing the service

coveredby the charge

Intervener N acirema Operating Co Inc takes the position that th

charge is unlawful in that the natural consequence thereof is to erca

a stevedoring monopoly at respondent s terminal contrary to Com

mission precedent andnational policy and that it constitutes an undu

preference ofthe terminal itself in thecapacity of astevedore

DISCUSSION

The primary issue presented for decision is whether a usage charg

assessed by respondent against complaint s stevedoring operation 

respondent s

facility violates section 17 of the Act the second para

graph ofwhichprovides

Every such carrier and every other person subject to tbis act sball establis

observe and enforce just and reasonable regulations and practices relating 

Ol connected with the receiving bandling storing or delivery of propert

Whenever tbe board finds that any such practice is unjust or unreasonable 

may determine prescribe and order enforced a just and reasonable regulatio

orpractice

Itis respondent s position that any person using its terminal facilitie

for a gainful purpose should pay for the privilege The Commission 

General Order 15 CFR 533 1 533 6 in section 6 d 8

recognize

that a tariff may be established for the use of said facilities for an

gainful purpose for which a charge is not otherwise specified an

complainant when stevedoring at New Haven uses respondent s facil

ties for a gainful purpose The term practice as used in section 17 

the Act is associated with rates and charges Intercoastal In1 estiga

tion 1935 1 US S B B at page 432 1935 The question then 

whether the usage charge is an unreasonable orunjust rate and pra

tice in connection with the receiving ofproperty Respondent assesse

complainant on the basis of 100 p

er 1 000 board feet of lumber u

loaded from vessels at the New Haven facility The record discloses tha

a gang of stevedores unloads an average of 30 000 board feet oflumbe

each hour thus the charge amounts to 30 00 per hour The test to b

here applied is whetherthe charge levied is reasonably related to th

ervjces rendered Volkswagenwerk v F lIf O 390 U S 261 1968

Complainant s operatiQn at respondent s

faGility differed fro

general stevedoring A described by its witness

I

lumber contract was made with the steamship operator simply for d

charging the ship to a place of rest on the dock You are notconcerned with th

13 F lLC
PITTSTON STEVEDORING CORP V NEW HAVEN TERMINAL INC 43

taking it away from the ship onto the terminal Whereas with general cargo

you have the receiving the cargo gathering storing on the pier and loading

and vice versa for the discharging with lumber you arefinished with the lumber

as soon as you land it on the clod and the terminal takes it away

Respondent s tariff includes a charge for wharfage vhich is applied

against the ve sel or the cargo on all cargo conveyed over o onto the

wharf and complainant performed the unloading service as contractor

or employee of the vessel Thus use of the vharf by complainant for

that purpose cannot be considered in determining the reasonableness

of the usage charge General Order 15 limiting usage charges to those

not otherwise specified The only services or facilities furnished to

complainant s employees by respondent for which no charge wasspeci

fied consisted of a 6 x 6 foot space in a shed for the use of a timekeeper

3 parking spaces a shed where longshoremen ate lunch or used during

coffee breaks and which contained a water cooler and a public tele

phone toilet facilities and the occasiona I use of a stacker to unload

and load complainant s fork lifts from a truck These facilities were

not constructed for 01 set aside for complainant s exclusive use

Except for the stacker they were also used by the longshoremen em

ployed by respondent during its own stevedoring operations Re

spondent s letter of September 1 196 7 evidences its intent to base the

usage charge on services provided for longshoremen A lumber steve

doring gang consists of 16 men The intermittent use of the above

described facilities or services by 16 men even ifthe use of the stacker

is added bears no reasonable relationship to a charge of 30 00 per

hour and fails to meet the standard set forth in Vollc8 f

agen e1 k

supTa Justification on a cost basis does not appear on the record

Nevertheless respondent argues that the usage charge is founded on

a rationaleconomic basis Economic considerations are somewhat con

fused due to the different accounting methods employed by the parties

Complainant s accountant testified testified that its coml utation of an

average of 46i per 1 000 board feet of lumber stevedored was well

founded a nd his computations are acceptable He further testified that

if his method vas applied to respondent s operation the result would

be a loss Respondent s method of accounting showed a gross profit or

approximately 170 per 1 000 board feet but when applying overhead

this figure wasreduced to approximately 100 Itis respondent s posi

tion that if a

competing stevedore obtains business which respondent

might have obtained respondent is deprived of the opportunity to

contribute lumber stevedoring profits to overall overhead and gross

profit Otherwise stated if respondent is deprived ofthe opportuhity

to earn revenue it may assess against the competing stevedore a

charge

equal to the profit itthereby loses Justification for the amount of th8

13 F M C
44 FEDERAL MARITIME COMl HSSION

charge is not found in this position Granting that respondent profits

by its stevedoring activities although the amount is questionable

and recoOnizing thrut respondent is entitled to a return on its substan

b

tial investment in terminal facilities a rate set forth in a tariff remaIn

subject to the statutory requirement that it be just and reasonable

Oalifornia Stevedore Ballast 00 et at v Stockton Elevators Inc

8 F MC 97 104 1964 The fact thatrespondent may lose an oppo

tunity to earn revenue and profit theTeby does not relieve itfrOln th

statutory requirement that it must establish and maintain just an

l easonable practices rates in connection with receiving property

Nor is that fact justificrution for escape from the Supreme Court 

mandate that a charge must be reasonably related to the service

rendered Respondent may assess a usage charge on persons using it

facility for a gainful purpose but it must be ordered to cease an

desist the assessment of 100 per 1 000 board feet of lumber stevedore

by others at its installation This finding is without prejudice to th

filing of a lumber tariff imposing a charge reasonably related to th

services rendered

Respondent questions the authority and nruture of the Commission 

powers over the usage charge In Oalifornia v United State8 32

U S 577 1944 the Supreme Court held

The withholding of ratemaking power fur services other than water carriag

does not qualify the unlimited grant to the Commission of the power to to

effectively all unjust and unreasonable practices in receiving handling storin

or delivering property Finding a wrong which it is duty bound to remedy th

Maritime Commission as the expert body established by Congress for safeg ard

ing this specialized aspect of the national interest may within the framewo

of the Shipping Act fashion the tools for so doing

The requirement that respondent cease and desist from imposing a

excessive charge and substitute a

charge based on theservices rendere

is clearly within the Commission s authority

Regardless ofthe intent ofrespondent in imposing theusage charg

ithas resulted in the exclusion of stevedores competing with respond

ent ror the performance or lUlllber stevedoring at the New Have

facility Complainant Intervener and Hearing Counsel consider th

a monopolistic situation contrary to the national policy of free an

open competition Itis well established that monopolistic practices 

be accepted must be well justified Further it is the custom in ocea

commerce that the vessel be permitted to select thestevedore inasmuc

as stevedoring is a

responsibility or the vessel Oalifornia Stevedore

Ballast 00 et ale V Stockton Port District 7 F MC 75 1962 Suf

cient justification does not appear on this record for depriving th

master of a vessel of the right to select a stevedore whether direct

13 F lIC
PITTSTON STEVEDORING CORP V NEW HAVEN TERMINAL INC 45

or through an agent Nor is there economic justification for excluding

competing stevedores from respondent s installation While this find

ing may add to the unlawful nature of the usage charge it may not

contribute to the ultimate solution of the probem presented It is

proper as above stated for respondent to impose a

charge on persons

coming onto and usingits facilities for a gainful purpose and a charge

reasonably related to the services rendered may be set forth in the lum

ber tariff The nature of those services as shown on tllis record would

indicate that a reasonable charge would not result in excluding all

stevedoring competition and the issue of monopoly would then become

moot Itis stressed that no attempt is here made to fix the usage charge

but only to provide a guide or tool for establishing a reasonalble rat

Complainant has raised the issue of self preference arguing that it

is unlawful for respondent competing for stevedoring business at its

installation to impose a charge on other stevedores but not upon itself

There is no doubt that in this situation respondent has an advantage

over its competitors but no authority is cited or found which would

require a terminal operator to charge itsel1f for the use ofits own facil

ities The usage charge as above stated and as set forth in General

Order 15 may be applied to persons using another s facilities for a

gainful purpose A usage charge may result ina preference but it

would not be undue if reasonably related to the use by parties against

whorn the charge is assessed In respondent s words complainant is

not entitled to a free ride

Itis noted thatthe wording ofthe tariff where itrefers to stevedores

may require modification The tariff applies to stevedores doing their

own loading or unloading and a stevedore as employee or contractor

of a vessel does not perform this service for itseH For that reason

the usage charge as it applies to complainant has been related to that

portion of General Order 15 above quoted which permits a charge

for use not otherwise specified

The question of the amount of reparation is not discussed in the

briefs The record discloses that complainant has not been able to com

pete with respondent at the New Haven terminal due to the imposition

of the usage charge since December 11 1968 Complainant and

respondent stipulated that

The total billings of the usage charge to date have been 72 075 38 of which

there has been paid 6 165 85 and there is due and unpaid 65909 53

Complainant is entitled to reparation but the amount cannot be fairly

determined without consideration being given to afair and reasonable

charge against complainant for use of respondent s

facility a deter

mination which cannot be here made Reparationshould be determineCl

13F MC
46 FEDERAL MARITliVIE COMM ISSION

pursuant to Rule 15 and if necessary further hearing will be held f

the purpose of hearing evidence or argument on reparation at a da

tobelater determined

Other issues discussed by the parties have been considered but fou

not necessaryto the resolution ofthebasic problem presented

ULTIlfATE CONCLUSIONS

The usage charge of 100 per 1 000 board feet of lumber assess

by respondent against complainant s stevedoring operation at respon

ent s terminal bears no reasonable relationship tothe use by or servic

rendered to complainant and imposing it constitutes an unjust a

unreasonable practice in connection with the receiving of prope

in violation ofsection 17 of theShipping Act 1916

Respondent nlay impose a

usage charge on persons coming onto 

facility fora gainful purpose provided such charge is reasona

related to the use by or services to such persons

Reparation is due but the record does not contain sufficient info

mation upon which to assess damages to complainant Complain

shall comply with Rule 15 b of the Commission s Rules of Pract

and Procedure and the amount of reparation shall be thereaf

determined

Respondent shall cease and desist from imposing a usage charge 

100 per 1 000 board feet of lumber set forth in its Lumber Ta

No 1

An appropriateorder will be issued

Signed HERBERT Ie GREER

Presiding Examine

13 F M C
FEDERAL MARITIlVIE COMl1ISSION

SPECIAL DOCKET No 406

CHEVRON CHE1HCAL CO ORTHO DIVISION

v

NIPPON YUSEN lLuSHA LINES LTD

Adol ted September 4 1969

Respondent permitted to refund to complainant the sum of 1 240 20 as a portion

of freight charges assessed and collected on four shipments of agricultural

insecticides from Oakland California to Kenya

R O Flood for complaint

INITIAL DECISION OF HERBERT Ie GREER PRESIDING

EXA MINER1

Nippon Yusen l aisha N Y l

a common carrier by water

through its agent Transmarine Navigation Corp has filed an appli

cation for permission to refund a portion of the freight charges col

ilected fronl Chevron Chemical Company Ortho Division on four

shipments of Agricultural insecticide from Oakland California to

l10mbasa l

enya

Prior to the date of these shipments and during the latter part of

1968 Chevron inquired of N Y l whether they would be interested

in handling cargo to Mombasa I

enya via Japanese ports at the

same rate as wasbeing charged by Nedlloyd Lines on shipments direct

frOlll San Francisco to 10mbasa N Y K advised Chevron that they

would so handle the cargo The N edlloyd rate on file with the Com

TIlission applicable to such commodity as of April 1 1968 was 51 00

V 1 per 40 cubic feet reduced to 5100 as of October 7 1968 and

increased to 55 75 as of Deceml er 2 1968 the latter bei lg the rate in

1

This decision became the decision of the Commission SeptembeI 4 1969

13 F lLC 47
48 FEDERAL MARITl 1Y1E COMMISSION

effect at the time of the shipments here involved N Y K having

agreed with Chevron to apply the Nedlloyd rates filed an amended

rate with the Commission during the month ofNovember 1968 how

ever by reason of administrative error the tariff set forth a rate of

61 75 WIM instead of the Nedlloyd rate of 55 75

Chev on dispatched by N Y I vessels the following shipments

ofagricultural insecticides

Consignees

Measure Bill of

inent lading date Freight

cubic feet

1 013 Mar 3 1969 1 563 8

1 6 0 Apr 12 1969 2 500 8

3 510 Feb 4 1969 5 418 5

2 125 Feb 4 1969 3 280 4

8 268 h 12 763 7

Kleenway Chemicals Ltd

Naropi

enya uu u

Shell Chemical Co of EasternAfrica Ltd u

Murphy Chemicals East Africa

TotaL

The rate applied to these shipments was 6175 per 40 cubic feet tha

being the rate erroneously filed with the Commission by N YI Had

the Nedlloyd rate of 55 75 ViM been applied as N YK had agreed

and as it had intended to charge the total freight charges would

have been 11 523 53 or 1 240 20 less than the freight collected

Public Law 90 298 75 Stat 764 authorizes the COlnmission in its

discretion and for good cause shown to

I

permit a common carrier by water in foreign commerce or conference

of such carriers to refund a portion of freight charges collected from a shippe

where it appears that there is an error iIi a tariffof a clerical or adminis

trative nature or an error due to inadvertence III failing to file a new tarif

and that uch refund or waiver willnotresult in discrimination among shs

Provided further That the common carrier by water in foreign commerce

has prior to applying for authority to make refun d filed a new tariff with the

Federal Maritime Oommission which sets forth the rate on which said refund

would be based Provided further That the carrier agrees that i

permission is granted by The Federal Maritime Oommission an appropriat

notice will be published in the tariff or such other steps taken as the Federa

Maritime Oommission may require which give notice of the rate on which such

refund I would be based and additional refunds as appropriate shaH

be made with respect to other shipments in the manner prescrited by the Oom

mission inits order approving the application And provided further That appl

cation for refund or waiver must be filed with the Commission within on

hundred and eighty days from the date of shipment

N Y I has filed a rate of 55 75WM per 40 cubic feet applicable

to the commodities here involved prior to filing its application fo

autho ity to make refund Applicant avers that no other shipments

13 F M C
CHEVRON CHEMICAL CO V NIPPON YUSEN KAISHA LINES LTD 49

of the same or a similar commodity moved via its vessels during the

same or approximate period the shipments here involved weremade

The application was deposited in the United States Mail on July 31

1969 and received by the Commission on August 4 1969 Rule 8 f

of the Commission Rules of Practice and Procedure provides that

the day of service of documents served is deposited in the United

States mail thus the application was filedwith the Commission within

180 days of the earlier shipment here involved

It appearing that the application has been timely filed that no

other shipments were made of the commodity involved on applicant s

vessels in the approximate period during which the Chevron ship

ments were made that the applicant has filed a tariff showing the

rates here sought to be applied prior to the date fthe application

that the rate applied was erroneously filed by reason of administra

tive mistake and good cause appearing Nippon Yusen Kaisha Lines

Ltd is authorized to refund to Chevron Chemical Company Ortho

Division thesum of 1 240 20 Applicant shall publish theappropriate

notice referred to in the statute above set forth and in 46 CFR 502 92

and the refund shall be effective within 30 days after publication of

such notice Within five days thereafter applicant shall notify the

Commission of the date of the refund and the manner in which pay

ment was made

Signed HERBERT K GREER

Presidilng Examiner

WASIDNGTON D C August 15 1969

13 F MC
FEDERAL IVIARITIlVIE COMl1ISSION

SPECIAL DOCKET No 406

CHEVRON CHEMICAL CO ORTHO DIVISION

v

NIPPON YUSEN I AISHA LINES LTD

Adopted September 4 1969

No exceptions having been taken to the initial decision of the

Examiner in this proceeding and the Commission having determined

not to review same notice is hereby given that the decision became

the decision of the Commission on September 4 1969

It is ordered That Nippon Yusen l aisha Lines Ltd refund to

Chevron Chemical Company Ortho Division the sum of 1 240 20

I

tis further o1 dered That Nippon Yusen l aisha publish promptly

in its appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal Maritime

Commission inSpecial Docket No 406 that effective February 4 1969 the rate

on agricultural fungicides from Oakland California to Mombasa Kenya fo

purposes of refunds or waiver of freight charges on any shipments which may

have been shipped on vessels of N Y K

during the periOd from February 4

1969 until April 30 1969 inclusive is 55 75 W1M subject to all other applicable

rules regulations terms and conditions of said rate and this tariff

Itis furthe1 ordered That Nippon Yusen laisha notify the Secre

tary on or before October 3 1969 of the date and manner in

the refund herein ordered has been made

By the Commission

50

Signed THOMAS LISI

Secretary

13 F M CL
FEDERAL JVIARITIl1E COMl1ISSION

DOCKET No 6546

TRUCK LOADING AND UNLOADING RATES AT NEW YORK HARBOR

Decided September 15 1969

Implementation of terminal conference tarifftruck loading and unloading defini

tion which includes a charge to cargo for movement between transit shed

and truck tailgate constitutes an unjust and unreasonable practice under

section 17 of the Shipping Act 1916

Elkan Turk Jr and Joseph A Byrne for respondent New York

Terminal Conference

Elmer O Maddy Baldvin Einarson and John lVilliams for re

spondent United StatesLines Inc

Elven S Sheahan for respondent The Cunard Steam Ship Company

Limited

Sidney Goldstein F A il1ulhern Arthu1 L lVinn Jr Samuel H

Moerman J Raymond Olark and James ill Hende1 son for inter

venor The Port of New York Authority

Herbert Burstein and Arthur Liberstein for intervenorEmpire State

Highway Transportation Association Inc

Robe1 t G Ga Wley for intervenor Niagara Frontier Tariff Bureau

Inc

TVarren D 111ulloy for intervenor Eastern Railroads

SamuellV Earnshaw for intervenor International Latex Corpora

tion its Subsidiaries and Affiliates

Bryce Rea Jr and Thomas 111 Knebel for intervenor 1iddle At

lantic Conference

EUgene W Johnson for intervenor The Copper Development

Association

Seymour Graubard and Michael H Greenberg for intervenor

American Institute for Imported Steel Inc

Norman D Kline and Donald J Brunner for Hearing Counsel

13 F M C 51
52 FEDERAL MARITIME COMMISSION

REPORT

By THE COMMISSION James F Fanseen Acting OhairmAsht

C Barrett George H Hearn Oommi8sioners 1

We instituted this investigation by order of December 14 1965 

determine the reas onableness of truck loading and unl oading ra

charged by members of the New York Terminal Conference Confer

ence United States Lines Inc and The Cunard Steam Ship Co

pany Limited were named respondents by supplemental order Int

venti o was granted to the parties as listed in the appearances

During the course of hearings the Conference intr oduced a c

study in an attempt to establish that its truck loading and unl oading

rates did not vi olate the pr ovisi ons of the Shipping Act 1916 Ac

Empire State Highway Transp ortati on ssociati on Inc Empi

and Hearing Counsel took is ue with the cast study alleging it i

pr operly all ocated casts to

carg o

rather than to the ocean carrie

The alleged impraper all ocati on was said to result from the Confer

ence s tariff definiti o oftruck loading and unl oading The Conferen

wauld have the service of truck loading include movement of 

between truck tailgate and transit sheds as well as st owing in t

bady of the truck whereas Hearing Counsel and Empire would lim

it to st owing at the tailgate charging the tailgate shed movement a

cast thereof to the ocean carrier

The parties agreed that a quick decision on the pr opriety of t

Conference s tariff definiti o was necessary to enable the parties 

pr oceed in presenting or evaluating meaningful cast data

In response to a petiti on filed by Hearing Counsel with the conc

rence or acquiescence of all interested parties we served a

supp

mental order on February 19 1969 We stated in that order that t

cast study prepared by the Conference based on its tariff definitia

might have impr operly allacated casts to

carg o

interests ratherth

to ocean carriers that itis in thepublic interest to determine a re

o

able meth od of cost allacati on to insure pr oper ratemaking practic

far the future and that an expedited determinati on of these matte

will assist in bringing the pr oceeding to an orderly conclusi on W

theref ore ordered that the investigati on specifically determine wheth

the implementation of the definiti o of the truck loading and unl oad

ing service as quoted by the New York Terminal Conference con

stitutes a

just and reasonable practice within the meaning of 

17 of the Shipping Act 1916 and whether the utilizati on of a

1

Vice Chairman Day abstains

13 FMO
TRUCK LOADING AND UNLOADING RATES AT NEW YORK HARBOR 53

method of cost accounting or allocation based upon such a definition

distri utes costs between cargo interests and ocean carriers in a just

and reasonable manner within the meaning of section 17 Ve ordered

these issues severed from those already in the proceeding for ex

pedited hearing and the issuance of an early decision

Hearing Counsel the Conference Cunard Line and Empire pre

pared a stipulation offacts pertainingto theSevered issues This stipu

lation has the concurrence of the interested parties and has been

received into the record The stipulation is set forth below The

appendices referred to in the stipulation have been omitted

Of the parties listed in the appearances the Conference U S Lines

Empire Middle Atlantic the American Institute for Imported Steel

and Hearing Counsel have participated on brief and at oral argument

in respect to the severed issues

STIPULATION OF FACTS

Respondent New York Terminal Conference operates about 125

piers in the p

rtof ew York varying in size physical facilities and

age The piers operated by respondents are either of the finger r

quay type and withlimited exceptions have been constru ted in the

last ten years or piers which may have been constructed prior the reto

but have been substantially modernized within the last ten years

Practically all of the comm on carrier by water inb oundand out

bound general cargo handled in the Port ofNew York moves overthe

piers operated by respondent s members

Prior to December 31 1953 truck loading and unloading at New

York was performed by public loaders who performed such functi os

independently of the terminal operators Abuses develop d under this

system and public loaders wereoutlawed by the provisions ofthe New

York New Jersey Waterfront Commissi on Compact PL 87 252 ap

proved August 12 1953 In pertinent part the declarati on of policy

stated in th compact is

thatthe function of loading and unloading trucks and otherland vehicles

at the piers and other waterfront terminals can and should be perfo m as in

every other major Aiherican port without the evils and abuses of the pUblic

loader system and by the oarriers of freight by water stevedores and operators

of such piers and other waterfront terminals orthe operators of such trucks or

other land vehicles

The abuses which gave rise to the aforementioned legislation per

tained widespread corruption among the public loaders in which un

sa vory elements demanded bdbes and oflten performed no service at all

13 F M C

42264 H 5
54 FEDERAL MARITIME COMMISSION

although a tariff for truck loading was actually publi hed Ifunload

ing was requested by the truckman the public loader performed th

service at a negotiated rate See Official Loading Charges in thePo

of New York established by Truck Loading Authority which con

sisted ofJoseph P Ryan President for ILA

Joseph Bergen Pres

dent for Port Loaders Council Local 1757 and Joseph M

Chairman for Joint Shipper Truckmen Committee and issued b

Hugh E Sheridan Chairman Effective June 5 1950 The publ

loader often owned no equipment and his usual service consisted o

loading cargo onto a truck from a point not more thana truck s

lengt

away from the tailgate In many instances the public loaders extorte

the free use of equipment and 1 90r from shipping and s vedorin

companies In most cases the public loader kept no financial record

did not maintain cargo liability insurance and was unregulated Eac

pier had its boss loader through who all loading work had to b

cleared regardless of whethel his or any loader s services were desire

by anyone Public boss loaders were in most in tanc m bers o

an ILA local and at the same time were employ rs of members o

their own union New York State Crime Commission Public Hea

ings No 5 Port of New York Waterfront December 3 195

1arch 17 1953

In the days of the public loaders the ocean carrier paid for the dis

cQtrge of the ve sel the movement ofthe inl10und cargo to a place o

rest on the pier and not infrequently under duress from the publ

loaders also paid for the movement of cargo from place of rest to th

tailgate of the truck or the vicinity thereof in cases where the truc

did not proceed to the vicinity of the place of rest

Previous to the public loader system it was customary for truck

men to load their own trucks with the aid of one or more helpers Wit

the stringencyof labor duringWorld War Itruckmen began dispens

il g with their helpers and hiring neces

cary manpower from a ong th

laborers available at the piers Such laborers would naturally ten

to be longshoremen and members oflongshoremen s unions The publi

l ader system was born out of this background Thenceforth loadin

wasundertheGoiltrol ofthe public loaders

Afterthe public loaderswere outlawed OCean carriers were generall

unwilling to furnish truck loading a 4 uni ading service Th y geIJ

erally urged that terminal operators provide same in order to keegthe

piers clear and conditions fluid Thereafter committees representin

the terminal operators and the truckers met and arrived at the infor

mal decision that the terminal operators should take over the respon

sibility of furnishing the truck loading and unloading service Te mi

13 F MC
RUCK LOADING AND UNLOADING RATES AT NEW YORK HARBOR 55

nal operators were hesitant until arrangements vere worked out

whereby steamship companies would make terminal operators whole

for whatever losses would be incurred Truck loading aRd unloading is

service essential to the efficient operation of ocean carriers In the

handling of freight at the piers the steamship lines objective is to

have a vessel loaded and unloaded in the shortest period of time so

that the turnaround period of the vessel is kept at a minimum To

accomplish this theterminal operator s objective is to have cargo move

onto and off of the pier by truck and lighter as quickly as possible It

is also essential in order for the cargo owner to get his goods 1nd ful

fill his obligation to get them off the pier or pay progressive demurrage

After a period of flux during which the responsibility fo the sei vice

and the charges therefor were unsettled the present sysfem evolved

pursuant to Agreemen No 8005 approved by the Commission s prede

cessor on farch 23 1955

Agreement No 8005 authorized the members ofthe New York Termi

nal Conferen who theretofore had been permitted individually by

the Waterfront Commission Compact to load or unload waterborne

freight onto or from vehicles at piers or at other waterfront terminals

iil the Port of Greater New York and vicinity foa fee or other com

pen ation ljointly to establish publish an l maintain

tariffs coptaining just and reasonable rates charge classifications

rules regulations and practices with respect thereto The mem

bers were required to assess and collectTafes and charges for and in

connection with such services strictly in accordance with rates

charges set forth insaid tariffs

A

subseqllent amendment to Agreement No 800aut40rized the

members to restrict performance of the service of truck loading to

the operators of the piers or waterfront terminals This agreement

implemented the jurisdictional position of the LLA with respect

to waterfront truck loading and facilitated the pla ning of labor

hiring by the terplinal operators The same system exists with regard

to the non member respondents

Pursuant to the authority granted by the Commission terminal

operators who are partie to Agreement 8Q05 have jssued a nuniber of

tarIffs the present tariff being NQ 7 in the series The tariffs provlded

for c ass and commodity rates

The great preponderance of service performed by the terminals

under the tariff is truck loading ather than unloading The truckers

in most cases do their own unloading Prior to the issuance of Tariff

No 4 the tariffs provided for partial service which Vas defined o

mean th moving of the cargo from a place of rest on the dock which

l

13 F M C
56 FEDERAL MARITIME COMMISSION

is readily accessible to the truck and elevating the same to a place 

rest on thetruck without the necessity of placing men on the truc

Tariff No 4does not provide for partial service leaving the truck

thechoice between fullservice and no service

Tariff No 1 issued by the Terminal Conference define9 the serv

as follows

1 Truck Loading shall mean the service of moving cargo from its plac

rest on the dock to the truck elevating onto the tailgate of tbe truck and plac

in the truck but shall not include the sorting of cargo by marks at time 

eliverynorthe loading onto consignee s pallets

J The loading and placing of cargo in tl1e truck shall be with 

assistance of and Under thesupervision of the driver of the truck

b When thecomplete truckloading service is requested and perform

the charge therefor shall be as provided herein under the column hea

Tailgate Service

0 When only tailgate delivery of the cargo is requested and perform

thecharge therefore shall be as provided herein under the column hea

Tailgat Service

iTailgate service shall mean the moving of cargo from its p

of rest at the dock to the truck and elevating same to the level of 

tailgate or floor of thetruck

d When the trucker performs the complete loading service he s

notbe required to break down cargo more than man high 6 feet

2 Truck Unloading shall mean theservice of removing cargo from the b

of the truck to a place of rest designated by the terminal operator and s

include sorting by port

a The unloading of cargo from the truck shall be with the assista

of and underthe supervision of the driver of thetruck

b When thecomplete truck unloading service is requested and perform

the charge shall be at thefulltariffrate

0 When only tailgate delivery of the cargo is requested and perform

the charge therefor shall be as provided herein under the column hea

TailgateService

i When the truck driver and or his helper palletize the cargo 

the tailgate there shall be no charge for tailgate receipt

d When the trucker performs the complete unloading service he s

notbe requiredto tiercargo more than manhigh 6feet

This tariff never became effective because of dispute and litigati

Tariff No 2 effective August 15 1955 provided for three types 

service viz truck loading full service truck loading partial serv

and truck unloadmg Truck loading fullserVice was defined to be 

service of moving cargo from a place of rest on the dock which 

readily accessible to the truck elevating the cargo on to the tru

and stowingofthe cargo in the truck but shall notinclude the sort

of the c

rgo by marks at the time of delivery nor the loading on 

consignee s pallets

13 F M 
TRUCK LOADING AND UNLOADING RATES AT NEW YORK HARBOR 57

Truck loading partial service was defined as the moving of cargo

from a place of rest on the dock which is readily accessible to the

truck and elevating thesame to a place ofrest on the truck without the

necessity of placing men on the truck Truck unloading was defined

as the service ofremoving cargo from thebody ofthe truck to a

place

ofrest deSignated by the Terminal Operator and shall include sorting

by port

In the case oftruck unloading the motor carrier had the option to

perform the service itself and in this instance all the motor carrier

wasrequired to do was to remove the cargo from the truck to a point

on the terminal facility adj acent to the truck tailgate as designated

by the terminal operator This provision is still in effect The service

of moving the outbound cargo from the place adjacent to the truck

tailgate is not deemed to be included within the truck unloading

service for which the motor carrier may b assessed a charge

Partial service was deleted from Tariff No 4

The above definitions of truck loading and unloading are substan

tially the same as those published in Tariff No 7 except for thedeletion

of partial service and the clause which is readily accessible to the

truck following the words place of rest The latter deletion first

occurred in Tariff No 6 effective April 1 1963 On May 24 1962 the

U S Court of Appeals for the District of Columbia Circuit had de

cided AJ1Ujrican President Lines Ltd v Fede1 al Marithne Board 317

F 2d 887 Truckers may elect to unload their own trucks in wIuch

case they do not use a tariff service and are not charged by the terminal

operators for moving cargo from the truck orbeyond the tailgate

The piers are policed and no one may enter or leave a pier without

permission This policy is dictated both by good business practice and

by regulation of the Vaterflont Commission The procedure for de

livering inbound cargo o a truck is fairly uniform The truck is reg

istered at the entrance to the terminal and a

gate pass is issued to the

driver The driver goes to the delivery clerk and submits the necessary

customs permits releases and proof of this authority to receive the

cargo Ifthe drivers papers are in order and approved he then awaits

the assignment ofthe necessary checkers truck loaders and designated

loading station Inthe rareillstances under present practice in which

the truck moves on to the pier and up to the pile of cargo clearance

for entry must await satisfactory conditions on the pier as to a clear

access and non interference with other operations After the truck is

loaded the driver is required to go to the delivery office to sign for

the lo ad according to the checker s

tally Thereafter the gateman per

mits th truck to leave the pier

13 F MC
58 FEDERAL MARITIME COMMISSION

Trucks to be loaded speedily and efficiently require the use o

hilos pushers cranes escalatOl s pallets pallet and live rollers an

other special equipment Such equipment is Q1vXled and maintaiI e

by the terminal operators at the piers they operate and it is 

by them for the truck loading and unloading service

Iil the case of imports the inbound cargo is removed from the shi

and placed upon the stringpiece and almost immediately thereafte

removed to the shed or moved directly from the ship to the shed Ex

ept in limited instances the shed has a pl tforrn alid motor vehicle

arriving to pick up import cargo may be backed jn the platforms i

truck bays for the receipt of import cargo Additionally the com

pound farm area may be used to load trucks vVhether platform o

compound farm area or both are used depends upon prevailing con

ditions at the pier in the judgment of the terminal opeeator Fo

reasonsofsafety andefficient operation trucks are not allowed to elri v

freely throughout the pier premises In exceptional cases with th

consent of the terminal operator it may still be possible for truck

to back into the immediate vicinity of the pile for the receipt of carg

The custom generally is to elevate and stow cargo in trucks at som

place other than the place of rest where the cargo was located he

the truckman arrived Then cargo is moved from first place of rest 

another this is not for the account of the cargo and was not include

as a cost in the Price Vaterhouse study

In cases where the truck does back into the immediate vicinity 

the pile of cargo the run for the lift truck between cargo and truc

will be shorter than otherwise The SaIne charge is assessed howeve

as if the cargo had been moved from place of rest to tailgate This 

so because the charges in the conference tariffs are assessed on th

basis of average experience throughout the port

In an cases except in the rare instances described above when 

nlotor vehicle is ready to receive the import cargo from the termin

operator the latter moves the cargo by hilos from the shed to th

platform or compound farm area where it is then stowed upon th

truck

In the case of truck unloading the trucks will either be backed in

the platform or placed in the compound farm area and the freig

removed from the truck on to the platform or at a point in the im

mediate vicinity ofthe truck orplaced on pallets stacked tailgate hig

at the tailof the truck and thereafter removed by the terminal ope

ators to a point in the shed pending arrival of a vessel

The determination of place of rest and loading area is made by t

terminal operator based upon type and volume of inbound cargo a

13 F M C
TRUCK LOADING AND UNLOADING RATES AT NEW YORK HARBOR 59

experience as to the order in which cargo will be called for It is

physically impossible to keep each and every consignment discharged

from an ocean going vesselin such a location that a truck tailgate can be

placed adjacent to it throughout the period from completion of dis

charge untilthe argo is called Ior Generally the truckman win call

the pier to ascertain ifthe cargo is available unless he has information

that the vessel has already completed discharge Unless arrangements

aremade by the terminal operator and the motor carrier for the picku p

of inbound cargo at a

specified time there is no certainty as to what

inbound cargo will be picked up on any given day or the hour thereof

The inbound cargo is handled on the pier by ILA labor from the

place of rest to the tailgate of the truck The loading and stowing on

the truck is done by ILA labor under the supervision and with the

assistance of the truck driver The terminal operators hire LLA

longshoremen for loading and unloading trucks This labor is identi

fied as ternlinallabor as opposed to gang labor who are in turn re

sponsible for loading and unloading the vessels The ILA terminal

labor is hired for a four hour period from 8 00 to 12 00 and may be

rehired for the afternoon period IrOln 1 00 to 5 00 Checkers ar hir d

for a fulleight hour day The menmust be paid for at least the mini

mum periods of hire The number of men hired by the terminal oper

ators for performing truck loading and unloading is determi ned by

the termilral operator s

judgment as to the amount of cargo that will

either be picked up or delivered to the pier on a given day Th Col

lective Bargaining Agreement setting forth the terms and conditions

of employment for the terminal labor is negotiated between the Inter

national Longshoremens Association and the New York 8hipping

Association of which the terminal operators are associate members

who do not have a vote as to the approval ordisapproval of allY col

lective bargaining agreement entered into by the parties How

ever representatives of the terminal operators do participate in the

negotiations

Terminal and stevedoring services performed Jor the ocean carrier

by terminal operators are provid d pursuant to negotiated contracts

between individual terminal operators and ocean carriers There is

keen competition among terminal operators for these contracts The

bulk of the operators revenues about 90 are derived from services

cother than the truck loading and unloadil1g

The latter services are

lot the subject of competition but are provided at uniform rates as

set forth in the New York Terminal Conference Tarjff No 7

Contracts between terminal operato s and ocean carriers vary in

types fr uently covering services beyond bare stevedoring which may

13 F M C
60 FEDERAL MARITI 1Ej CO ISSION

include movement of cargo to the vicinity ofthe truck Such addition

services may include among other things sorting according o BIL

marks movement on the pielr to accommodate changing situations

e gsimultaneous receipt and loading of outbound cargoes fo th

same or another vessel getting packages for weighing or sampli 

lnoving cargo from place of rest to the head of the pier in anticipa

tion of a call by a trucker and again in some instances movement o

the cargo between the place of rest on the pier and the vicinity o

the truck There are some contracts under which the ocean carrie

pays the cost of all terminal service ald is credited with revenu

under the Conference tariff There are in effect some bare stevedorin

contracts which make no reference to truck loading or unloading I

such insfunces the ocean carriers perform the aforeaid service

Respondent Cunard Lines effective March 10 1969 in order t

bring its tariff definitions into linewith its practices followed through

out the periods covered by its Tariffs Nos 1 and 2 F MC T 1 an

T 2 amended its Tariff No 2 F MC T 2 to define truck loadin

as

Truck Loading Service shall mean the service of moving cargo from a place o

rest adjacent to truck tailgate on the dock elevating the cargo onto the truc

and stowing of the cargo in the truck but shall not include special stowag

sorting or grading of or otherwise selecting the cargo for the convenience o

the truckers or the consignee nor the loading onto consignee s pallets

and truck unloading as

Truck unloading shall mean the service of removing cargo from the body o

thetruck to a place of rest adjacent to truck tailgate designated by the Termina

Operator and shall include sorting by port Truck unloading shall be performe

at the request of the truckman The underscored is the amending language

DISSCUSSION

The issue before us as set forth in our supplemental order i

whether the implementation by the Conference ofits definition of th

truck loading and unloading service constitutes a just and reasonabl

practice withinthe meaningofsection 17 oftheAct

As is seen above the controversy arises over that part of the Con

ference s definition which includes in the service oftruck loading an

unloading the movement of cargo between place ofrest on the termina

facility and place adjacent to the truck tailgate Implementation o

this definition a esses a charge for this movement on the cargo via

the trucker We sepai ated this portion of he proceeding to determine

13 F M C
TRUCK LOADING AND UNLOADING RATES AT NEW YORK HARBOR 61

if the assessment of this charge through the Conference s definition

constitutes an unjust or unreasonable practice We conclude that it

does

The Conference and U S Lines have maintained that the inclusion

in the truck loading tariff definition of the movement of cargo from

plaee of rest on the pier to a spot adjacent to the truck accurately

reflects the boundary between the obligation of ocean carriers with

respect to inbound cargo at the Port of New York and the responsi

bilities of receivers of such cargo who employ truckmen or others to

call for their cargo In other words they contend that it is entirely

proper to assess a

charge against the receivers of cargo for this partic

ular movement and that the carrier is not responsible for performing

this service

The Conference argues that it is well settled that the ocean carrier s

obligation under its contract of transportation ceases when it has

discharged the cargo and placed it in a location from which it can

readily be located and removed and has allowed the cargo interests

concerned the specified period of free time within which to call for

the cargo Americarn President Lines Ltd v Federal MartimeBoard

311 F 2d 881 D C Cir 1962 is cited to support this position

U S Lines stresses that the carrier by law has no obligation to

remove the cargo from the dock that after the carrier has put the

cargo on the dock reasonably accessible properly segrega ted and

marked itis for the receiver to take over and remove it that the per

sons who aid in that task do it for the account of the receiver that it

is the receiver s Hft truck in this sense that comes to the pile takes

up thecargo and brings it to the truck

U S Lines points out that the stipulation of facts shows that it is

physically impossible to keep every consignment of inbound cargo in

such a location that a truck tailgate can be placed adjacentto it They

conclude then that as long as the cargo is readily accessible to the

receivers forklift there is no impediment in hisway and there is no

further duty on the carrier s part to effectuate delivery of the cargo

The Arnerican President Line case sup ra described the transpor

tation obligation of ocean carriers The Court said

Ships bringing transoceanic freight into port are required by their transporta

tion obligation absent a special contract to unload cargo onto a dock segregate

it by bill of lading and count put it at a place of rest on the pier so that it is

accessible to the consignee and afford the consignee a reasonable opportunity

to come and get it

13 F MC
62 FEDERAL MARITIME COMMISSION

Iri citing this case to support their position the Conference stresseS

the point that thecarriei sduty ends at place of rest They 3irgtie tha

place of rest at the Port of New York is the transit shed and there

fore the carrier s duty ends at the transit shed We do not read the

case as so limiting the carrier s

responsibility The Conference would

haye us overlook the Court s language which describes place of res

as a place accessible to the consignee The carrier s duty is not 

filled by bringing calgo to rest in a transit shed when the transit shed

is not accessible to the consignee or cargo receiver Ve recognize tha

at the Port of Ne v York cargo cannot be placed in areas adjacen

to trucks immediately upon discharge frOlll ships and that neither can

trucks freely drive around the piel s searching for cargo However

we think Hearing Counsel correctly recognized that it is the carrier 

duty to provide adequate terminal facilities which are convenient and

safe for delivery and receipt of cargo and that if as is the case at th

Port of New York cargo can only be brought to truck tailgate afte

first being deposited ina transit shed in order to prevent chaos o

the piers the necessary movement to truck tailgate is part ofthe serv

ice required tobe provided by the ocean carrier and liot one for which

a separate charge is assessed the cargo receiver Ocean carriers have

not rendered the cargo accessible to the trucker by placing it in

transit sheds from hich trucks are barred entry

ltIuch has been said in this proceeding as to what constitutes acces

sibility of cargo to the cargo receiver As mentioned above U S

Lines contends that the cargo at rest in the transit shed is accessibl

in that the cargo receiver can simply send in a forklift hilo or what

ever and move thecargoto the tnlCk

U S Lines position might be correct if the cargo receiver wer

permitted to so utilize his own equipment or were not assessed a

additional charge for this movement IIowever to say that cargo i

accessible because the cargo receiver can send in a terminal operator 

lift truck is simply not reasonable Neither is it logical to say carg

is accessible to the cargo receiver when the cargo receiver is require

to pay an additional charge to obtain the cargo or to bring the carg

to truck tailgate Since it is the obligation of the ocean carrier t

render the cargo reasonably accessible to the cargo receiver any serv

ice perfqrined by tlJc terminal operator which ontributes to the fu

fillment ofthat obligationis for the account of the ocean carrier Thi

in no way changes the rule that the carrier is not required to mak

delivery to the consignee

The Conference looks to another portion ofthe America Presiden

Line case to support its position This case involved a controversy ov

13 F M C
TRUCK LOADING AND UmOADING RATES AT NEW Y0RK HARBOR 63

the Federal Maritime Board s

interpretation ofits free time and demur

rage rules The Board7s interpretation vas to the effect that c rliers

would be barred from assessing demurrage on cargo when th y

are

unable to deliver because of a

longshoremen s strike and this bar

would apply regardless of whether the cargo vas made available

during the entire prescribed period of free time The Court described

the Board s position and characterizeq what the Board sought to

accomplish as being a violent shift from the provisions of its previous

rule r

egarding demurrage and free time The Court said at p890

The Board s position as made clear by its brief and argument hei e is that

the legal duty of the carrier to deliver continues until the consignee calls for the

cargo that even after free time has expired the carrier has the duty of making

the cargo physically available to the oonsignee s trucks and that the carrier

must provide the labor to load the consignee s trucks A

longshore strike the

Board says prevents the carrier from fulfilling this obligation This is a violent

shift from the provisions of General Order 69 and introduces a new concept

into the industry A carrier does not as we have pointed out under long

established custom and official rules deliver good to consignees it tenders them

for delivery makes them available for delivery Ve think the proposal to

deny the carriers demurrage charges at the first period demm rage rate where

gOOds have been properly marked etc on the dock for more than five days

befo e the strike began s a violation of General Order 69 I I

Fhe Conference characterizes this language as a rebuke by the Cqurt

of an attempt by the Board to extend the ca rrier s duty to include the

service in question here The Conference feels this decision bars us

fr0111 finding tle carrier responsible for Inovement of cargo to a plac

adj acent to truck tailgate

A careful analysis of the Court s opinion shows that it would not

relieve the carrier of its duty to perform the service in question here

The violent shift the Court was worried about was a sllift in the

free time and demurrage requirements to preclude demurrage pay

ments to a carrier even after it had properly tendered cargo for

delivery for the entire free time period The case before l1S does not

involve free time and demurrage requirements This case does involve

the requirement discussed by the Court of a carrier to tender for

delivery Ve are saying no more than the Court in American Presi

dent Line i e a carrier must tender goods for delivery it need not

deliver them to consignees A proper tender is not mlade at th transit

shed when the cargo receiver has no access to that area The Court

was worried that the former Board s position would extend the car

1ier s duty to include making the cargo physically available to the

consignee by providing Jabor to load the consignee s truck We agree

that this would be a new concept in the industry 9wever we ar

13 F M C
64 FEDERAL MARITIME COMMISSION

not suggesting such a

requirement We are only requiring a carrie

to bring cargo to a place accessible to the cargo receiver for truc

loading Ve are not requiring the carrier to load or to provide labo

for loading

U S Lines has cited several other cases to support its position r

garding the obligation of a carrier to deliver or tender for deliver

The select portions quoted by US Lines sometimes appear on the

face to lend support to its position However as suggested and car

fully outlined by Hearing Counsel a closer analysis of each of thes

cases demonstrates that they are not controlling largely because 

different facts andsometimes because ofdifferent customs or regulato

laws involved

There has been much discussion in this proceeding as to who w

bear the costs ofthe service in question and whether assessment of th

charge by the terminal operator results either in double payment b

the cargo or double compensation for the carrier or the terminal o

erator

Three forms of stevedoring contracts between the carriers and th

Conference are employed at the Port of New York and bear on th

question

Under one form of contract the terminal operator bills the carrie

for stevedoring services on the basis of actual cost plus a profit Th

terminal operator credits the carrier with revenue collected under th

truck loading tariff This type of arrangement is said to result in th

ocean carrier receiving double compensation for the service of makin

cargo reasonably accessible to the consignee once in the freight rat

and a second time in the revenues from truck loading

Another type of contract calls for no reimbursement by the carrie

to the terminal operator for the tariff service of truck loading Th

terminaloperator bears the costs and keeps the revenue obtained unde

the truck loading tariff Itis alleged that under this category of con

tract the cost of the service is charged by the terminal operator to th

cargo rather than to the carrier permittingthe carrier who receive

payment for the service in the freight rate to retain compensation fo

a service which it did not provide to the consig ee

Under the third type of contract the carrier pays the termin

operator for assisting receiving and delivery Itis suggested that th

terminal operator in this case is being compensated both by the carrie

andthe consignee for the same service and that in any event the carrie

may unjustly benefit to the extent that it does not reimburse the term

inal for its fullcosts ofmoving cargo from the transit shed to the tai

gate ofthe truck

13 F

M C
TRUCK LOADING AND UNLOADING RATES AT NEW YORK HARBOR 65

Whether the employment of any of these contracts in conjunction

with the Conference s current truck loading tariff results in double

payment or double compensation is not clearly established Double

compensation to the carrier occurs ifthe carrier includes the movement

from transit shed to truck tailgate in its freight rate This is assumed

or conjectured but not established Double payment by the cargo also

depends on this assumption Double compensation to the terminal

operator forthis service occurs ifits service to the carrier of assisting

delivery includes the movement in question

While the many allegations and counter allegations about double

payment and double compensation may not be conclusively shown to

be true we think they sufficiently point out the potential dangers in

herent in the employment of the Conference s present truck loading

definition in connection with the stevedoring contracts in use at the

Port of New York The existence of these real or potential dangers

only accentuates the desirability and necessity of requiring a change

in the conference tariff definitions to properly allocate between carrier

and cargo the costs of the various aspects ofthe loading and unloading

service

The Conference has also argued that a change in the truck loading

definition to relieve the cargo owner orhis agent the truckman of the

cost ofmovement between place ofrest and tailgate would be a radical

departure from the user concept which stands for the proposition

that the cost of a service must be borne by the users of that service and

that accordingly therates chargedthe usersmust be sufficient to produce

revenue which will meet costs and a reasonable profit The Conference

explains that to make carriers bear the cost of this service would

compel them to subsidize all orpart ofthe costs ofthe service rendered

to truckmen This they say will result in subsidization of users by

nonuserssince some ofthe carriers patrons use lighters for pickup and

delivery and if thesteamship companies should pass on throughhigher

freight rates the cost ofsubsidizing the truckmen the result would be

that users of lighters would be contributing to the cost of the service

rendered to those who pay truck loading and unloading tariff charges

This argument is answered simply by pointing out that therewould

be no passing on ofthe cost to subsidize truckmen since carriers would

not in fact be subsidizing truckmen What would happen is that the

carriers would be paying for movement to tailgate a service which is

part oftheir legal obligationto tender for delivery The carriers would

not be paying a loading charge or any other charge which might

properly be assessed the truckman Hence there is no subsidization or

passing on to non users

13 F M C
66 FEDERAL MARITIME COMMISSION

The Conference raises the additional argument that with one excep

tion the c1 eflnitioilS of truck loading and unloading contained in the

Cllrrent tariffs goVerning operations at various North Atlantic ports

other than New York clearly encompass the movement between the

trllCk and the place of I est on the pier and that since uniformity o

practice in this respect is desirable the Commission would be illadvised

to require a change in the New York Conference s definition

Vliilc we are desirous of obtaining uniformity of practice among

ports wherever feasible we are unable to base any decision on the

evidenbe in the record concerning practices employed at the various

North Atlanticports The sinlple reason for this is that we have no in

formation befoi e us to indicate what are the customs practices o

conditions at these ports iVe have the bare tariff provisions but the

experieilce a fCunard Line demonstrates the danger of drawing con

clusions as to practice based simply on tariff provisions The Cunard

tariff previousiy defined truck loading to mean the service of moving

cargo from a place of rest on the dock stowing of the cargo onto the

truck etc Cunard has stated that place of rest in practice has always

meant place of rest adjacent to truck tailgate This could not b

determined by a mere f

eadlng of the language in the tariff

Finally tI1e Conference resurrects its argument that if we were to

req lite a revisioil or the tariff definition of the service upon which the

cost study was liremised for the purpose of refining the allocation o

costs between ocean carriers and truckmen we would be exercising 

degree of l atemaking authority over the terminals which we do no

possess 1le argument is that we do not have conventional ratemaking

authority with respect to nlarine terminais our ratem akingauthority

l

eing limited to carriers

The fact that we have authority to investigate unlawful ratin

practices under section 17 of the Act was established long ago i

California v United States 320 U S 577 1944 The District Cou

for the Southern District of New York in Federal Maritime Oommis

sion v Ne v York Terminal Oonference et al 262 F Supp 22

1966 2more recently confirmed this The Court s language is directl

responsive to the Conference s argument about our conventional rate

nlaking authority The Court said at p

228

Granting that the Shipping Act gives the Commission the power to prescrib

just and reasonable rates in haec verba only with regard to carriers th

does not preclude the regulation of rates charged by other persons subject to th

Act under other provisions Rates charged by the Conference are expressly mad

subje ct to Commission review by Section 15 46 USC 814 and the rates I

may constitute unreasonable practices under Section 17 46 use 816

IIFeae1 aZ Maritime Oom n v New Y01 k TerminaZ Oonference 373 F 2d 424 C A 2 1967

affirming

13 F M C
TRUCK LOADING AND UNLOADING RATES AT NEW YORK HARBOR 67

The Conference further states that whatever ratemaking authority

we might have under section 15 to protect against concerted setting of

cxhorbitant rates which yield an outrageous profit would not be exer

dsable here since the Conference s cost study already indicated that the

rates are not outrageously profitable

In view of our decision here that the Conference s tariff definition

improperly charges cargo for aportion of the service no reliance can

be placed on the Conference s cost study since it is based on that

definition

CONCLUSION

Respondent New York Terminal Conference s tariff definition of

loading and unloading improperly assesses a

charge on cargo for a

nlv ment which is the responsibility of the ocean carrier Conse

quently the implementation of that tariff definition constitutes an

unjust and unreasonable practice within themeaning of section 17 of

the Act Additionally the utilization of any method of cost accounting

tor allocation bas d

upon such a definition distributes costs between

cargo interests and ocean carriers in an unjust and Unreasonable man

nerwithin the meaning of section 17

SEAL Signed THOMAS LISI

Secretary

13 F M C
FEDERAL MARITIME COMMISSION

DOCKET No 6546

TRUCK LOADING AND UNLOADING RATES AT NEW YORK HARBOR

ORDER

By supplemental order of February 19 1969 the Federal Maritim

Commission severed this portion of the proceeding to expeditiousl

determine whether the implementation by the New York Termina

Conference ofits definition ofthe truck loading and unloading service

contf1 ned in its Truck Loading and Unloading Tariff No 7 constitute

a

just and reasonable practice withinthe meaning of section 17 ofth

Shipping Act 1916 The Commission also sought to determine whethe

the utiliz tion of any method of cost accounting or allocation base

upon uch a definition distributes costs between cargo interests an

ocean carriers in a just and reasonable mannerwithinthe meaning o

section 17

The Commission has fully considered these matters andhas this dat

made and entered a

report containing its finding and conclusion

thereon which report is hereby referred to and made a part hereof

Itis ordered pursuant to section 17 oftheShipping Act 1916 tha

the New York Terminal Conference cease and desist from imple

menting the definition of the truck loading and unloading servic

contained in New York Terminal Conference Truck Loading an

Unloading Tariff No 7

It is further ordered pursuant to section 17 of the Shipping Ac

1916 that the New York Terminal Conference amend its Truck Load

ing and Unloading Tariff No 7 to define the services of truck load

iug andunloading as follows

Truck Loading shall mean the service of moving cargo from a place of rest o

the terminal facility adjacent to truck tailgate elevating the cargo onto t

truck and stowing of the cargo in the truck but shall notinclude among oth

things special stowage sorting or grading of or otherwise selecting the carg

for the convenience of the trucker or the consignee nor the loading of carg

onto consignee s pallets

68 13 F M C
TRUCK LOADING AND UNLOADING RATES AT NEW YORK HARBOR 69

Truck Unloading I When the Participating Member perform truck un

loading such service shall consist of removing cargo from the body If thetruck

to a place of rest on the terminal facility adjacent to truck tailgate as desig

nated by the Participating Member and shall include sorting by port Truck

unloading shall be performed by the Participating Member at the request of the

motor carrier

2 When themotor carrier s

employees perform the unloading service it shall

include the removing of cargo from the body of the truck to a place of rest on the

terminal facility adjacent to truck tailgate as designated by the Participating

Member Motor carrier s employees shall be required to tier cargo to the height

specified by the Participating Member but in no event shall they be reqUired to

tier cargo more than six 6 feet high

By the Commission

SEAL THOMAS LISI

Secretary

13 F MC

A O QA 1 a
FEDERAL MARITIl1E COMMISSION

No 694

IN THE MArrER OF AGREEMENT No T 2214 BETWEEN THE CITY O

LONG BEA CH CALIFORNIA AND TRANSOCEAN GAJ WA Y CORPO RA I9N

Adopted September 18 1969

Rental for marine properties for use as a public container terminal subje

to an adjustment in the minimum rental for the second year found com

pensatory on proposed ten year basis and not shown to be unjustly d

criminatory or unfair to other ports or terminals Lease agreement approve

subject to said adjustment in second year minimum rental

Leslie E Still Jr for respondent the City of Long Beac

California

Joseph Lotterman andHoward A Levy for respondent Transocea

Gateway Corporation

Roger Arnebergh Edward O Farrell Walter O Foster and May

nard Asper for petitioner theCity of Los Angeles California

Donald J Brunner and Robert H Tell as Hearing Counsel

INITIALDECISION OF CHARLES E MORGAN PRESIDIN

EXAMINER 1

By order of investigation served January 10 1969 the Commissio

instituted thisproceeding to determine whetherAgreement No T 221

theAgreement a marine terminal lease between the City of Lon

Beach California Long Beach and Transocean Gateway Corpora

tion Transocean should be approved disapproved ormodified pu

suant to section 15 oftheShipping Act 1916 theAct

The Commission has received a protest against approval of th

Agreenlent from petitioner the City ofLos Angeles California urg

ing that the Agreement should not be approved because the renta

contained therein are noncompensatory in violation of section 1

of theAct Accordingly the Commission s order of investigation pro

This decision became the decision of the Commission September 18 1969

13 F lIC

70
AGREEMENT NO T 2 2Jl 4 71

vided that the issues in this proceeding are to be confined to whether

the rentals contained in Agreemelit No T2214 are non compensatory

resulting in prejudice to other ports or terminals He ring was held

April 8 9 1969 The matter was argued orally before the Presiding

Examiner by respondents Long Beach and Transocean and by p

ti

tioner the City of Los Angeles and in acc0rdanc with the procedure

agreed to by all parties Hearing Counsel filed a

reply brie and

respondent Transocean an answering brief Long Beach nd the City

of Los Angeles waived the filing of answering briefs in consideration

of their presentat ons on oral argument The City of Los Angeles

opposes and the other parties favor approval of theAgreement

The Agreement provides for the non exclusive preferential assign

ment to Transocean of the wharf and contiguous wharf premises

at berths 246 and 247 Pier J Long Beach California Parcel I

In addit on the Agreement prQvides that Transocean has an option

for the non exclusive preferential assignment of the wharf and con

tiguous wharf premises at berth 245 Pier J ParcelII together with

an option for the non exclusive preferential assignment of up to 80

acres of additional property adj aceilt to oroontiguous to ParcelIand

Parcel IITransocean is to use the leased properties as a public con

tainer terminal At the terminal Transocean will furnish war hous

ing and rail and truck facilities facilities for the loading and unload

ing of vessels and facilities for other generally related purposes

Transocean has the right under the Agreement of first refusal of

any additional public container facility Gonstructed or nlade available

by Long Beach The term of the lease is ten years with an option to

renew for an additional ten years Long Beach reserves the right to

make a temporary assignment of the leased facilities to other persons

when the premises either ill whole or in part are not required by

Transocean

Transocean will assume the burden of providing the requisite con

tainer handling equipment such as cranes top loaders and oontainers

at an estimated cost to Transocean initially of about 1 333 333 Ini

tially Transocean will provide one container crane and certain other

equipment but for the operation of the container terminal at full

capacity there would have to be substantial additional investment on

the part of Transocean including another container crane

Construction offacilities in the terminal area in issue wasbegun by

Long Beach with no specific tenant in mind These facilities were

offered to certain Japanese steamship lines before theAgreement was

made with Transocean Then negotiations were commenoed with

13 F MC
72 FEDERAL MARITIME COMMISSION

Tr nsocean the wharves for the two berths in issue were about o

third com Pl teAt present the wharves on berths 246 and 247 are

virtually finished and the back area is being graded to its final

elevation

Under terms of the Agreement Transocean will provide its services

in operating a public container terminal at rates that shall conform

as nearly as possible to those in the tariff of the PortofLong Beach

As compensation for the leased premises Transocean for each

month ofits occupancy of these terminal facilities shall pay to Long

Beach a sunl equal to the total amount of all charges for dockage

wharfage wharf demurrage wharf storage and all other terminal

charges computed on the basis of the Port of Long Beach tariff with

respect to Transocean s operations at the premises for vessels berthed

and for cargo loaded discharged or held subject to certain provisions

including those in the next paragraph

For the first year oftheAgreement the amount paidby Transocean

to Long Beach is subject to amaximum of 300 000 but with nomini

mum for the second year therewill be a minimum of 200 000 and a

maximum of 350 000 for the third year and any succeeding year of

theAgreement the minimum will be 340 000 and the maximum will

be 420 000

In sUlnmary for the ten years of theAgreement the minimum pay

ment by Transocean to Long Beach would be zero for the first year

plus 200 000 for thesecond year plus eight times 340 000 for the next

eight years or atotal of 2 920 000

The expenses of Long Beach in connection with the leased facilities

for the 10 year period have been estimated by Long Beach to total

2 381 500 which is a sum less than the minimum revenues of

2 920 000 which Long Beach would receive from Transocean In addi

tion Long Beach might receive other revenues from the leased facili

ties through its right to make temporary assignments of the leased

facilitiesto persons other than Transocean when the premises either in

whole or in part are not required by Transocean Also both respond

ents expect that in due time the facilities will earn in excess of the

agreed minimum revenues

Long Beach did not insist on a minimum rental for the first year of

the lease because of its desire to have a public containership terminal

because Transocean agreed to furnish from its own funds the operat

ing equipment such as the container crane and because Long Beach

waswillingto speculate along with Transocean that the venture would

be a success A principal reason for the lack of a minimum rental for

13 F M O
AGREEMENT NO T 22 14 73

the firSt year apparently was because Transocean was to pay fur the

container crane and Other terminal equipment thereby Obviating an

investment by LQng Beach in container crane and related equipment

The investment costs in land and water area Of LQng Beach for

Berths 246 and 247 are estimated to total 1 542 200 This estimate is

based On 110200 square feet Of land at 2 a

square fO Ot or 1 420 400

On 103 600 square feet Of area under wharf at 50 cents a

square fQQt Or

51 800 and On 140 000 square feet of water area at 50 cents a

square

foot Or 70 000 Improvements estimated as of February 26 1969

totalled 1 236 800 The imprOvements include paving freight station

and Office gate house railrQad tracks utilities and Other items Based

on a contractfigure Of 1 109 75 per linear foot and 1 400 feetofwharf

the wharf was valued at 1 553 660 The total of the land area the

improvements and the wharf is 4332 660

The cOncrete wharf is assigned alifeof50 years with a

straight line

depreciation of2 percent a

year andthe other structures utilities pav

ing and improvements are assigned a life of 20 years with a

straight

line depreciation Of 5 percent a

year Two percent of the estimated

value Of the wharf plus five percent Of the estimated value Of the

structures and imprQvements amounts tQ abOut a cOmp Osite 214 per

cent Of the total estimated investment in berths 246 and 247 AccQrd

ingly depreciation was calculated by Long Beach on a yearly basis

at the composite figure of 2 14 percent Of the total investment

Pr Orated pOrt cOsts or cOsts that cOuld not be directly assigned tO

any particular berths ofthe LOng Beach Harbor On the last available

annual basis totalled 2 847 492 Dr 2 50 percent Of the total invest

ment cost of 113775 813 Of the revenue prQducing facilities Of the

LOng Beach Harbor

Direct costs attributable tO a particular berth Or terminal were de

termined from a previQus study Of Long Beach tO average 0 84 per

cent Of thecost Of inveStment

The sum Of 2 14 percent for depreciatiQn 0 84 percent fQr direct

costs and 2 50 percent for pr Orated port cOsts results in 5 48 percent

fOr the total expenses for bel hs 246 247 whereas the averagealulual

gross rate Of return Over the 10 year life Of the Agreemeht based on

mininlUln payments by Transocean would be 6 74 percent revised in

vestment Of 4332 660 divided into lone tenth Of minimum 10 year

return Of 2 920 000This leaves a net profit on investment tO LOng

Beach Of 126 percent IfTransocean were tO make maximum pay

ments fQr the 10 years the net profit to LOng Beach would be 3 78

percent

13 F M C
74 FEDERAL MARITIME COMMISSION

Th principal issue herein is whether the proposed rentals are com

pensatory A

subsidiary iSSlleis whetherthe rentals must be compens

tory on ayear by year basis that is for example must the rental fo

the first year be compensatory Neither the minimum rental of ze

for the first year nor the minimum rental of 200 000 for the secon

year is compensatory All other rentals whether minimum or inax

mum in the Agreement are compensatory in that they exceed the 

mated total expenses ofLong Beach of 238 150 per year

The City o

Los Angeles admits that the rental provisions oftheAgreement whe

considered on the overalll0 year term oftheAgreement are compensa

tory The respondents insist and Hearing Counsel agree that whethe

the rentals are compensatory or not must be decided on the 10 yea

basis oftheAgreement

The Qity of Los Angeles in opposing the Agreement relies in pa

on the fi ding in Docket No 6826 Agreements No T 108 an

T 108A 12 FJJ O 110 October 15 1968 in which a lease agre

ment was approved subject to an increase in the minimum payment t

insure that the facilities in question were not furnished at less tha

cost during any year of the pendency of the agreement This cite

case concerned an agreement to lease for three years which was can

cellable at the end of the fIrst year at the option of the lessee tenan

In the present proceeding we have a somewhat different situation i

the fOrln ofa non cancellable ten year lease which is admittedly com

pensatory overthIS ten year period on the basis ofthe total ofits min

nlum yearly rentals The City ofLos Angeles argues in part that th

lease is no better than the financial capability of its tenant lessee bu

here we must deferto thejudgment ofLong Beach

Ithas been said in other cases of terminal rentals that itis not ou

prerogatlve to prescribe specific rates ofreturn to public bodies exper

enced in terminal management The present record generally affords n

gro dfor disputing Long Beach s

judgment in negotiatingthis leas

to Transocean

Nevertheless there is one disturbing element in theAgreement an

we are constrained to listen to theargument oftheCity ofLos Angele

that there be some limit placed on the number of years that the min

mum rental in a lease ofthis nature may be less than fully compensa

tory There appears in the present case to be ample justification fo

the lack of a minimunl rental for the first year particularly becaus

of the substantial investment in terminal equipment to be made b

Transocean However it is our conclusion that thesecond year s renta

should not be less than compensatory norshould any succeeding year 

rental

13 F M C
AGREEMENT NO T 2214 75

Accordingly the present agreement appears approvable subject to

the change or adjustment of the minimum rental for the second year

from its noncompensatory amount of 200 000 to the compensatory

amount of 240 000

It is concluded and found tJlat tlW total minimunl rental in Agree

ment No T2214 a non cancellable ten year lease subject to the ad

justment in the minimum re11tal for the second year of the lease to

240 000 is compensatory and does not result in undue prejudice to

other ports or terminals It is further concluded and found that the

Agreement subject to the adjlstment to 240 000 of the minimunl

rental for the second year of the lease has not been shown to be other

wise unlawful under section 15 of the Shipping Act The Agreement

subject to the change in the second year s minimum rental will be

approved

WASHINGTON D C June 5 1969

13 F M C

CHARLES E MORGAN

Presidi g

Examiner
FEDERAL MARITIME COMMI ION

DOCKET No 68 14

C H LEAVELL COMPANY

V

HELLENIC LINES LIMITED

DecidedSeptember 9 1969

Where complainant shipped cargo on two of respondent s vessels scheduled f

Red Sea port via Suez Canal which was closed after commencement 

voyages following outbreak of Arab Israeli War of 1967 requiring bo

voyages to be diverted via Cape of Good Hope the first after back trackin

from Alexandria a 65 surcharge imposed on the voyage which was e

tended 164 intime and 193 in mileage and a 25 surcharge imposed 

the voyage which was extended 71 intime and 94 inmileage found a

thorized by filed tariff rule and bill of lading clauses providing for addition

compensation inunspecified amount in the event of such contingency and n

inviola tion of section18 d of theShipping Act 1916

Incorporation by reference of definitely ascertainable matter in bill of ladi

terms comprising transportation agreement follows established maritim

custom which is not invalidated by section 18 b of Shipping Act 1916

SamJUel W Earnshaiw for complainant

Stanley O Sher for respondent

Donald J B1lJfner E Duncan Hamner Jr and Robert H Te

Hearing Counsel intervener

REPORT

By THE COMMISSION James F Fanseen Acting Ohairman Jame

V Day Vice Ohairman Ashton C Barrett George H Hear

oOfllIlnusioners

This is a complaint proceeding brought by C H Leavell Co 

shipper to recover reparation for surcharges collected by responde

carrier Hellenic Lines Limited in alleged violation of theShippin

Act 1916 46 US C 801 et seq Examiner Walter T Southwor

issued an initial decision on February 6 1969 in which he conclude

that the surcharges were j

ustified Leavell and intervener Hearin

76 13 F M C
c H LEAVELL COMPANY V HELLENIC LINES LIMITED 77

Counsel filed exceptions The Commission heard oral argument on

June 25 1969

FACTS

Leavell is a construction contractor Itheld a 5 000 000 contract to

construct tse age p oject in Khartoum North Sudan sponsored by

the Agency for International Development AID Hellemc is a for

eign flag common ca rier by water ill the foreign commerce of the

United States Until the 1967 closing of the Suez Canal Hellenic

maintained a

regularly scheduled advertised liner service from At

lantic and Gulf ports of the United States via the Mediterranean and

Suez Canal to portson the Red Sea and Gulf ofAden Leavell shipped

construction material and equipment for its Khartoum project con

signed to itself at Port Sudan on the Hellenic GlO7Y and H elleni

Pioneer on voyages which were scheduled to call at the Red Sea ports

of Jidda and Port Sudan in the said service as well as at Alexandria

in the case ofHellenicGlory at le t and ports beyond Port Sudan

rhe Hellenic Glory commenced her voyage at New Orleans on

May 5 1967 She proceeded to Houston then returned to New Orleans

where on May 18 1967 she loaded 5 275 000 pounds of cargo for

Leavell In addition to some 4200 000 pounds of asbestos cement pipe

the cargo included trucks tractors concrete mixers and other heavy

construction machinery total freight was more than 142 000 The

Glory departed New Orleans second call May 19 1967 and arrived

at New York May 23 There she loaded a

relatively small shipment

about 300 reven u tons of construction supplies tools and small

equipment likewise consigned by Leavell to itself at Port Sudan

The Glory departed New York May 27 1967 Atthat time there was

no thought that she might not be able to transit the Suez Canal the

possibility had not been discussed with complainant or its freight

forwarder or with any other shipper Her first scheduled call was

Alexanderia then Jidda on the easterly shore of the Red Sea across

from and slightly north of Port Sudan Port Sudan and on to

Djibouti Karachi Rangoon and Calcutta She was originally sched

uled to arrive at PortSudan June 14 1967 but the normal time from

New York to Port Sudan via the canal is 22 days with stops atAlex

andria and Jidda or 18 days without such stops Freight ch rges

were calculated in ccordance with basic tariff rates without the inclu

sion of any unusual or additional sum because of any apprehension

ofwar r

closingofthe canal

O May 13 1967 the UA R had begun to move forces through

Cairo eastward into the Sinai Desert following threats of Israels

p minjster provoked in turn by raids ofthe Syrian sponsored Al

13 F M C
78 FEDERAL MARITIME COMMISSION

Fatah organization that it would choose the time the place an

the means to counter the aggressor On May 18 the U A R formal

requested withdrawal of United Nations forces on the Sinai borde

On May g2 PresidentNasser under pressure in the Arab wo ld close

theStrait ofTiran to IsraeliShipping

On Sunqay June 4 the Israeli Cabinet decided upOn war Itbega

next morning June 5 with an air strike that destroyedthe U A R A

Force as a

fighting servi e in three hours The land battle for SIn

beganthesame morning

That day He llenia Glory was less tlan a day s steaming time f

r

o

Gibraltar She was not of course privy to Israels plans any mo

than Pr ident Nasser had peen She entered the Strait of Gibralta

passed Glbraltar on June 6 at 4 00 a m Gibraltar time which is th

same as Greenwich 1ean Time and hove to pending further develo

ments and the receipt of instructions from her owner s office in Ne

York After steaming about in circles for a day she was directe

to put in at Ceuta directly across the Strait from Gibraltar for fu 

This unscheduled call was made to take advantage of Ceuta s bunke

ing facilities while Hellenic s New York office was assessing the situ

tion Every effort was being made to find out just wJ lat was going o

in Egypt and Israel The company had access to such information 

waspublicly available through a n ws ticker in its office it wasunab

to establish contactwith its own representative in Cairo

On Thursday evening June 8 the UN Security Council concluded 

cease fire after four days trying and the battle for Sinai gradual

came to an end By that night the fourth day ofthe war the Israe

forces commanded the length of the Suez Canal The same day th

Glory sailed from Ceuta and proceeded slowly eastward into the Med

terranean President Nasser had ordered the Suez Canal closed o

June 6

On Friday June 9 the Israeli forces attacked Syria from the nort

east border of Israel farthest from the Sinai Desert and the cana

The AraJbs abandoned their positions within 27 hours

Meanwhile the Glory was proceeding eastward he was ordere

into Heraklion on the island of Crete where she arrived June 1

The next day June 15 she finally went in to Alexandria the firs

scheduled port of call

The Glory was directed not to wait for the canal to open but t

proceed to Jidda and PortSudan via Grbraltar and the Cape ofGoo

Hope She departed Alexandria June 17 stopped at Durban for fue

and after practically circumnavigating theAfrIcan continent arrive

at Jidda July 21 She discharged her Jidda cargo sailed July 24 an

13 F M C
C H LEAVELL COMPANY V IIELLENIC LINES LIMITED 79

arrived at Port Sud an July 25 Atthe date of this decision the Suez

canal is still closed

The Glory s scheduled voyage from New York its point of depar

ture frow the Unit d Strutes to Port Sudan via Alexandria the canal

and Jidda wasone of about 22 days and OOO miles The actual voyage

wasone of 58 days and 17 565 miles from New York In terl ls of per

centages of the schedu1ed time nd mi ge the ourse followed addecl

164 percent in time nd 193 perce lt in mileage

Hellenic added a 65 percent Sill ch rge to the normal freight charges

lue from complainant S ch surcharge was made against all cargo on

this voyage ofH ellenio Glory

Leavell s cargo on H ellenia Pioneer was lo cied at New Orleans on

oQr bout May 29 1967 Itconsisted of 1 086 082 pounds ofmerchandise

principally steel reinforcing bars in addition to some trucks and other

construction and office equipment To al freight was about 18 000

calculated at regular tariff rates in contempl3Jtion of the scheduled

voyage via the Suez Canal under the same circumstances as set forth

above with respect to Hellenio Glory Hellenio Pioneer left New

Orleans May 30 made calls at Baltimore and Philadelphia and

arrived at New York June 7 two days after the war began She could

have sailed June 10 but was held at New York until June 16 pending

clarification of the situation in the 1iddle East

iVhile the Pioneer was at New York Ienenic s traffic manager had

daily telephone conversations with the president of 10hegan Inter

llational Corporation complainant s

freight forwarder which had

made all the arrangements for LeaveIl s shipments It wasnever sug

gested to Hellenic that Leavell s carg be discharged at New York

On June 8 1967 Hellenic filed withthe Commission by special per

mission a tariff amendment effective the same date adding a 25

percent surcharge on all ra s due to the 1iddle East crisis

Hellenic s disposition of the Pioneer wasconsistent with that of the

Glory On June 16 the day before the Glory sailed from Alexandria

the Pioneer sailed from New York for Jidda via the Cape of Good

Hope instead of via Gibraltar and Suez as had been scheduled when

she sailed from New Orleans She arrived at Jidda July 18 left there

July 20 nd arrived at Port Sudan July 21 The distance was 11 649

miles and the time about 35 days against some 6 000 miles via Suez

and without a stop at Alexandria about 20 days The normal mile

age was thus increased by about 94 percent and the elapsed time by

about 71 petcent Hellenic assess a 25 percent surcharge quivalent

to 4 544 52 against complainapt

shipITI eI1t on the Pioneer

13 F M C
80 FEDERAL MARITIME COMMISSION

On June 7 when Glory was atCeuta and thePioneer at New York

Leavell had instructed Mohegan its freight forwarder as follows

CONFIRMING TELEPHONE INSTRUCTIONS GLORY OR PIONEER ARE

NOT TO SAIL WITHOUT PREVIOUSLY ADVISING US SO WE MAY GIVE

INSTRUCTIONS AS TO DISPOSITION OF CARGO

Mohegan conveyed the message to Hellenic that day No inst uc

tions were thereafter given by Leavell although Leav ll was kep

informed as to Hellenic s intentions On June 15 a Thursday

Leavell cabled its Khartoum representative with copies toAID and

the United States Embassy Glory sailing from Alexandria Friday

and Pioneer from New York over weekend hoth via Cape for Por

Sudan This was approximately correct thePioneer sailed from New

York Friday the 16th and the Glorysailed from Alexandria Saturday

the 17th

While the lory was sailing westward toward Gibraltar there wa

some talk between Leavell and Mohegan about the poSsibility of dis

charging Leavell s cargo at Genoa or some other Mediterranean port

Hellenic s traffic manager told Mohegan s president Seymour tha

this would involve great difficulty because 2 000 tons of cargo destined

for Jidda were on top of Leavell s cargo and would have to be dis

charged before Leavell s cargo could be reached and then reloaded

and that a deviation of Genoa would require consideration from the

standpoint of vessel and cargo insurance On the afternoon ofJune 20

when the Glory was two days from Gibraltar Seymour vired Leavel

that Hellenic refused to offload its cargo at Genoa due to excessive

exposure of damage and loss on super imposed cargo and that the

Glory and also the Pioneer were proceeding to ports of destination

via the Cape of Good Hope Hellenic s witness denied that there was a

refusal to offload and there was no evidence thereof other than the

hearsay telegram Seymour did not testify In any event the subjec

was not renewed with Hellenic after its traffic manager pointed out to

Seymour the difficulty it would involve At no time prior to the arriva

of the vessels at Port Sudan did Leavell take any firm position con

trary to or critical ofHellenic s handling ofthe situation other than

the imposition of the surcharges although it was at all tiines kep

advised ofHellenic s acts and intentions throughits freightforwarder

The Tariff8 and Bills of Lading

Hellenic had tariffs on file with the Commission and open to public

inspection These tariffs cntained rules orregulations and spe cimens

of the bill of lading evidencing the transportation agreement Ainong

the provisions of such rules and regulations and hill of ladi g

were

the following

13 F Y C
C H LEAVELL COMPANY V HE LENIC LINES IMITED 81

1 Under Rules and Regulations paragraph a of Rule 3 Ap

plication of Rates proYided as far as pertinent here

Ifthe expense of transiting the Suez Canal increases through any cause what

soever except carriers fault and or in the opinion of HELLENIC LINES

LIMITED it fs unsafe imprudent inadvisable or unlawful a Surcharge on all

freights and charges as specified herein may be levied withoutnotice regardless

of the other provisions of this Rule and owner of the goods shall pay the

Surcharge

2 Hellenic s billoflading provided in Clause 5 thereof

Without limitation of any other provision herein in ani situation whatever

or wherever occurring and whether existing or anticipated before comme nc

ment of or during the voyage which in the judgment of the carrier is likely

to give rise to risk of capture seizure detention damage delay or disadvantage

to or loss of the ship or any part of thecargo or to make itunsafe imprudent

Qi uplawf ll1or any reason to continue the voyage or to give rise to delay

or difficulty in arriving entering discharging at or leaving the port of dis

ch rge

III the carrier whether or not proceeding toward or attempting to

nter the port of discharge may proceed by any route or return directly or

indirctly to or stop at such other port or place whatever as the carrier may

consider safe or advisable under the circumstances once or oftener backwards

or forwards in any order and discharge the goods at any place he may select

there or the carrier may retain th cargo on board until a return trip or until

such time as e carrier thinks advisable and discharge the gOOds at any place

whatever as herein provided or the ca rrier may discharge and forward the

goodS by any means whatever all at the risk and expense of thegoods

The carrier shall be entitled to a reasonable extra COQ1pensation for any services

in eonnecti9p with the foregoing above the agreed freight

3 Hellenic s bill of lading provided in Clause 25 thereof

Baltic Suez Stop Clause 1956 is considered as incorporated in thepresent Bill

of Lading

The Baltic Suez Stop Clause was drafted in 1956 by theBaltic and

International Maritime Conference an association of shipping lines

and shipowners based in Copenhagen which has drawn various forms

of bills of lading and charter parties The clause reads as followR

Ifbefore thevessel commences loading navigation on the Suez Canal is inter

rupted the owners carriers shall be entitled to cancel this contract if navi

gation is interrupted as aforesaid after loading has commenced the vessel may

proceed by some other route and the freight shall be increased in proportion

to the longersailing distance

The Baltic and International Maritime Conference is not compara

able to the ordinary steamship conference it does not make rates

Hellenic is not amember and no copy of the Suez Stop Clause is on

file with the Commission as far as the record shows Hellenic sent a

copy to complainant s forwarder Mohegan and to all other shippers

13 F M C
82 FEDERAL MARITIME COMMISSION

on the vessels shortly after it deQided to divert the Glory and Pio1Lee

via the Cape Prior to that time it had not furnished or been aske

to furnish a

copy to ohegan or complainant

Although Leavell s shipment on the Glorymade up about 20 percen

of the vessels cargo there were about 1 000 shippers on the voyage

all of who except theMilitary Sea Transportation Service have pai

the 65 percent surcharge and except for complainant have mad

no complaint about it in fact Hellenic has had several telephon

calls complimenting us for fulfilling the voyage ofthe vessel Aclaim

for about 2 200 is being filed against Military Sea Transportatio

Service

DISCUSSION

The presiding examiner found that the surcharges were authorize

by the tariffs on file and the bills oflading which provided for add

tional compensation in an unspecified amount jn the event of ail un

foreseen deviation due to the outbreak of the Arab Israeli W ro

1967

The examiner reasoned that the goods were shipped under a tari

duly filed with the Commission which gave notice by rule that if

were unsafe imprudent il1advisabl or unlawful to procee

through the Suez Canal and an alternate route was used a surcharg

on all freights and charges specified in thetariffmight be levied with

out notice Since transit ofthe canal was not orily unsafe impruden

and unlawful but impossiqle a the result of circumstances whic

arose after the voyages cOlmnenced the examiner found Hellenic wa

justified in using alternate routes to reach the port of discharge

In addition the examiner relied upon the fact that the shipment

were governed by bills of lading pecimens of which were llwluded

in the tariffs filed with the Commission as provided by section 18 b

1 which contained provisions applicable to the instant situations a

part of the transportation agreement between the parties Clause 

of the bill of lading stipulated ge lerally that the carrier should b

entitled to a reasonable extra corp peJ lsation fQr any services in COl

nection with various situations arisi ng during a voyage il cluding

situations likely to result in risk ot d mage or delay in arriving a

the port of discharge or make it unsafe imprudent or uI la ful t

continue the voyage in which events the carrier might among othe

options proceed toward the port ofdischarge by qny route Clause 2

of the bill of lading incorporated qy reference the Baftic Suez Sto

Clau e 1956 which clause speci cally provided that if naviga ion o

the Suez CaneI were interrupted dQring the voyage the vess

ligh

proceed by some other route and the freight be increased in propor

tion to the longer sailing distance

13 F M C
C H LEAVELL COMPANY V HELLENIC LINES LIMITED 83

The examiner concluded that although Hellenic relied on the

Baltic Suez Stop Olause in assessing the 25 percent and 65 percent

surcharges anyone ofthe three clauses Tariff Rule 3 a billof lad

ing clause 5 or bill of lading clause 25 authorizes the charges and

satisfies section 18 b as interpreted in theAll Oargo case

1

In All Oargo the Commission sustained a

surcharge of 125 percent

assessed because the shipper s perishable cargo was kept under re

frigeration aboard the vessel at anchor orat dock during a

longshore

men s strike which caused the vessel to lose about 331h days on a

scheduled voyage of about25 days or 13 days from the lastEuropean

port to the first United States port under the followingbill oflading

p OVWl l

For any Iservice rendered to the goods as hereinabove provided the carrier

shall be entitled to extra compensation and if in following the procedure per

mitted herein the length or duration of the voyage of the ship is increased the

shipper and consignee shall pay proportionate additional freight all of which

shall be a lien on the goods

The amount o extra omp nsationcharged in AllOargo was found

to be lawful and not arbitrary not as being propor ionate to the in

creased length or durakion of the voyage but s

imply beqause it was

considerably less than the expenses for charter hire and bunkers in

curred by thecarrierduringthe period ofthestrike

The examiner found that Hellenic rendered services obviously at

increased cost to itself in connectjon with circumstances within the

conte plation of clalse 5 of its bill oflading Hellenic did not mereJy

return the goods td the port of loading as it might have done under

the bill oflading clause but carried them on to the port ofdestip ation

although in the case ofthe Glory it added a mQIth and soine 11 500

miles to its scheduled voyage in order to do so Effort was made and

action taken to delivel the goods otherwise than by the direct carriage

contemplated by Hellenic s tariff and for such services extra compen

sation was provided in the transportation agreement Hellenic was

therefore entitled to reasonable e4tr compensation by reasoJ 1 of bill

oflading clauses 5 and 25 as well as tariffrule 3 a

The examiner next considered whether under th circumstances tle

65 percent and 25 percent surcharges constituted fair and re sonable

extra compensation under the e4press and implied 1imitatipns Qf the

filed tariff rules and transportation agreement tor the services ren

dered the goods over and above the services covered by the basic

traIlsportation rates and accessorial charges

1 Erctra Gharges Gaused by Longshoremen Strike 8 F lIC 437 1965 aff d sub nom

Internati nal Paokers Ltd v Federal Maritime Gom n 356 F 2d 808 DC Cir 1966

g MC
84 FEDERAL MARITIME COMMISSION

The examiner found that in the case of the Glory the schedu

voyage from New York the voyage upon which Hellenic s und

lying rates were based would have covered about 6 000 miles a

required about 22 days The actual voyage was one of 17 565 port 

port miles exclusive of mileage to nonscheduled ports and steam

in circles while awaiting developments an increase of 193 perce

The actual time was 58 days an increase of164 percent Even if h

the carrier s total costsincluding voyage oper3Jting costs overhe

and depreciation be assumed to consist ofport and cargo costs wh

were not increased and with due consideration for the relativ

nOlninal saving of 6 000 to 7 000 in anal tolls the examiner fou

the surcharge to bereasonable

In the case ofthe Pioneer the examiner found a 6 000 mile 20 

voyage became an 11 649 mile 35 day voyage an increase of ab

94 percent in distance and 71 percent in time The examiner fou

that these facts provide a sufficient showing Qf reasonableness in 

circumstances to support a 25 percent surcharge

Leavell argues on three major points 1 whether the 1961 ame

ments to the Shipping Act as interpreted in light of their Cong

sional policy permit a carrier to depart rom its expressed tarif

any way 2 whether the tariff andbill ofladingprovisions permit

surcharges and 3 whether the surcharges if legal at all are 

sonable in amount

Leavell emphasizes the legislative history of section i8 b to est

lish a

single purpose that tariff compliance and enforcement requ

ments be strictly applied and enforced In other words Leavell arg

that in spite of emergency or other conditions and in spite of 

terms which might be included in the carrier s bill oflading the ta

rate is absolutely mandatory and no exceptions whatsoever are p

mitted In support of this proposition Leavell relies upon the fail

of the statute or the legislative history to contain any authority 

the contrary Further Leavell cites the pronouncements ofsister tra

portation agencies that no deviations shall be allowed from the 

plicable tariff In conclusion Leavell argues that there are no exc

tions to thetariff filingand enforcementrequirements ofsection 18 

Section 18 b containing tariff filing requirements applicable 

carriers in the foreign commerce of the United States was added 

PL 87 346 effective October 3 1961 These requirements are g

erally that rates must be posted and filed with the Board 30 days pr

to their effective date that terminal and other accessorial charges m

be stated separately that carriers will not charge a different rate th

thatfiled with the Board and posted publicly and thatthe Board m

13 FM
C H LEAVELL COMPANY V HELLENIC LINES LIMITED 85

establish regulations relating to the form of tariff which shall be used

by such carriers 2

The objective of section 18 b s

filingrequirements

was similarly expressed in a 1962 letter of the Chairman of the Com

mission concerning implementation ofPL 87 346

we are convinced that shippers and receivers areentitled to know

t eir transportation charges in advance and that such certainty ot charge8 is

beneficial to our foreign commerce tTe are equally persuaded that the public

interest requires the assurance of equal treatment to all who are similarly

situated Emphasis added

The emphasized words in the preceding quotation indicate the pur

pose Yf section 18 b The shipping public is entitled to be provided

with advance notice of rates certain to be charged and which will be

charged equally to all shippers for the same services This does not

mean however that in all cases and under all circumstances the condi

tions willprevail which permit strict adherence to those requirements

Business life is filled with intangible elements and non quantifiable

factors This is especially true in the business of ocean transportation

and is recognized in particular in the contracts which are employed

between carriers and shippers This beingso it can hardly be suggested

that Congress in enacting section 18 b intended to legislate away

the traditional and necessary relationships between the shipper and

carrIer

It cannot be practically expected that carriers can put a predeter

mined price on every conceivable contingency of the kind to which

ocean transportation is subject On the other hand it is equally hard

to assume that legislation is written without an awareness of contenl

porary conditions We are no longer living in the days of wind driven

wooden ships with all their navigational inadequacies

Ve cannot interpret statutory provisions in terms no longer relevant

Enlightened regulation is the key to effective regulation no regula

tory agency can permit regulation to be outstripped by new techniques

in the industry Disposition of Oontainer Marine Lines Through

lntermodal Oontainer Freight Tanffs Nos 1 and 2 FMO Nos 10 and

11 11 F l1 C 476 489 1968 See also American T1Uking Assns

Inc v A T SF By 00 387 US 397 416 1967

Consequently while we conclude that section 18 b does not preclude

r

ference to an implementation of emergency language in tariffs and

bills of lading we do not approve unlimited use of such practices It

I From letter of Secretary of Commerce to Chairman Committee on Merchant Marine

and Fisheries House of Representatives March 20 1961 recommending favorable con

sideration of the bilI HR 6775 on behalf of the Department and the Federal Maritime

Board Legislative History of the Steamship Conference Dual Rate Law 87th Cong

2d Sess Document No 100 p132

13 F M C

428 264 71 7
86 FEDERAL MARITIME COMISSION 

is not a question or conflict between the tariff filing requirements 

section 18 b and established maritime law Rather we are confronte

with the matter or the public interest which this Commission is stat

torily obliged to protect Consequently there must be a balancing oft

interests of a need for adherence to section 18 b a

recognition of t

contingencies or ocean transportation and an obedience to public 

terest standards

Under these circumstances we find no malfeasance in the actions 

Hellenic in this case and we find that in a proper case extra COlnpens

tion may be provided ror by the agreement of transportation set for

in the bill or lading with the reasonable amount thereor to be det

mined upon the occurrence and in light or the circumstances or t

contingency

However resort to clauses in tariffs or bills of lading which eff

a change in the tariff rate is closely circumscribed by the policy 

section 18 1 Ve interpret that section to mean that only where it 

impossible to file a new rate and seek special permission where 

quired will a carrier be allowed to depart from the tariff rate pursua

to emergency provisions For example this means that the emergen

must occur while the vessel is at sea or at least after the cargo h

been loaded And of course the emergency must be such that it w

unforeseeable to a prudent steamship operator in the exercise of a h

degree of diligency Cf Surcharge at U S Atlantic and Gulf Po

10 F M C 13 23 1966

Thus each case invohring an emergency departure rrOnl filed ra

will be determined on its own facts and as Te have said unlimited 

or emergency rate provisions will be subjected to severe scrutiny In 

sence however contractual relationships between the shipper and c

rier are commercial matters Itis best if shippers and ca rriers re

accommodation on such matters without government agency int

ference Consequently we hope shippers and carriers recognize 

need for their commercial practices to keep in step with the mode

zation or transportation technology

Weare not persuaded hy Leavell s reference to the decisions ofot

transportation agencies 3

These cases are distinguished simply beca

they do not concern themselves with emergency situations Likew

Leavell s reliance on the Commission s General Order No 13 46 C F 

5310 et seq is misplaced The general order applies to normal 

emergency conditions

3

United State8 v A880ciated Air Transport Inc 275 F 2d 827 5th Cir 1960 

Motor 00 v Nicholson UniversalS S 00 56 F Supp 585 D C Minn 1944 Ra din G

Oompany v Illinois Oent al Railroad 00 288 F SuPP 813 S D Ill 1968 and other c

13 F M 
C H LEAVELL COMPANY V HELLENIC LINES LIMITED 87

Leavell abjects to the strang reliance upan the All OaJ go case

LeaveIl wauld distinguish that case because here there was nO state

ment in the tariff 01 stipulatian by the shipper that the transpartatian

was subject to the terms afthe bill af lading Leaven wauld alsO dis

tinguish the case because af its feeling that there is a vast difference

between a labar strike and the clasing af the Suez Canal Leavell s

argument is based upan its cantentian that the clasing af the canal

was readily fareseeable while the typical labar strike is nat Next

Leavell wauld distinguish the All Oa1 go case because that case was

based upan the inability afthe carrier to camply with the terms af the

bill af lading that is to discharge the cargO On the ather hand 11el

lenic was able to deliver cargO to the part af destinatian it was simply

unable to use the raute that it had cantracted with Leavell to fallaw

Thus I1ellenic actually perfarmed the transpartatian in the manner

cantemplated by thebill af lading transpartatian fram T nited States

to Sudan

In All Oargo the carrier s tariff ar rates stated an its title page

that transpartatian thereunder was subject to the terms and cancli

tians Ofthe line s bill af lading and ather dacuments currently in use

by the lines a fact which nat surprisingly wasnated by the Hearing

Examiner whase decisian was adapted by the Cammissian as w1 as

by the affirming Caurt af Appeals That fact as nat essential to the

decisian hawever far under sectian 18 b 1 the specimen bi 11 af

lading is by definitian a part afthe carrier s tariffrequired to be filed

Such tariffs shall include specimens af any bill aflading con

tract afaffreightment 01 atherdacument evidencing the transpartatian

agreement

11ere respandent s specimen bill of lading wasfiledwith theCammis

sian pursuant to sectian 18 b 1 ny

that circumstance it became part

af respandent s filed tariff within the meaning afthe statute nO addi

tianal effect cauld have been abtained by mentianingit in the titlepage

af the tariff i e the dacument shawing rates and rules which in

camman parlance is usually referred to as the carrier s tariff

The differences between Hellenic s bill af lading pravisians and

thase in All Oargo are nat substantial Both bins af lading pravided

far extra campensatian mare precisely in Hellenic s case reasan

able extra campensatian althaugh theAll Oargo clause wauld certain

ly be limited by interpretatian to reasanable extra campensatian The

All Oa1ogo clause went an to pravide that if the length 01 duratian af

the vayage were increased the shipper shauld pay prapartianate

extra freight Obviausly prapartianate meant prapartianate to

the increased length or duration of the voy age This interpret3Jtion

matches theemergency language afHellenic s tariff and bill aflading

13 F M C
88 FEDERAL MARITIME COMMISSION

Therefore there is no significant legal distinction between All Oarg

and the present situation

Leavell next argues that even if section 18 b allows resort 

emergency language Hellenic s tariff and bills of lading do not justi

the surcharges Thus Leavell contends that rule 3 a contains no sp

cific formula for determining the amount of the surcharge 4 With r

spect to clause 5 of the bill of lading Leavell argues that the bill 

lading was not incorporated by reference into the tariff and is t

vague to be considered to be a valid tariff provision Finally Leav

argues that theBaltic Suez Stop Clause wasnot on filewith the Co

mission and cannot be used to justify the surcharges

Complainant shipped goods on what were mutually expected to 

normal liner voyages scheduled to proceed through the Suez Can

to the Red Sea and thence to Port Sudan They were shipped und

a tariff duly filed with the Commission which gave notice by ru

that ifit were unsafe imprudent inadvisable orunlawful to proce

throughthe Suez Canal and an alternate route wereused a surchar

on all freights and charges specified in the tariff might be levied wit

out notice In fact transit of the canal wasnot only unsafe imprude

and unlawful but impossible as the result of circumstances which aro

after the voyages commenced

As the examiner found the scheduled voyage ofthe GlO1 Y

from Ne

york the voyage upon which respondent s underlying rates we

based would have covered labout 6 000 miles and required about 

days The actual voyage was one of17 565 port to port lniles exclus

of mileage to nonscheduled ports and steaming in circles while awa

ing developments an incr ase of 193 percent The actual time was 

days anincrease of164 percent Even ifhalf the carrier s total costs

inCluding voyage oPlirating costs overhead and depreciatJion 

assumed to consist of port and cargo costs which were not increas

and with due consideration for the relatively nominal saving of 6 0

to 7 000 in canal tolls the 65 percent surcharge was reasonable 

Outbownd Rates Affecting Export High Presswre Boilers 9 F M

441 454 1966

Likewise the record shows that Pioneer sitinerary increased fro

a 6 OOO mile 20 day voyage to an 11 646 mile 35 day voyage an 

crease of about 94 percent in distance and 71 percent in time The

fore the 25 percent surcharge was reasonableunderthe circumstance

Leavell s suggestion that Hellenic s basic rates were too high is not proven on 

record

5 Leavell recalculated the additional mileages and times for both voyages Howe

Leavell s calcul8Jtlons even assuming their valldity would not compromise the re

s

ableness of either surcharge

13 F M
C H LEAVELL COMPANY V HELLENIC LINES LIMITED 89

The burden ofshowing that the charges were unreasonable is upon

complainant although the fact of substantial surcharges alone is suf

ficient to require the carrier to come forward with some proof of their

propriety Both Hearing Counsel and complainant contend that

respondent must justify its surcharge by showing its actual costs and

the increase therein attributable to the lengthened voyage That was

done in AllOargo to the extent of showing daily charter expense and

estimated fuel costs attributable to the additional time spent at anchor

but that is not the only way to show reasonableness InAll0argo the

fact that the vessel was under charter provided a

simple means of

proof In the instant case respondent s showing of increased voyage

distance and duration is sufficient to overcome any presumption of

unreasonableness and there is no basis for a

finding that the sur

charges assessed were unreasonable in the complete absence of any

proof of unreasonableness On the contrary the record supports a

positive finding that the surcharges assessed for the extra services

rendered to complainant s cargoes represented in each case a reason

able extra charge for suchservices

In addition to the tariff rule expressly directed to closure of the

Suez Canal route the shipments were governed by bills of lading

specimens ofwhich were included in the tariffs filed with the Commis

sion as provided by section 18 b 1 which contained provisions ap

plicable to the instant situations as part of the transportation agree

ment between the parties CLause 5 of the bill of lading stipulated

generally that the carrier should be entitled to a reasonable extra

compensation for any services in connection with various situations

arising during avoyage including situations likely to result in risk

of damage or delay in arriving at the port of discharge or make it

unsafe imprudent orunlawful to continue the voyage in which events

the carrier might among other options proceed toward the port of

discharge by any route Clause 25 of the bill of lading incorporated by

reference the Baltic Suez Clause 1956 which clause specifically

provided that ifnavigation of the Suez Canal were interrupted dur

ing the voyage the vessel might proceed by some other route and the

freight be increased in proportion to the longer sailing distance

Tariff Rule3 a and bill oflading clause 5 both authorize the assess

ment ofthe 25 and 65percent surcharges However we donot rely upon

the Baltic Suez Stop Clause which was allegedly incorporated by

referenceinto bill oflading clause 25 The Baltic Suez Stop Clause was

not on file with the Commission and does not appear to have been

readily available to shippers Therefore there was insufficient notice

to shippers Accordingly it cannot be given any effect and in fact

13 F M C
90 FEDERAL MARITIME COMMISSION

carriers should be very wary of relying on material which is no

on file with the COlnmission as a basis for determining rates an

surcharges

Leavell argues that Hellenic has failed to come forward with dollar

and cents justification for the level ofits surcharge Leavell specificall

objects to the examiner s emphasis upon time andmileage comparison

which are not indicative ofspecific costs Likewise Leavell argues tha

the surcharges are unreasonable because competitive carriers did no

assess such surcharges Ve see no reason why Hellenic should com

forward with additional dollars and cents justification of the level o

the surcharges The fact that competitive carriers who mayor ma

not have found themselves in situations similar to Hellenic did no

assess emergency surcharges is immaterial

Hearing Counsel an intervener in this proceeding have also ex

cepted to the initial decision ofthe examiner Initially Hearing Coun

sel argue that the examiner reached the wrong result because contrar

towell established maritime principles the examiner construedthe a

plicabletariff and bill oflading against the shipper and in faVOl ofth

carrier According to Hearing Counsel this alone is grounds for re

versal although they do not attempt to state how they would constru

the appropriate language

Ve disagree the examiner did not construe any bill of lading 

tariff provision for or against anyone He simply construed the pro

visions as they are Hearing Counsels suggestion that this is a matte

of ambiguity misses the mark

Next Hearing Counsel argued that Tariff Rule 3 a which do

not specify a sum certain for the amount of surcharges that will b

levied in the event some contingency occurs is defective In arguin

this point Hearing Counsel urge that the examiner s reliance upo

the All Oargo case is misplaced Hearing Counsel would distinguis

this case because of their feeling that the contingency in issue her

the closing of the Suez Canal was not entirely fortuitous Hearin

Counsel contend thatrespondent wasawareofthe potential closing 

the canal and should have set forth in its tariff the surcharge to 

applied inthe event thecanal wasclosed

On the contrary there was nothing in the events immediately pr

ceding the outbreak ofhostilities which gave respondent or complai

ant or anyone else reason to believe that the particular developmen

with which we are concerned would occur when and as they did Thu

there is no support in the record for Hearing Counsels predictio

that the Suez Canal crises waspredictable

13 F M C
C H LEAVELL COMPANY V HELLENIC LINES LIMITED 91

Therefore we conclude that the 65 percent and25 percent surcharges

collected from Leavell for shipments on respondent s HeUenic Glory

and Hellenic Pioneer respectively under the circumstances herein

above set forth were authorized by respondent s tariff including its

specimen bill of lading setting forth the transportation agreement

duly filedwith the Commission pursuant to section 18 b of the Ship

ping Act 1916 and werenot in violation of any provision ofthe said

section 18 b

The complaint is dismissed

SEAL

13 F 1IC

Sign d THOMAS LISI

Secretary
FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 410

B H LOVELESS CO

v

MICRONESIA INTEROCEAN LINE INC

octobe1 14 1969

Respondent permitted to refund to complainant the sum of 125 24 as a portio

of freight charges assessed and collected on a shipment of asphalt floor tile

from SanFrancisco California to Saip an

B H Loveless for complainant

KaiAnge1 lnann for respondent

INITIAL DECISION OF HERBERT IC GREER PRESIDING

EXAlilNER1

Respondent l1icronesia Interocean Line Inc a common carrier b

water in the foreign commerce of the United States has filed an appl

cation for permission to refund a portion of the freight charges co

lected from complainant B H Loveless Co a

foreign freight fo

warder on a shipment of Asphalt Floor Tiles via respondent s vess

from San Francisco California to Saipan MarianasIslands

Public Law 90 298 75 Stat 764 authorizes the Commission in it

discretion to

permit a common carrier by water in foreign commerce or conferenc

of such carriers to refund a portion of freight charges collected from a shipp

I where it appears that there is an error in a tariff of a clerical or admin

istrative nature or an error due to inadvertence in failing to file a new tari

and that such refund or waiver willnot result in discrimination among shippers

Provided further That the common arrier lby water in foreign commerce

has prior to applying for authority to make refound fi ed a new tariff with th

Federal Maritime Commission which sets forth the rate on which said refun

I would be based Provided further That the carrieragrees tha

if permission is granted by The Fedenal Maritime CommiSSion an appropriat

notice will be published in the tariff or such other steps taken as the Feder

1

ThIs decISIon became the decision of tbe CommIssIon OctOber 14 1969

92 13 F M C
B H LOVELESS CO V INTEROCEAN LINE INC 93

Maritime Commission may require which give notice of the rate on which

such refund I would be based and additional refunds I

as appropriate

shall be made with respect to other shipments in the manner prescribed by the

Commission in its order approving the application And provided further That

a1pplication for refund or waiver must be filed with the Commission within one

hundred and eighty days from the date of shipment

The application wastransmitted to the Commission on May 9 1969

and the shipment involved was under bill of lading dated February 7

J 969 thus theapplication wastimely filed

Respondent s bill of lading LA SAIPAN No 4 included 109 Car

tons ofAsphalt Floor Tile weighing 5 693 pounds to which commodity

respondent applied the N O S rate of 94 50 per 2 000 pounds and col

lected from complainant the sum of 268 99 The request for per

mission to refund is based on an agreement between respondent and the

Trust Territory of the Pacific Islands whereby respondent agreed to

assess rates no higher than those in effect for shipments moving on

Far East Line to the Trust Territory via Guam Respondent when

issuing its tariff in September 1968 listed only rates on commodities

known to be moving in the trade being to a degree handicapped by

reason of destruction of certain records by Typhoon Jean Subse

quently it found that certain commodities moving in the trade had

been omitted and in March 1969 in order to comply with its agree

ment revised its tariff to include rates on other commodities including

a rate of 50 50 per 2 000 pounds for asphalt floor tile The omission of

asphalt floor tile in the tariff at the time of the shipment here in

volved wasin thenature of an administrative error

Had the 50 50 per 2 000 POlUld rate on asphalt tile as corrected in

the March 1969 tariff revision been applied to the shipment here in

volved the freight would have been 143 75 or 125 24 less than the

amount charged andpaid by complainant

Respondent has filed its application within the 180 days statutory

period and has filed a tariff reflecting the lower rate here sought to

be applied prior to the date ofthe application One other shipment of

asphalt floor tiles was carried during the period here involved and

respondent has concurrently filed an application to make refund on

that shipment Special Docket No 409 The rate charged and col

lected having been due to administrative error since corrected re

spondent is authorized to refund to complainant the sum of 125 24

Respondent shall publish the appropriate notice referred to in the

above set forth statute and in 46 C F R 502 92 and the refund shall be

made within30 days of such notice vYithin 5 days thereafter respond

13 F M C
94 FEDERAL MARITL1E COMMISSION

ent shall notify the Commission of the date of the refund and th

manner in which payment was made

Signed HERBERT K GREER

Presiding Examiner

ORDER

It is ordered That Micronesia Interocean Line Inc refund 

B H Loveless andCo the amount of 125 24

Itis further ordered That Micronesia Interocean Line Inc publi

promptly in its appropriate tariff the following notice

Notice is hereby given as required by the decision of the Federal Maritim

Commission inSpecial Docket No 410 that effective February 7 1969 the ra

on asphalt floor tilesfrom San Francisco OaUfornia to Saipan Mariana Islan

for purposes of refunds or waiver of freight charges on any shipments wh

may have been shipped on vessels of Micronesia Interocean Line during t

period from February 7 1969 until March 13 1969 is 50 50 per 2 000 poun

subject to all other applicable rules regulations terms and conditions of t

said lIateand this tariff

I

tis further ordered That Micronesia Interocean Line notify t

Secretary on or before November 20 1969 of the date and manner 

which therefundherein ordered wasmade

Bythe Commission

Signed THOMAS LISI

Secretary

13 F M C
FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 401

HAWAII STATE STEEL COMPANY LTD

v

IrCRONESIA INTEROCEAN LINE INC

Adopted October 16 1959

Respondent permitted to refund to complainant the sum of 29 03 as a portion of

freight charges assessed and collected on a shipment of lamps from Honolulu

to Korol Palau Western Caroline Islands

INITIAL DECISION OF JOHN LRSI IALL PRESIDING EXAlHNER 1

R espondent Micronesia Interocean Line Inc a common carrierby

water in the foreign commerce ofthe United States has filed an appli

cation for perlnission to refund a portion of the freight charges col

lected from complainant Iawaii State Steel Company Ltd on a ship

ment oflamps via respondent s vessel from Honolulu to leoror

Pala

Western Caroline Islands

Public Law 90 298 75 Stat 764 authorizes the Commission in its

discretion to

It permit a common carrier by water in foreign commerce to refund

a portion of freight charges collected from a shipper where it appears that

there is an error in a tariff of a clerical or administrative nature or an error due

to inadvertence in failing to file a new tariffand that such refund will not

result in discrimination among shippers Provided further That the f

car

riel has prior to applying for authority to make refund filed a new tariff

with the Federal Maritime Commission which sets forth the rate on which said

refund c

would be based Providellfurther That the carrier agrees that

if permission is granted by The Federal Maritime Commission an appropriate

notice will be published in the tariff or such other steps taken as the Federal

Maritime Commission may require which give notice of the rate on which such

refundwould be based and additional refunds as appropriate shall

be made with respect to other shipments in the manner prescribed by the Com

mission inits order approving the application And provided further That appli

cation for refund c

must be filed with th Commission within one hundred

anl

eighty days from tIle date of shipUlent

1

This decision became the decision of the Commission October 16 1969

13 F

M

C 95
96 FEDERAL MARITIME COMMISSION

The application was transmittedto the Commission on l

iay 29 196

and the shipment involved was under bill of lading dated March 1

1969

Respondent s bill of lading No KOR 4included a shipment 

lamps totalling 85 5 cu ft Respondent applied the N O S rate 

94 50 per 40 cu ft and complainant paid the sum of 203 18 The r

quest for permission to refund is based on an agreement betwe

respondent and the Trust Territory of the Pacific Islands where

respondent agreed to assess rates no higher than those in effect f

shipments moving on Far East Line to the Trust Territory v

Guam Respondent when issuing its tariff in September 1968 liste

only rates on commodities lmown to be moving in the trade being to 

degree handicapped by reason of destruction of certain records b

Typhoon Jean Subsequently itfound that certain commodities mo

ing in the trade had been omitted and in April 1969 in order to comp

with its agreement revised its tariff to include rates on other commod

ties including a rate of 8100 per 40 cu ft for lamps The omissio

oflamps from thetariff at the time ofthe shipment here involved w

in the nature of an administrative error

Had the 8100 per 40 cu ft rate on lamps been applied to this shi

ment the freight would have been 174 15 or 29 03 less than th

amount paid by complainant

Respondent filed its application withinthe 180 day statutory perio

and prior thereto amended its tariff to reflectthe lower rate The ra

charged and collected having been due to administrative error sinc

corrected respondent is authorized to refund to complainant the su

of 29 03 Respondent shall publish the appropriate notice referred 

in the above set forth statute and in 46 C F R 502 92 and the refun

shall be made within 30 days of such notice Within 5 days thereafte

respondent shall notify the Commission of the date of the refund an

the mannerin which payment wasmade

Washington D O SEPTEMBER 24 1969

It is ordered That Micronesia Interocean Line Inc refund t

Hawaii St3Jte Steel Company Ltd the amount of 29 03

Itis furthered ordered That Micronesia Interocean Line Inc pub

lish promptly in its appropriate tariff the followingnotice

Notice is hereby given as required by the decision of the Federal Maritim

Commission in Special Docket No 407 that effective March 13 1969 the ra

on lamps from Honolulu Hawaii to Koror Palau Western Caroline Islands fo

purposes of refunds or waiver of freight charges on Shipments which may hav

been shipped on vessels of Micronesia Interocean Line on March 13 1969 

13 F M C

JOHN ltIARsHALL

Presiding Examiner
HAWAII STATE STEEL CO V MICRONESIA INTEROCEAN LINE IN C 97

8100 per 40 cu ft subject to all other applicable rules regula tions terms and

conditions of the said rate and this tariff

I

tis further ordered That Micronesia Interocean Line notify the

Secretary on or before November 20 1969 of the date and manner in

which the refund herein ordered has beenmade

By the Commission

SEAL Signed THOMAS LISI

Secretary

13 F MC
FEDERAL rvIARITli1E COi1MISSION

SPECIAL DOCKET No 411

B I LOVELESS COMPANY

V

l1rCRONESIA INTEROCEAN LINE INC

October 16 1969

Respondent permitted to refund to complainant a portion of the freight charge

assessed and collected on a shipment of insecticides and a shipment of plastic

pipe fittings between San Francisco California and Saipan Mariannas

B H Loveless for complainant

ai Angermann for respondent

INITIAL DECISION OF IIERBERT Ie GREER PRESIDING

EXAMINER 1

Respondent l1icronesia Interocean Line Inc a common carrier by

water in the foreign conlmerce ofthe United States has filed an appli

cation for permission to refund a

portion of the freight charges co

lected fronl complainant B H Loveless Co a foreign freigh

forwarder on two shipments from San Francisco California toSaipan

in the Trust Territory of the Pacific Islands Public Law 90 298 7

Stat 764 authorizes the Commission in its discretion to

permit a common carrier by water in foreign commerce or conferenc

of such carriers to refund a portion of freight charges collected from 

shipper where it appears that there is an error in a tariff of a clerica

or administrative nature or an error due to inadvertence in failing to file a ne

tariff and that such refund or waiver will not result in discrimination amon

shippers Provided further That the common carrier by water in foreign com

merce

I has prior to applying for authority to make refund filed a new

tariff with the Federall iaritime Commission which sets forth the rate on whic

said refund l would be based Provided further That the carrier

agrees that if permisSion is granted by The Federal Maritime Commission a

appropriate notice will be published in the tariff or such other steps taken a

the Federal Maritime Commission may require which give notice of the rat

1

This decision became the decision of the Commission October 16 1969

98 13 F M C
B H LOVELESS CO V MICRONESIA INTEROCEAN LINE LTD 99

on which such refund would be based and additional refunds as

appropriate shall be made with respect to other shipments in the manner pre

scribed by the Commission inits order approving the application And provided

further That application forrefund or waiver must be filed withthe Commission

withinone hundred and eighty days from the date of shipment

The application was transmitted to the Commission on May 9 1969

and within180 days ofthe date ofthe shipments

Respondent issued bill of lading SF S 21 on December 14 1969

designating complainant as forwarder E D Black as shipper and

Black Construction Company Saipan as consignee The commodities

shipped were generally described as construction materials but in

eluded by reference to a list attached to the bill of lading 9 Drums

of Insecticide measuring 56 cubic feet Respondent charged and com

plainant paid the N O S rate of 94 50 per 40 cubic feet a total of

132 30

On February 7 1969 respondent issued bill of lading SF S 24

designating complainant as forwarder Heidi Cook Ltd as con

signor and consignee The commodities described on the bill oflading

included 4 cartons of plastic pipe fittings lueasuring 36 cubic feet

Hespondent charged and complainant paid the N O S rate of 94 50

per 40 cubic feet a total of 85 05

The request for permission to refund is based on an agreement

between respondent and the Trust Territory or the Pacific Islands

whereby respondent agreed to assess rates no higher than those in

effect for shipn1ents moving on Far East Line to the Trust Territory

via Guam Respondent when issuing its tariff in September 1968

listed only rates on commodities known to be moving in the trade

being to a degree handicapped by reason of destruction of records

during Typhoon Jean Subsequently it found that certain commodi

tiesmoving in the trade had been omitted and in l1arch 1969 in order

to con1ply with its agreement revised its tariff to include rates on

other commodities In this revision a rate of 84 25 per 40 cubic feet

was set forth for insecticides and a rate of 67 25 for plastic fittings

The omission of insecticides and plastic fittings from the tariff in effect

at the time or the shipments was in the nature of an administrative

error

IIad the 84 25 per 40 cubic feet rate been applied to the shipment

or the insecticides the freight would have been 117 95 or 14 35 less

than the 132 30 charged and collected Applicationofthe rate of 67 25

to the shipment or plastic fittings would have resulted in a

freight

chaTge of 60 53 24 52 less than the 85 05 charged and collected The

total respondent requests authority to refundis 38 870

13 F l1C
100 FEDERAL MARITIME COMISSION

Respondent has filed its application within the 180 day statutory

period and has filed a tariff reflecting the lower rates here sought to

be applied prior to the date or this application One other shipmen

during the time here involved was made at the higher rate however

respondent has filed a

request to n1ake similar rerund with the Com

mission The rate charged and collected having been because or admin

istrative error since corrected respondent is authorized to refund to

complainant the sum of 38 87 Respondent shall publish the appro

priate notice referred to in the above set rorth statute and in 46 C F R

502 92 and the refund shall be made within 30 days or such notice

vVithin 5 days thereafter respondent shall notify the Commission o

the date or the refund and the manner in which payment was made

IERBERT K GREER

Presiding Examiner

vVASHINGTON D C

Septernber 934 1969

It is ordered That Micronesia Interocean Line Inc refund to

B H Loveless and Co the amount or 38 87

Itis f

urthe J orde1 ed That Micronesia Interocean Line Inc publis

promptly in its appropriate tariff the following notice

Notice is hereby given as required by the decison of the Federal Maritim

Commission inSpecial Docket No 411 that 1 effective December 14 1969 th

rate on insecticides from San Francisco California to Saipan Mariana Islands

during the period from December 14 1968 until March 13 1969 is 84 25 pe

40 cubic feet and 2 effective February 7 1969 therate on plastic pipe fitting

from San Francisco California to Saipan Mariana Islands during the perio

from February 7 1969 until March 13 1969 is 67 25 W1M The above rates a

forpurposes of refunds or waiver of freight charges on any shipments which ma

have been shipped on vessels of Micronesia Interocean Line and are subject to a

other applicable rules regulations terms and conditions of the said rates an

this tariff

Itis further ordered That Micronesia Interocean Line notify th

Secretary on or before November 20 1969 of the date and manneri

which the refund herein ordered wasmade

By the Commission

SEAL Signed THOMAS LISI

Secretary

13 F MC
FEDERAL MARITI 1E COMMISSION

WASHINGTON D C

SPECIAL DOCKET No 412

vVALTER PLUNKE lT CO lfPANY

v

MICRONESIA INTEROCEAN LINE INc

October 16 1969

NOTICE OF ADOPTION OF INITIAL DECISION AND

ORDER GRANTING REFUND

No exceptions having been taken to the initial decision of the ex

aminer in this proceeding and the Commission having determined not

to review same notice is hereby given that the decision became the

decision of the Commission on October 16 1969

It i8 ordered That Micronesia Interocean Line Inc refund to

Walter Plunkett and Co the amount of 62 28

Iti8 funther ordered That as to other matters set forth in the ap

plication herein permission to refund is denied

It i8 fwrther ordered That Micronesia Interocean Line publish

promptly in its appropriate tariff the followingnotice

Notice is hereby given as required by the decision of the Federal Maritime Com

mission inSpecial Docket No 412 that effective December 14 1968 the rates on

copper sheets and automobile parts and accessories from San Francisco

California to ports inthe Trust Territories forpurposes of refunds or waiver of

freight charges on any shipments which may have been shipped on vessels of

Micronesia Interocean Line during the period from December 14 1968 until

March 13 1969 are 7200 per 2000 pounds and 62 50 Wjlf respectively sub

ject to all other applicable rules regulations terms and conditions of said rates

and this tariff

It i8 further ordered That Micronesia Interocean Line notify the

Secretary on or before November 20 1969 of the date and manner in

which the refund herein ordered has been made

By the Commission

SEAL

13 F M C

428Z64 71 8

THOMAS LISI

Secretary

101
FEDERAL l1ARITIME COMMISSION

SPECIAL DOCKET No 412

WALTER PLUNKETT COJ fPANY

v

MICRONESIA INTEROCEAN LINE INC

Octobe1 16 1969

Respondent permitted to refund to complainant a portion of thefreight charge

assessed and collected on shipments of copper sheetsand auto parts from Sa

lfrancisco California to ports in the Trust Territories

Richard Parmenter for comp ainanrt

Kai Anger1nann for respondent

INITIAL DECISION OF HERBERT K GREER PRESIDING

EXAMINER 1

Respondent l1icronesia Interocean Line Inc a common carrier b

water in dle foreign commerce of the United States has filed an ap

plication for permission to refund a povtion of the freight charge

colleoted from complainant vValter Plunkett Company a foreig

freight forwarder on six shipments carried by respondent from Sa

Francisco Calif to ports in the TrustTerritory ofrthe Pacific Islands

Public Law 90 298 75 Stat 764 authorizes the Oommission in it

discretion to

to permit a common carrier by water in foreign commerce or conference o

suchcarriers to refund a portion of freight charges collected from a shipper

where it appears that there is an error in a tariff of a clerical or administrative

nature or an error due to inadvertence infailing to file a new tariffand that suc

refund or waiver willnot result indiscrimination among shippers Provided fu

ther That the common carrier by water inforeign commerce has prior t

applying for authority to make refund filed a new tariff with the Federal Mar

time Commission which sets forth the rate on which said refund would

be based Provided further That the carrier agrees that if permission i

granted by The FederalMaritime Commission an appropriate notice willbe pub

lished in the tariff or such other steps taken as the Federal Maritime Commis

sion may require which give notice of the rate on which such refund would

be based and additional refunds as appropriate shall be made withrespec

to other shipments in the manner prescribed by the Commission in its order ap

1

This decision became the decision of the Commission October 16 1969

102 13 F M C
WALTER PLUNKETT CO V MICRONESIA INTEROCEAN LINE LTD 103 

proving the application And provided further lhat application for refund or

waiver must be filed with the Commission within one hundred and eighty days

from the date of shipment

The application was transmitted to the Commission by respondent

on June 3 1969 and as originally submitted involved shipments made

on November 8 1968 and December 14 1968 Delay was occasioned by

the necessity to require modifications or theapplication together with

several other applications submitted by respondent Respondent was

advised by the Commission that as to the shipments or November 8

1968 refund could not be considered as the statutory time offiling had

expired Although the application as su bmitted to the examiner re

ferred to such shipments the application as to shipments made on No

vember 8 1968 is hereby denied the filing having been more than 180

days subsequent to shipment

Two shipments made on December 14 1968 are here considered The

first shipment evidenced by respondent s bill or lading SF 1 21 des

ignated complainant as the forwarder R M Taite Co as shipper

consigned to the order oftheBank of flawaii involved the following

conullodities

Item C1bbic Weight

No Commodity feet illlbs

1 Bdls Copper Sheets 38 3 687

2 Bales Plastic

Conduits

39 551

3 Ctn Plastic

Pipe

4 41

4

Fittings

36 815

5 Bdl Aluminum

Conduits

9 302

6 Ctns Bolts Anchors and Screws 21 3 550

7 Ctns

Glu0

2 38

8 Ctn Calking Compound 1 40

Freight charges were assessed by respondent and paid by complain

ant as follows

3687 Ibs @ 94 50 ST 174 21 Item No 1

88 Cu fit @ 63 50 40 139 70 Items Nos 2 3 4 5

3350 1bs @ 94 50 ST 167 74 Item No 6

3 cu ft @ 94 50 40 7 00 Items Nos 7 8

The second shipment here involved was under respondent s bill or

lading SF S12 complainant being designated as the forwarder Gates

Export Corporation as the shipper a nd as the consignee The following

commodities weredescribed in the bill oflading

Item Cubic Weight

No CommodUy feet in lbs

1 Integral Automobile Parts 26 340

Plastic Garden Hose 1 225

Freight charges assessed and paid by complainantwere

134 cubic feet @ 94 50 14 316 58

13 F l

LC
104 FEDERAL MARITIME COMMISSION

As to all commodities except those items numbered 2 3 4 and 5 in

the bill Of lading first above described respondent assessed the N O S

r3lte of 94 50 W1M

The request for permission to refund is based on an agreenlent be

tween the Trust Territory of the Pacific Islands whereby responden

agreed tto assess ratesno higher than those in e ect for shipments mov

ing On Far East Line to the TrustTerr1tory via Guam 1Vhen issuing

its tariff in September 1968 respondent listed only rates on commod

ties known Ito itto be movingin the trade being to a degree handicap

ped by reason ofdestruction of cevtain records during Typhoon Jean

Subsequently respondent found that cer tain commodities moving in

the trade had been omitted from its September 1968 tariff and effec

tive 1t1arch 14 1969 revised its tariff to include those items Coppe

sheets under the revised tariff were assessed 72 00 per 2000 pounds

auto parts and accessories N O S were assessed 3it 62 50 both W1M

Had respondent s tariff reflected its agreement with the Trust Te

r1tory at the time ofthe shipments the rate of 72 00 per 2000 pound

would have been applied to the shipment Of 3687 pounds of coppe

sheets for a total charge of 132 73 or 4148 less than the 174 21 co

lected by respondent from complainant Applying the 62 50 per 4

cubic feet rate to the autOlnobile parts lneasuring 26 cubic feet th

freight would have been 20 80 less than the freight charged and co

lected The applic3ition does not demonstraite that any other commod

ties shipped on December 14 1968 are subject to refund

The application insofar as theshipments made On December 14 1968

wastimely filed No other shipments ofthe commoditieshere involve

weremade duringthe same period Respondent had filed a tariff show

ingthe r3ites here sought rbo be applied prior to the d3lte ofthe applica

tion for permission to refund and the rate applied was omitted from

the tariff upon which the charges werebased by reason of administra

tive mistake Good cause appearing respondent Interocean Line In

corporated is authorized to refund to complainant 1Valter Plunkett

Company the total sum of 62 28 and shall publish the notice referre

to in the statute above set foDthand in 46 C F R 502 92 The refun

shall be made within 30 days after public3ltion Of such notice an

within 5 days thereafter respondent shall notify the Commission o

the date ofthe refund and the mannerin which payment wasmade A

to other matters set fOrth in the application permission to refund 

denied

HERBERT Ie GREER

Presiding EJaminer

WASHINGTON D C September 934 1969

13 F MC
FEDERAL MARITIME COlllVIISSION

SPECIAL DOCKET No 417

ENTERPRISE SHIPPING CORP

v

MICRONESIA INTEROCEAN LINE INc

October 1212 1969

Respondent is permitted to refund to complainant the sum of 33 18 as part of the

freight charges assessed and collected forthe transportation of brooms from

San Francisco Calif to Truk Trust Territory of the Pacific Islands in

February 1969

fai Ange1 mann forapplicantjrespondent

INITIAL DECISION OF C Y ROBINSON PRESIDING

EXAMINER 1

This is an applicaJtion filed by Micronesia Line Inc applicant

concurred in by complainant for permission to refund to complainant

the sum of 33 18 as part ofthecharges assessed and collected by appli

cant for the transportation ofthe cargo referred to below

On February 24 1969 rut San Francisco Calif there wasdelivered

to applicant by complainant on behalf of Associated Cooperatives

Inc among other commodities not here involved a shipment of 10

cases of brooms for carriage on applicant s vessel Aase Nielsen to

Truk TrustTerritory of the Pacific Islands On board bill of lading

No SFjT 26 was issued therefor on February 27 1969 Freight

charges of 106 31 were assessed in accordance with the rate of 94 50

per ton weight or nleasurement contained in Item 140 of applicant s

TariffNo 1 F MC No 1 applicable Ito nonharzaldous cargo NOS The

charges werepaid by complainant to applicant on March 18 1969

By agreement between applicant and the Trust Territory of the

Pacific Islands the former s rates are to be no higher than those in

effect for shipments moving via Pacific Far East Line to the Trust

lffhls decision became the declsion of the Commission October22 1969

13 F M C 105
106 FEDERAL MARITIME COMMISSION

Territory by way of Guam or moving on vessels of other carrie

serving the Trust Territory via Japan When its tariff was issued 

September 1968 applicant chose to use the same commodity items 

shown in Trust Territory of the Pacific Agreement Tariff Freig

Tariff No 2 applicable to theTrustTerritory via Japan Inconstruc

ing its tariff applicant had attempted to obtain statistics showi

commodities etc moving in the trade but was unable to do so part

because ofthe destruction of records in Saipan as the result oftyphoo

Jean Applicant thereafter learned that commodities other than tho

for which therewerespecific rates in its tariff weremoving to the Tru

Territory whereupon new rates were established as applicant becam

awareof such shipments

Atthe time ofshipment there was no specific rate on brooms in a

plicant s tariff for which reason there was assessed the rate of 94 

for cargo NOS Uponascertaining that brooms could move via anoth

carrier at a lower rate applicant amended its Itariff effective March 1

1969 by publishing a

specific rate of 65 00 per ton weight or measu

ment for Brooms Th10ps and Parts Item 110 of the tariff Att

new raJte the charges on the instant shipment would have been 73 1

The difference between the charges assessed and collected 106 31 a

the charges which would have been assessed and collected under t

new rate 73 13 amounts Ito 33 18

The failure to have on file a specific rate for brooms at the Itime th

present shipment moved was under the circumstances an administr

tive error for which applicant and complainant should not be pena

ized Applicant has complied with all ofthe preliminary requiremen

ofthe statute Inview ofthe foregoing applicant hereby is authorize

to refund to cOlnplainant the sum of 33 18 and it shall publish the a

propriate notice referredto in thestatute Refund shall be made with

30 days of such notice Within five days thereafter applicant sh

notify the Conlmission Of the date ofthe refund and ofthe manner

which paymenthas been made

Washington D O SEPTEMBER 29 1969

Signed C iV ROBINSON

P1 esiding Examine

13 F M C
FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 408

CARLTON J SIEGLER

V

MICRONESIA INTEROCEAN LINE INC

NOTICE OFADOPTION OF INITIAL DECISION AND ORDER GRANTING REFUND

Ootober 9316 1969

No exceptions having been taken to the initial decision of the Ex

aminer in this proceeding and the Commission having determined not

to review same notice is hereby giyen in accordance with Rule 13 g

ofthe Commission s Rules of Practice and Procedure that the decision

became the decision of the Commission onOctober 22 1969

Itis ordered That Micronesia Interocean Line Inc refund to

CarltonJ Siegler theamount of 125 12

It is further ordered That Micronesia Interocean Line publish

promptly in its appropriate tariff the followingnotice

Notice is hereby given as required by the decision of the Federal Maritime

Commission inSpecial Docket No 408 that effective February 7 1969 the follow

ing rates were in effect from San Francisco California to Majuro Marshall

Islands and Yap Western Caroline Islands for purposes of refunds or waiver of

freight charges on any shipments which may have been shipped on vessels of

Micronesia Interocean Line during the period from February 7 1969 until

March 13 1969 subject to all other applicable rules regulations terms and

conditions of said rates and this tariff

Commodity Rate W M

Beds and Bed Parts 75 50

Carpets Carpeting Rugs 77 50

Linoleum 68 00

Aluminum N O S 79 50

Insecticides 84 25

Pads Belts and Napkins Sanitary 70 75

Brooms Mops 65 00

Itis further ordered That Micronesia Interocean Line notify the

Secretary on or before November 22 1969 ofthe date and mannerin

whichthe refundherein ordered wasmade

By the Commission

SEAL Signed THOMAS LISI

Secretary

107 13 F M C
FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 408

CARLTON J SIEGLER

V

fICRONESIA INTEROCEAN LINE INC

Adopted October 22 1969

Respondent permitted to Tefund to complainant the sum of 125 12 as a portion 

freight charges assessed and collected on seven specified commodities shipp

from San Francisco to Majuro Marshall Islands and Yap Western Caroli

Islands

INITIAL DECISION OF JOHN MARSHALL PRESIDING EXAMINER 1

Respondent Micronesia Interocean Line Inc a common carrier 

water in the foreign commerce of the United State has filed an a

plication for permission to refund a

portion of the freight charg

collected from complainant Carlton A Siegler on shipments of sev

specified commodities via respondent s vessel from San Francisco 

Majuro Marshall Islands andYap Vestern CarolineIslands

Public Law 90298 75 Stat 764 authorizes the Commission in 

discretion to

permit a common carrier by water inforeign commerce Ito refun

a portion of freight charges collected from a

shipper where itappears th

there is an error in a tariff of a clerical or administrative nature or an error d

to inadvertence infailing to file a new tariffand that such refund lie will n

result in discrimination among shippers Provided further That the I

c

rier has prior to applying for authority to make refund filed a ne

tariff withthe Federal Maritime Commission which sets forth the rate on whi

said refundwould be based Provided further That the car

agrees that if permisison is granted by The Federal Maritime Commission 

appropriate notice will be published inthe tariff or such other steps taken as t

1This decision became the decision of the Commission October 22 1969

108 13 F M C
CARLTON J SIEGLER V MICRONESIA INTEROCEAN LINE INC 109

Federal Maritime Commission may require which give notice of the rate on

which such refund would be based and additional refunds as ap

propriate shall be made with respect to other shipments inthe manner prescribed

by the Commission inits order approving the application And provided further

That application forrefund must be filed with the Commission within one

hundred and eighty days from thedate of shipment

The application was transmitted to the Commission onMay 5 1969

and all of the four bills of lading involved 2were dated February 7

1969

The shipments in question totaled 249 cu ft Respondent applied the

N O S rate of 94 50 per 40 cu ft and complainant paid the sum of

588 26 The request for permission to refund is based on an agreement

between respondent and the Trust Territory of the Pacific Islands

whereby respondent agreed to assess rates no higher than those in effect

for shipments moving on Far East Line to the Trust Territory via

Guam Respondent when issuing its tariff in September 1968 listed

only rates on commodities known to be moving in the trade being to a

degree handicapped by reason of destruction of certain records by

TyphoonJean Subsequently itfound thatcertain commodities moving

in the trade had been omitted and in March 1969 in order to comply

with its agreement revised its tariff to include rates on other com

modities as follows

Commodity Rate W1M

Beds and Bed Parts 75 5

Carpets Carpeting Rugs 77 50

Linoleum 68 00

Aluminum N O S

79 50

Insecticides 84 2

Pads Belts and Napkins Sanitary 70 75

Brooms Mops 65 00

The omission ofthese commodities from thetariff atthetime ofthese

shipments wasinthe nature of an administrative error

Had the above commodity rates been applied the freight would

have been 463 14 or 125 12less than theamount paid by complainant

Respondent filed its application withinthe 180 day statutory period

and prior thereto amended its tariff to reflect the lower rates The

rate charged and collected having been due to administrative error

since corrected respondent is authorized to refund to complainant the

sum of 125 12 Respondent shall publish the appropriate notice re

ferred to in the 3ibove set forth statute and in 46 CF R 502 92 and

the refund shall be made within 30 days of such notice Within 5 days

2B L Number SF M 5 SF M41 SF M45 and SF YAP 3

13 F M C
110 FEDERAL MARITI1YIE COMMISSION

thereafter respondent shall notify the Commission of the date of the

refund andthe mannerin which paymentwasmade

JORN MARSHALL

Presiding Eceaminer

Washington D O SEPTEMBER 26 1969

13 F M C
FEDERAL l1ARITIME COMMISSION

VVASmNGTON D C

SPECIAL DOCKET No 414

IG E EXPORT DIVISION

11

MICRONESIA INTEROCEAN LINE INC

Novemoer fJ5 1969

NOTICE OF ADOPTION OF INITIAL DECISION AND

ORDER GRANTING REFUND

No exceptions having been taken to the initial decision of the ex

aminer served November 4 1969 in this proceeding and the Commis

sion having determined not to review same notice is hereby given that

the decision became the decision of the Commission on November 25

1969

It is ordered That J1icronesia Interocean Line Inc refund to

IG E Export Division the amount of 375 19

1t is further ordered That Micronesia Interocean Line publish

promptly in its appropriate tariff the notice set forth at page 113

Itis further ordered That Micronesia Interocean Line notify the

Secretary on or before December 24 1969 ofthe date and manner in

whichthe refund herein ordered has been made

By the Commission

13 F lIC

8 FRANCIS C HURNEY

Secretary

111
FEDERAL MARITIME COMl1ISSION

SPECIAL DOCKET No 414

IG E EXPORT DIVISION

V

MICRONESIA INTEROCEAN LINE INC

November 25 1969

Refund authorized of portion of freight charges collected because of error d

to inadvertence in failure to file a new tariff item on shipment of insulate

copper wire and cable from San Francisco California to Koror Pala

Western Caroline Islands

O F Schlehner for complainant

Kai Angermann for respondent

INITIAL DECISION OF CHARLES E MORGAN PRESIDIN

EXAMINER 1

This application under section 18 b 3 ofthe Shipping Act 191

the act seasonably filed on May 23 1969 by the respondent an

concurred in by the complainant is for permission to refund to th

complainant 375 19 as a portion of the freight charges collected on 

shipment of insulated copper wire and cable on February 27 196

from San Francisco Calif to Ioror Palau Testern Caroli

Islands

An agreement between the Trust Territory of the Pacific Island

and the respondent calls for freight rates no higher than those in effe

on shipments on vessels ofthe Pacific Far East Line via Guam or 

vessels ofvarious other carriers viaJapan to theTrustTerritory T

shipment herein was charged on the bases of a cargo N O S rate 

94 50 ViM whereas it apparently could have been moved at a ra

of 72 W1M via another carrier Pacific Far East Line

Based on the respondent s newly established rate of 72 W 

effective March 13 1969 and using the measurement rate per 40 cub

1tThls decision b e the decision of the Commission November 25 1969

112 13 F M C
LG E E TORT DIVISION V MICRONESIA INTEROCEAN LINE INC 113

feet andthe measurement of667 cubic feet ofthe shipment the freight

charges would be 1 200 60 instead ofthe charges actually collected of

1 575 79 and the respondent now seeks approval to refund the dif

ference of 375 19 No other shipment of copper wire or cable moved

on respondent s line during this period in issue and the authorization

of the refund will not discriminate among any shippers Section 18

b 3 of the act permits the Commission in its discretion and for

good cause shown to permit a refund of a portion of the freight

charges collected as in the circumstances herein provided that among

other things the carrier shall publish in its tariff the appropriate

notice referred to in statute giving notice of the rate on which the

refundis based This notice shall be as follows

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket No 414 that effective February 27 1969 the rate

on insulated copper wire and cable from San Francisco California to Koror

Palau Western Caroline Islands for purposes of refunds or waiver of freight

charges on any shipments which may have been shipped on vessels of the re

spondent from February 27 1969 until March 12 1969 inclusive is 72 00 a

tonW1M subject to all other applicable rules regulations terms and conditions

of the said rate and of this tariff

Good cause shown the respondent hereby is authorized to refund

to the complainant 375 19 provided that the respondent upon re

ceiving final permission to make this refund publishes in its tariff the

appropriate notice required by the statute The respondent shall notify

the Commission within 30 days after the date of final decision herein

of the date and manner in which the refund herein authorized was

made

WASHINGTON D C November 4 1969

13 F M C

CHARLES E MORGAN

Presiding Ewaminer
FEDERAL l1ARITIME COMl1ISSION

VVASHINGTON D C

SPECIAL DOCKET No 415

DrSCAL CORPORATION

v

MICRONESIA INTEROCEAN LINE INC

November 25 1969

NOTICE OF ADOPTION OF INITIAL DECISION AN

ORDER GRANTING REFUND

No exceptions having been taken to the initial decision ofthe Exam

iner served November 6 1969 in this proceeding and the Commi

sion having determined not to review same notice is hereby giventh

the decision became the decision of the Commission on November 2

1969

It is ordered That Micronesia Interocean Line refund to Disc

Corporation the alnountof 1196

It is further o1 dered That icronesia Interocean Line publishe

promptly in its appropriate tariff the notice set forth at page 116

It is further orde1ed That 1icronesia Interocean Line notify th

Secretary on or before December 24 1969 of the date and manner 

which the refund herein ordered has been made

By the Commission

114

FRANCIS C HURNEY

SeC1 etary

13 F M C
FEDERAL MARITIME COMI1ISSION

SPECIAL DOCKET No 415

DISCAL CORPORATION

v

MrCRONESIA INTEROCEAN LINE INC

N oVe Tnbe1 25 1969

Refund authorized of portion of freight charges collected because of error due

to inadvertence infailure to file a new tariff item on shipment of automotive

storage batteries from San Francisco California to Saipan Mariana Islands

Oarroll Heath for complainant

Kai Ange1mann for respondent

INITIALDECISION OF CHARLES E MORGAN PRESIDING

EXAMINER 1

This application under section 18 b 3 of theShipping Act 1916

the Act seasonably filed on 1ay 14 1969 by the respondent and

concurred in by the complainant is for permission to refund to the

complainant 1196 asa portion of the freight charges collected on a

shipment of automotive storage batteries on February 7 1969 from

San Francisco California to Saipan 1ariana Islands

An agreement between the Trust Territory of the Pacific Islands

and the respondent calls for freight rates no higher than those in effect

on shipments on vessels of the Pacific Far East Line via Guam or on

vessels of various other carriers via Japan to the Trust Territory

The shipment herein was charged on the basis of a

cargo N O S rate

of 94 50 a ton of2 000 pounds whereas itapparently could have been

moved at a rate of 86 00 V 1 via another carrier Pacific Far East

Line

Based on the respondent s newly established rate of 86 00 IV1M

effective 1arch 13 1969 on the per ton basis on the shipment of3 600

pounds the freight charges would be 154 80 instead of the charges

1

This decision became the decision of the Commission November 25 1969

13 F M C 115
116 DISCAL CORPORATION V MICRONESIA INTEROCEAN LINE 

actually collected of 166 76 and the respondent now seeks approv

refund the difference of 1196 No other shipment of autom

storage batteries moved on respondent s line during this perio

issue and the authorization of the refund will not discriminate am

any shippers Section 18 b 3 of the Act permits the Commis

in its discretion and for good cause shown to permit a refund 

portion of the freight charges collected as in the circumstances he

provided that among other things the carrier shall publish i

tariff the appropriate notice referred to in statute giving notice o

rate on which the refund is based This notice shall be as follows

Notice is hereby given as required by the decision of the Federal Ma

Commission inSpecial Docket No 415 that effective February 7 1969 the 

on automotive storage batteries from San Francisco California to Sa

Mariana Islands for purposes of refunds or waiver of freight charges on 

shipments which may have been shipped on vessels of the respondent 

February 7 1969 until March 12 1969 inclusive is 86 00 a ton T

1

subj

all other applicable rules regulations terms and conditions of the said rat

of this tariff

Good cause shown the respondent hereby is authorized to re

to the complainant 1196 provided that the respondent upon rece

final permission to make this refund publishes in its tariff the 

propriate notice required by the statute The respondent shallllo

the Commission within 30 days after the date of final decision h

of the date and manner in which the refund herein authorized 

made

CHARLES E MORGAN

Presiding Examin

WASHINGTON D C November 6 1969

13 F 1
FEDERAL MARITIl1E COMMISSION

WASHINGTON D C

SPECBL DOCKET No 409

INTERNATIONAL MATERIALS CORP

V

MICRO ESIA INTEROCEAN LINE INC

Decembe11 91 1969

NOTICE OF ADOPTION OF INITIAL DECISION AND

ORDER GRANTING REFUND

The initial decision of the examiner in this proceeding was served

September 30 1969 In the absence of exceptions we issued our notice

of intention to review the decision on October 24 1969

After careful review of the decision we conclude that the exam

iner s disposition of the application herein was correct and accord

ingly adopt his decision as our own

I

t is ordered That Micronesia Interocean Line Inc refund to

International Materials Corp the sum of 19 18

It is further ordered That Micronesia Interocean Line publish

promptly in its appropriate tariff the followingnotice

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket No 409 that effective December 21 1968 the

rate on tiles N OS from Los Angeles California to Koror Palau WC I for

purposes of refunds or waivers of freight charges on any shipments which may

have been shipped on vessels of Micronesia Interocean Line during the period

from December 21 1968 until March 13 1969 is 83 50 per short ton subject

to all other applicable rules regulations terms and conditions of the said rate

and this tariff

It is further ordered That Micronesia Interocean Line notify the

Secretary on or before January 9 1969 of the date and manner in

which the refund herein ordered was made

By the Commission

SEAL S FRANOIS C HURNEY

Secretary

117 13 F M C

42R 26471

9
FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 409

INTERNATIONAL MATERIALS CORP

1

MICRONESIA INTEROCEAN LINE INC

Deoember 2 1969

Respondent permitted to refund to complainant the sum of 19 18 as a portion

of freight charges assessed and collected ona shipment of tiles from Los

Angeles to Korol Palau Western Caroline Islands

INITIAL DECISION OF JOHN MARSHALL PRESIDING

EXAMINER 1

Respondent Micronesia Interocean Line Inc a common carrier by

water in the foreign commerce ofthe United States has filed an appli

cation for permission to refund a portion of the freight charges col

lected from complainant International Materials Corp on a

shipment

of tiles via respondent s vessel from Los Angeles to Koror Palau

Western Caroline Islands

Public Law 90 298 75 Stat 764 authorizes the Commission in its

discretion to

II permit a common carrier by wa ter in foreign commerce

I

to refund

a portion of freight charges collected from a

shipper where it appears

that there is an error in a tariff ofa clerical or administrative nature or an

error due to inadvertence in failing to file a new tariff and that such refund

III I will not result indiscrimination among shippers Provided further That

the carrier has prior to applying for authority to make refund

filed a new tariff with the Federal Maritime Commission which sets forth the

rate on which said refund III would Ibe based Provided further That the

carrier agrees that if permission is granted by The Federal Maritime

Commission an appropriate llotice will be published in the tariff or such other

steps taken as theFederal Maritime Commission may require which give notice

of the rate on which such refund I I would be based and additional refunds

as appropriate shall be made with respect to other shipments inthe man

1

This decision became the decision of the Commission December 2 1969

118 13 F M C
INTL MATERIALS CORP V MICRONESIA INTEROCEAN LINE INC 119

ner prescribed by the Commission in its order approving the application And

provided further That application for refund l III l must be filed with the Com

mission within one hundred and eighty days from the date of shipment

The application was transmitted to the Commission on l1ay 26

1969 and the shipment involved as under bill of lading dated De

cember 21 1968 In Special Docket No 406 the Commission held that

in accordance with rule 8 f applications deposited in the United

States mail within 180 days of the date of shipment are timely filed 2

Complainant s shipment of tiles totaled 3 488 Ibs Respondent ap

plied the N O S rate of 94 50 per short ton and complainant paid

the sum of 164 80 The request for permission to refund is based on

an agreement between respondent and the Trust Territory of the

Pacific Islands whereby respondent agreed to assess rates no higher

than those in effect for shipments moving on Pacific Far East Line

to the Trust Territory via Guam Respondent when issuing its tariff

in September 1968 listed only rates on commodities lmown to be

moving in the trade being to a degree handicapped by reason of de

struction of certain records by Typhoon Jean Subsequently it fotUld

that certain commodities moving in the trade had been omitted and

in March 1969 in order to comply with its agreement revised its

tariff to include rates on other commodities including a rate of 83 50

per short ton for tiles N Q S The omission of tiles fronl the tariff

at the time of the shipment here involved was in the nature of an

administrative error

Had the 83 50 per short ton rate been applied to this shipment the

freight would have been 145 62 or 19 18 less than the amount paid

by complainant

Respondent filed its application withinthe 180 day statutory period

and prior thereto amended its tariff to reflect the lower rate The rate

charged and collected having been due to administrative error since

corrected respondent is authorized to refund to complainant the stUn

of 19 18 Respondent shall publish the appropriate notice referred

3

The statute is remedial being intended to provide shippers some equitable

relief from the rigid provisions of section 18 b 3 of the Shipping Act 1916 Itdoes not

provide that applications must be received by the Commission before filing is accom

plished In the absence of statutory provision to the contrary the Commission is free to

consider applications filed when mailed 71 C J S 847 If such a requirement were to be

imposed applicants not willing to hazard the falllbllltles of the postal service would

be forced to hand carry applications to Washington or perhaps to a regional office of

the Commission

These applications are pleadings in the nature of complaints albeit the complainant is

hand in hand with a friendly respondent and are SUbject to the Commission s Rules of

Practice and Procedure Rule 8 f has been consistently applied to filing requirements

such as those for exceptions and replies set forth in rule 13 g General Order 13

concerns the filing of tariffs and is in no way relevant to the filing of special docket

applications or any other pleading

13 F M C
120 FEDERAL MARITIME COMMISSION

to in the above set forth statute and in 46 C F R 502 92 and the re

fund shall be made within 30 days of such notice 1Vithin 5 days

thereafter respondent shall notify the Commission of the date of the

refund and the mannerin which payment wasmade

JOHN MARSHALL

Presiding Examiner

WASHlNGTON D C September 30 1969

13 F M C
FEDERAL MARITIME COMMISSION

DOCKET No 69 33

ATLANTIC GULFWEST COAST OF SOUTH AMERICA CONFERENCE

AGREEMENT No 274430 ET AL

REPORT

December 15 1969

Agreement whereby respondent conferences are authorized to agree to and

establish through intermodal arrangements with other modes of transporta

tion approved for a period of eighteen months provided prohibition of

negotiation on such matters by individual lines is removed

John R Mahoney and Jose A Oabranes for Respondent

Conferences

Raymond P Demember and Howard A Levy for the Freight

Forwarders Institute

John Ll1ason and Robert L Dausend for Sea Land Service Inc

Fritz R Kahn Arthur Loback and Raymond M Zimmet for the

Interstate Commerce Commission

Norman D Kline Thomas A Ziebarth and Donald J Brunner

1

Iearing Counsel

By THE COMnIISSION James F Fanseen Vice Ohairman Ashton C

Barrett George 11 Hearn Oommissioners

This proceeding was instituted to determine whether nine con

ferences serving the U S South American trades could amend their

basic agreements by adding the following clause 1

Chairman Helen Delich Bentley didnot participate

1

The nine respondent conferences are Atlantic Gulf West Coast of Central America

and Mexico Conference Agreement No 8300 8 Atlantic Gulf West Coast of South

America Conference Agreement No 274430 East Coast Colombia Conference Agree

ment No 759016 Leeward Windward Islands Guianas Conference Agreement

No 7540 18 U S Atlantic Gulf Baiti Conference Agreement No 8120 8 U S

Atlantic Gulf Jamaica Conference Agreement No 4610 13 US Atlantic Gulf

Venezuela and Netherlands Ant1lles Conference Agreement No 619023 US Atlantic

Gulf Venezuela and Netherlands Antilles ConferenceOll Companies Contract Agree

ment Proprietary Cargo Agreement No 6870 77 West Coast South America

Northbound Conference Agreement No 789 G

121

13 F M C
122 FEDERAL MARITIME COMMISSION

No provision of this agreement shall be deemed to prohiibit the Conference

from agreeing to and establishing through rates by arrangement with othe

modes of transportation or to prohibit the publication and filing of through

rates by the Conference in conformity with any such rate agreement or to pro

hibit the issuance by the member lines of through bills of lading pursuant to

a published Conference tariff embodying through rates or the adoption by the

member lines of any uniform through bill of lading which may be agreed upon

and formally adopted by the Conference However no member line eithe

individually or inconcert with any other member line or lines or any non member

line or lines may negotiate establish publish file or operate under any through

intermodal transportation rates or issue any through bills of lading otherwise

than pursuant to the formal action and authorization of the Conference

In addition each agreement would be modified to remove certain

language clearly in conflict with the above

Permission to intervene was granted to Sea Land Service Inc the

Gulf Mediterranean Ports Conference the Gulf United IGngdom

Conference Gulf B altic 8 Scandinavian Sea Ports Conference the

Departnlent ofTransportation the Interstate Comlllerce Commission

and the Freight Forwarders Institute The proceeding was limited

to affidaTits briefs and oral argunlent The issues as framed in the

order instituting the proceeding are

1 Whether the concerted activities stated in the new paragraph to be added

to each agreement are approvable in the form requested by the Conference

2 The extent to which the Commission has jurisdiction to approve such

agreements

3 l he extent to which the Commission may accept for filing under section

18 b of the Shipping Act 1916 the through rate tariffs and throUgh bills of

lading that appear to be contemplated by the agreements

4 The extent of the antitrust immunity that would stem from approval of the

agreements

In Di8lJOsition of Oontainer Marine Lines 11 F l1 C 476 1968

Container l1arine Lines Cl1L filed tariffs which named rates be

tween ports in the U S North Atlantic Eastport to I

Iampton Roads

Range and inland points in the United IGngdom via the Port o

Felixstowe At the time CML was a lllember of the North Atlantic

Testbound Freight Association and the North Atlantic United

l

ingdom Freight Conference The conferences objected to the Cl1L

tariffs clailning that the transportation involved was subject to con

ference jurisdiction and only the rates in the conference s tariffs could

lawfully be charged The Commission held that the intermodal service

offered by Cl1L vas not within the scope of the conference agree

lllents and thus not subject to conference control

The conferences have stated that it is to avoid the situation in the

OlliL case that they have filed the proposed modification which would

13 F M C
ATLANTIC GULF WEST COAST OF SOUTH AMERICA CONFERENCE 123

allow the conferences to adapt to the intermodal developments with a

minimum of confusion and conflict among the member lines

DISOUSSION AND CONCLUSION

Before directing our attention to the substantive issues it is neces

sary to deal with certain procedural allegations and arguments made

by the Freight Forwarders Institute

The Institute argues that included in this proceeding as subsidiary

issues are such things as the estimated tonnage involved in opera

tions under the proposed modifications the treatment to be accorded

small shippers the basis on which inland rates will be predicated and

the manner in which interline arrangements will be established The

Institute calls for a public evidentiary hearing lest these subsidiary

issues be administratively determined without any discovery any

gathering of the facts indeed without a scintilla of evidence to sup

port the COlnmission s ultimate conclusions

The subsidiary issues raised by the Institute are simply not

presently before us Questions such as how small shippers will be

treated or how inland rates will be fixed will arise only when and if

the conferences enter into actual intermodal arrangements These

arrangements must of course be preceded by meetings discussions

and negotiations Such nleetings etc must be conducted by the con

ference within the framework and authority of the basic agreements

The proposed modifications are designed solely to insure that the

concerted activity necessarily preliminary to any intermodal arrange

ment is in fact within the authority granted by us in the respective

conference agreements Any approval we may grant to the modifica

tions here at issue would not of course extend to the particular inter

modal arrangements arrived at by the conferences should those

arrangements involve matters subject to section 15 Viewed in this

light the Institute s subsidiary issues are patently premature They

deal with questions aimed at facts and agreements which do not now

exist Thus an evidentiary hearing on these questions is not warranted

at this time

The institute places its principal reliance in Marine Space En

closu1 es Inc v Federal Maritim e 007nmission D C Cir No 22 936

July 30 1969 In Marine Space Enclosures the Court of Appeals

held that we erred in approving without any kind ofhearing a con

tract for the construction and maintenance of maritime passenger

terminal facilities and the Portof New York and a conlpanion agree

ment between carriers and thePortofNew York Authority for theuse

of the terminal The case is simply not precedent applicable to the

13F M C
124 FEDERAL MARITIME COMMISSION

issue here The Institute s reliance on the Marine Space Enclosu

case ignores the basic holding namely that What the words of 

fairly indicate is that an appropriate hearing shall be held prior 

either approval or disapproval Marine Space Enclosures sup

at 9 emphasis ours Inthis proceeding which involves no discerni

questions of fact the receipt of memoranda of law and sworn sta

ments and the hearing of oral argmllent will sufficiently develop t

issues See e gThe Oity of Los Angeles v Federal Maritime Oo

mission 388 F 2d 582 D C Cir 1967 Outward Oontinental Ilor

Pacific Freight Oonference v Federal Maritime Oommission 3

F 2d 981 D C Cir 1967

The conferences do not yet know the nature of any arrangeme

or tariffs which might emerge from the projected discussions w

carriers of other modes of transportation IIowever the conferenc

do recognize that any such arrangements and underlying facts a

circumstances will be subj ect to the scrutiny ofthe C0111mission wh

such arrangements are submitted to the Commission at a later sta

under sections 15 and 18 b ofthe Act

The renewed request for an evidentiary hearing is hereby deni

1 Approvabilit lof the modifications in their present form

The respondent conferences of course urge that the modificatio

are approvable in their present form They argue that the only p

pose ofthe modifications is to permit the conferences to participate 

the development of interllloda transportation by the use of throu

lllovements of freight between inland points in foreign countries a

inland points in the United States The modifications were filed th

say as a result of the Commission s decision in the 01J1L case and 

designed to prevent unilateral entry of conference nlembers in

the movenlent of intermodal traffic thereby avoiding the strain 

the conference structure arising in the OML case The responde

conferences stress that the modifications are necessarily broad so 

to provide for the full development of intermodal transportation 

the future even though theconferences have not at this time embark

upon any large scale containerized system of transportation in th

respective trades Accordingly they are merely here seeking 

authority to sit down with carriers and freight forwarders subj

to the Interstate Commerce Act as well as foreign carriers and f

warders to discuss arrangements for through intermodal routes a

rates and related bill of lading provisions The conferences rea

that the results of these negotiations will have to be filed with us 

appropriate tariffs oragreements

13 F M C
ATLANTIC GULF WEST COAST OFSOUTH AMERICA CONFERENCE 125

IIowever I

Iearing Counsel would substitute the followinglanguage

for that sublnitted by the conferences

Subject to approval under section 15 of the Shipping Act 1916 the conference

may enter into arrangements with other modes of transportation whereby

through rates may be agreed to and established and in conformity with any

such rate agreement may publiSh and file such through rates 1he member

lines may issue through bills of lading pursuant to a published Conference

tariff embodying through rates or pursuant to a uniform bill of lading agreed

to by the member lines and formally adopted by the conference However no

member line either individually or in concert with any other member line or

lines or any non member line or lines may negotiate establish publish file

or operate under any through intermodal transportation rates or issue any

through bills of lading otherwise than pursuant to the formal action and author

ization of the Conference at any time after the Conference has published and

filed a through rate pursuant to any arrangement which may be entered into in

accordance with this paragraph

Hearing Counsel s main problem with the modifications as they are

presently drafted concerns the possible misuse of the authority

granted in them Thus while Hearing Counsel feel that the confer

ences have taken a step in the right direction they feel that the

conferences lnay by their refusal to act to stimulate the intermodal

movement of cargo frustrate a

progressive carrier member in its desire

to establish a through intermodal movement on its own Since the

nlodifications in their present form provide that members may quote

intermodal rates only pursuant to conference tariffs a refusal by the

conference to enter into intermodal arrangements would effectively

prevent any meInber from doing so on its own initiative Hearing

Counsel would remove this impediment by providing each member

with the right of independent action achieved by adding language

to the effect that no conference member lnay establish an independent

intermodal service if the conference itself has already published and

filed rates for such a service

The conferences urge that the proposal to permitindividual member

lines of the conferences to take independent ratemaking action is

based upon a fundamental misunderstanding of the purpose and

function of conferences of steamship lines ignores other well

established devices available to the Commission in the exercise of its

regulatory functions and would not in any event accomplish its

intended purpose

Hearing Counsel s proposal appears to the conferences to be based

upon the erroneous notion that as a result of the adoption of these

proposals and amendments the conferences member lines would be

giving up the right to independent action and this mis

takenly assumes that the proposed amendments would somehow with

draw from the member lines a

right which they now possess

13 F M C
126 FEDERAL MARITIME COMISSION

The conferences contend the adoption ofHearing Counsels proposal

to preserve to the individual members of the conferences the right

of independent action would actually have the effect of establishin l

that putative right The conferences further argue that Hearing

Counsels proposal ignores explicit Congressional repudiation of the

right ofindependent action on the part ofindividual carriers within

a single conference Thus at the time of the adoption of the Dual

Rate Law Public Law 87 346 75 Stat 762 1961 it was proposed

that section 15 of that Act be amended to prohibit the approval of

agreements between carriers of conferences of carriers serving differ

ent trades that would otherwise be naturally competitive unless in

the case of agreements between carriers each carrier or in the case

of conferences each conference retained the right of independent

action The proposed amendment to section 15 was accepted only

after both houses of Congress had agreed to limit the prohibition

on carrier agreements to carriers not members ofthe same conference

The legislative history of the resulting provision in the second para

graph ofsection 15 is clear Inthewords ofthe report oftheCommittee

on Merchant Marine and Fisheries of the House of Repre

sentatives this provision was not meant to require the right of

independent action on the part of the individual carriers within a

single conference 2

We cannot agree with IIearing Counsel that a

right of independent

action is called for here It could in fact do much more hal ln than

good Any conference is but a fragile balancing ofconflicting competi

tive interests Foremost in the mind ofeach member is quite na

its own economic well being The conference is able to exist as an

entity only by restricting the individual s right to go his own economic

way Thus it is that rates are maintained at stable levels and fre

quent and reliable service is offered Current forms ofthe interlnodal

concept are new and their fruition will occur undoubtedly only after

smne experimentation and much give and take among the parties in

interest It can come about only through the cooperation of all con

cerned Thus if each member of a conference is free to pursue his

2 House Committee on Merchant Marine and Fisheries Providing for the Operation of

Steamship Oonferences H Rep No 498 87th Cong 1st Sess on HR 6775 June 8 1961

at 10 and Indea to the Legislative History of the Steamship Oonference Dual Rate Law

Senate Doc No 100 87th Cong 2d Sess at 121 emphasis supplied quoted with

approval in Senate Committee on Commerce Steamship Oonferences and Dual Rate

Oontracts S Rep No 860 87th Cong 1st Sess on HR 6775 August 31 196 at 16

and Indea to the Legislativ History of the Steamship Oonference Dual Rate Law Sltpra

at 215 See also Conference Report No 1247 Indea to the Legislative History of the

Steamship Oonference Dual Rate Law supra at 445 and 1961 US Oode Oong and

Adm News 3108 3145

13 F M C
ATLANTIC GULF WEST COAST OFSOUTH AMERICA CONFERENCE 127

own way at any point in the midst of conference efforts the possi

bility is very real that successful conference action would be

frustrated

Te are not unmindful however ofthe problem pointed to by Hear

ing Counsel A conference could through foot dragging inertia

opposition by a few members or otherwise effectively stifle the desire

of its progressive members from instituting intermodal service On

the other hand it is not the policy of the Commission to compel

carriers to offer any particular type of service when carriers deem

cOlllmercial considerations not to warrant it Thus we must find a

balance between the need to prevent inhibitions to progressive service

and to not unduly interfere in commercial matters

To accomplish this we will approve the proposed agreement modifi

cations with two limitations First we will limit the duration of our

approval and second we will grant a limited right of independent

action

The duration of our approval will be 18 1110nths During that time

conference members will be able to act in concert toward the establish

ment ofintermodal service and upon timely request to seek renewed

approval of the subject modifications IIowever if during the first

12 lllonths of the initial approval period the conferences do not

achieve any results from their negotiations which will have to be

filed with this Commission then at the end of that first 12 month

period the prohibition in the modifications against mere negotiation

by an individual member will lapse

Such limitation of the prohibition against mere negotiation will

allow any individual member in the face of the conference s failure

refusal or inability to move forward on its own to at least pre

liminarily prepare itself for the institution of its own intelnlodal

service should the conference s efforts fail cOlupletely The imposition

of a time limit on our approval should serve as an impetus to con

ference efforts Furthermore the independent efforts of individual

members during the last six months could have some bearing on a

request for renewed approval of the modifications

I

Iearing Counsel s other language changes wording to cast the

modifications in the affirmative rather than the negative The

conferences however object to this The conferences submit that their

negative formulation No provision of this Agreement shall be

deemed to prohibit is unobjectionable and preferable to the

affirmative formulation proposed by I

Iearing Counsel The nega

tivo formulation would preclude conflicting interpretations of any

and all other provisons of the several organic agreements including

13 F M C
128 FEDERAL MARITIME COMMISSION

the port to port language Thus other possibly conflicting pro

visio s of the organic agreements need not be amended or altered in

any way including the port to port language to which Hearing

Counsel refers

There is nothing inherently wrong with phrasing a modification in

the negative Since we have limited our approval to 18 months the

negative casting eliminates the need to engage in extensive remodif

cation should the present modification not receive continued approval

Finally intervenor Sea Land would substitute the following for th

conference s modification

No provision of this Agreement shall be deemed to prohibit the Conference

from agreeing to and establishing through ftlJtes routes by arrangement wit

other modes of transportation or to prohibit the publication and filing ef thraug

Pates by the Conference of rates applicable to such through routes such rates to be 

combination of the conference port to port rate and the rate applicable to such othe

mode oftransportation ffi eeftfepRH ty with fbB j

eeh fibte ttgPeeffieftt tor to prohib

the issuance by the member lines of through bills of lading pursuant to a publishe

Conference tariff embodying 4ftfflttgh paeerates applicable to through routes or th

adoption by the member lines ef ftftY Wetfgft em ef lttdffig of uniform

practices which may be agreed upon and formally adopted by the Conference i

connection with through bills oflading However no member line either individual

or in concert with any other member line or lines or any nonmember line or line

may negotiate establish publish file or operate under any through intermoda

transportation rates or issue any through bills of lading otherwise tharl pursuan

to the formal action and authorization of the Conference

Intervenor Sea Land s position is that the proposed amendment

in their present form go further than needed to accomplish the

purpose Sea Land is apparently concerned that the Conference

would be authorized to negotiate joint rates which would provide a

to the port to port segment of the joint transportation a return t

the ocean carrier which differs frOln the port to port ocean freigh

rates published by the Conferences As we have already noted th

proposed amendments to the organic agreements of the several con

ferences merely permit the conferences to n1eet with freight fo

warders and carriers of other modes of transportation to discus

arrangements for through routes and the rates and bills of ladin

related thereto The kind of arrangen1ents which may emerge from

such discussions with carriers of other modes of transportation an

freight forwarders are presently unlmown Any arrangement whic

the conferences might make under the proposed amendments woul

be reflected in agreements and tariffs filed with this Commission an

in accordance with other appropriate statutes and rules

13 F M C
ATLANTIC GULF WEST COAST OFSOUTH AMERICA CONFERENCE 129

Sea Land is premature in raising the spectre of so called port

equalization practices which it apparently feels travels in the guise

of so called joint rates The Chairman of the conferences in an

affidavit of July 29 1969 has unequivocally stated that

The proposed amendments to the organic agreements of the several Con

ferences are in no way concerned with port equalization or absorption of inland

transportation costs The proposed amendments are not designed to approve or

disapprove of either of these practices Affidavit of OlladesD Marshall July 29

1969 paragraph 11

The conferences argue that the questions raised by Sea Land can

and should be raised by it and any other interested parties vhen and

if the practices feared by Sea Land are embodied in through inter

modal transportation arrangements submitted to the Conunission ancL

otherregulatory agencies

Sea Land further asserts that the proposed amendments go too

far in authorizing the conferences to agree upon and formally adopt

a unifol Jn through bill of lading Sea Land does not explain what

conceivable interest it could have in the adoption under applicable

law of a bill or lading governing the operations or other enterprises

Nor does Sea Land explain Or cite authority for its view that the

particular provision referred to is in any way objectionable Conse

quently Ve will approve the provision as submitted provided pro

hibition of negotiations on such matters by individual lines is

removed

2 Jurisdiction over the modifications

Only the Freight Fonvarders Institute challenges our jurisdiction

over the proposedmoclifications Both lIearing Counsel and respond

ents point out that the parties to the agreements are subject to the

Shipping Act 1916 and the subject matter is appropriate to

section 15 Thus the two ingredients essential to our jurisdiction are

present They also contend that the inclusion of persons not subject

to our jurisdiction in the actions taken lUlder the agreements does

not deprive us of our jurisdiction iV e

agree

Section 15 of the Act 46 U S C S 814 requires that every

conunon carrier by yater or other persons subj Bet to the Act file

vith the Cmmnission for approval certain kinds of agreements made

with another such carrier or person subject to thel ct Under section 1

of the Act 46 U S C S 801 a common carrier by water means

inter alia a COlllJll0n carrier by water in foreign comnlerce vhich in

turn is defined as

13 lII M O
130 FEDERAL MARITIME COMISSION

a common carrier engaged in the transportation by water 

passengers or property between the United States or any of its Districts Ter

tories or possessions and a foreign country whether in the import or expo

trade

It is clear that the conferences member lines are persons subject t

the Act and that the agreements which envisage joint ratemakin

action by persons subject to the Act fall squarely within the C011

mission s

jurisdiction under section 15 Thus the only question whic

could possibly be raised regarding the Commission s jurisdiction t

approve the agreements is that they contemplate through transporta

tion arrangements which would include inland carriage in the Unite

States It is apparently the view of Freight Forwarders Institut

that because any person providing any inland transportation servic

in the United States comes under the exclusive jurisdiction of th

ICC such a person may not enter into any arrangement with a carrie

subject to the Shipping Act This view is patently wrong In th

absence of a showing that the two sister agencies claim jurisdictio

over the Salne particular activity the two agencies may exercise co

current jurisdiction over the same persons See e g

Alaba1na Gre

Southern Railroad Oompany v Federal Maritirne O

m1nission 126 U

App DC 323 379 F 2d 100 102 1967 Approval of the modifica

tions or even of the conferences subsequent through intermod

arrangements would leave unimpaired the jurisdiction ofeach agenc

over the matters assigned to its care

There is nothing unusual about a situation in which arrangemen

for through transportation service are filed with more than on

regulatory agency and each such agency limits its jurisdiction to 

particular segment ofthe throughtransportation There are any num

ber of examples of carriers who hold authority frOln the ICC 

operate as freight forwarders in inland transportation and file inlan

tariffs with the ICC vrhile filing ocean tariffs with the Commissio

See e g

Determination of Oommon Oarrier Status 6 F M B 2

1961 As the Court ofAppeals for the District of Columbia Circu

has recently noted

Where a person performs functions some of which are subject to regulati

under the Shipping Act and others under the Interstate Commerce Act t

same person might be subject to the jurisdiction of one or the other Commissio

depending upon the subject matter to be regulated Alabama Great Southe

Rail1 oad Oompany v Federal Maritime Commission supra at 102

In a related case arising under the Act and the Intercoastal Shippi

Act 1933 theCommission has held thatit is not precluded from asse

ing jurisdiction over a service offered by a common carrier subje

13 F M C
ATLANTIC GULF WEST COAST OF SOUTH AMERICA CONFERENCE 131

to the Act merely because a portion of that service is subject to the

regulation of another agency

We are merely subjecting to regulation a service authorized by the provisions

of the Shipping Act offered by a common carrier subject to that Act Ifa portion

of that service is conducted by a carrier subject to another agency s regulation

and the carrier performs that service in violation of the laws administered by

that agency that is a matter for the agency concerned Practical difficulties and

problems may arise but jurisdictional conflicts should not Matson Navigation

001nlJany Gontainer Freight Tariffs 7 F M C 480 4912 1963

3 Accepta1we of inter1nodal rates

Ye published in the Federal Register the following proposed rule

on October 18 1969 34 F R 16880

536 16 Filing of Through Rates and Through Routes

Every common carrier by water in the foreign commerce of the United States

as defined in the Shipping Act 1916 or conference of such carriers shall file

with the Commission tariffs of any through rates charges rules and regulations

governing the through transportation of freight between ports or points in

the United States and ports or points in a foreign country inwhich such carrier

or conflence participates Such tariffs shall include the names of all participat

ing carriers the established through route a description of the service to be

performed hy each participating carrier and shall clearly indicate the division

rate or charge that is to be collected by the water carrier subject to the Shipping

Act 1916 for its port to port portion of the through service which division

rate or charge shall constitute a proportional rate subject to the provisions of

the Shipping Act 1916 Such tariffs will be filed and maintained in themanner

provided in Section 18 b of the Shipping Act 1916 and this Part A memo

randum of every arrangement to which a

carrier or conference of carriers

subject to the jurisdiction of the Shi Jping Act 1916 is or becomes a party for

transportation between a port or point in the United States and a port or point

in a foreign country establishing any joint rate which is offered in connection

with any other carrier shall be filed with this Commission concurrently with

thefiling of the through ratetariffs

At present we believe that the Federal Maritime Commission has

the authority and regulatory responsibility to accept such rates for

filing but to avoid any uncertainty or confusion and to establish

coordination of regulation we instituted our rulemaking proceeding

Consequently the determination of this issue must await the out

come of that proceeding

4 The extent of the antitrust immunity stem7 Jing from approval of

the agreements

Section 15 ofthe Act provides that Every agreement modification

or cancellation lawful under this section shall be excepted from

the provisions ofthe antitrust laws

Arrangements subject to Section 15 of the Act must also be filed and approved in

accordance with the requirements of General Order 24 46 CFR 522

13 F M C
132 FEDERAL MARITIME COMMISSION

As we have already noted before the conferences member lines

may take the joint action contemplated by the agreenlents with

immunity from challenge either under the Act or under the antitrust

laws the agreements herein nlust be approved by the Commission

under section 15 of the Act

The only agreements now before us would on the one hand prohibit

individual conference meInbers from entering into intermodal arrange

Inents on their own while on the other permitting the co ferences to

do so as a whole The antitrust imnlunity which would flow from the

approval of these particular agreements presents no novel ordifficult

problems In its simplest terms it is nlerely an agreement among

competing carriers to regulate the terms of competition among theln

selves Thus the conferences and their Inember lines would be exempt

from the antitrust laws so long as they engaged in the concerted

activity authorized under the approved agreements

The question of the extent of the antitrust immunity which would

flow from the actual intermodal arrangements which would be arrived

at under the authority of the agreements before us now presents a

different question onewhich in large measure would appear to depend

upon the precise terms of a particular arrangement 1Vhile both the

conferences and flearing Counsel would appear to argue that all

parties to such arrangements would upon our approval of them be

imnlune from prosecution under the antitrust laws such a determina

tion must await the filing of such arrangements

For the foregoing reasons we will approve the amendments to the

agreements as proposed by the respondents for an 18 month period

provided however that if during the first 12 months of approval

no results are achieved from negotiations as contemplated by the

modifications then the individual members shall be free to enter into

their own negotiations

Any argument not specifically dealt with in this report has been

considered and found to be either irrelevant immaterial or unneces

sary to our decision herein

JA1IES V DAY Oommissioner dissenting

IIearing Counsel charged as we know with an advocacy for the

public interest had said that the Commission could simply disapprove

the agreements as filed as being too vague in that they do not apprise

an interested person of the scope of the activity contemplated there

under or approve them with modifications coupling however any

such approval with a strict interpretation of the meaning of the

agreements so as to delineate precisely the activities which may be

legally accomplished tmderthem

13 F M C
ATLANTIC GULF WEST COAST OFSOUTH AMERICA CONFERENCE 133

There are indeed questions preferably surveyed now better ex

plored early than late The majority recognize this in their own choice

of one possible answer with respect to safeguarding progressive car

riers from frustration because of the manner in which such agree

ments might be implemented The Freight Forwarders Institute is

concerned about the effects on forwarders and seeks therefore the

opportunity to develop underlying information and factual data

lIence Iwould support an expedited hearing before the Examiner

to ascertain the impact of such agreements with regard to the above

noted An expedited examination will not unduly interfere with the

general objectives of the agreements The parties themselves are not

unaware of the possible ramifications Precipitous approval now can

later cause greater delay to this a most significant transport

developmentthe intermodal concept

SEAL Signed FRANCIS C HURNEY

Secreta1 Y

As the Court stated in Marine Space Enclosures antitrust issues do not lend them

selves to disposition solely on briefs alld argument Even though there may be no disputed

adjudicatory facts the application of the law to the underl ing facts involves the

kind of judgment that benefits from ventilation at a formal hearing Marine Space

Enclosures Inc v FMO et al No 22 936 United States Court of Appeals for the

District of Columbia DC Circuit 420 F 2d 577 July 30 1969

13 F M C

428 26471 10
FEDERAL l1ARITIl1E COl1l 1ISSION

DOCKET No 69 33

ATLANTIC GULFl VEST COAST OF SOUTH AlfERICA CONFERE

AGREElfENT No 274430 ET AL

ORDER

This proceeding having been instituted by the Federal l1arit

Commission and the Commission having fully considered the mat

and having this date made and entered of record a Report contain

its findings and conclusions thereon which Report is hereby refer

to and made a

part hereof

1tis ordered That the modifications to the agreements under c

sideration in this proceeding are hereby approved subject to th

amendment to provide that such arrangements shall continue o

for a period of 18 nlonths from the date hereof and if during 

first 12 nlonths of the initial approval period the conferences do 

achieve any results from their negotiations which will have to 

filed with this Commission then at the end of the first 12 mo

period the prohibition in the modifications against negotiation by 

individual mClnber shall be nulland void

ftis further ordered That such agreements shall be null and v

unless the parties thereof submit appropriate modifications wit

60 days ofthe date hereof

By the Commission

SEAL Signed FRANCIS C HURNEY

Secretary

134

13 FM
FEDERAL l1ARITIl1E COl1l1ISSION

SPECIAL DOCKET No 419

MESSRS DA PRATO FLORENCE AS BUYING AGENT OF MESSRS

UNITED CHINA AND GLASS CO NEW ORLEANS

V

1ED GULF CONFERENC ON BEHALF OF 1 SSRS

LYKES BROS STEAllSHIP Co

Dece1nber 16 1969

Lykes Bros Steamship Company permitted to waive collection of a portion of

thefreight charges on a shipment of glassware frolll Leghorn Italy to New

Orleans Louisiana

G Ravera for applicant

INITIAL DECISION OF I

IERBERT Ie GREER

PRESIDING EXAMINER 1

The Med Gulf Conference on bnhaH of Lykes Bros Steamship

Company a conference member and a common carrier by water has

filed an application for permission to waive collection of a

portion of

the freight from United China and Glass Company of New Orleans

Louisiana on a shipment of glassware from Leghorn Italy to New

Orleans

Public Law 90 298 75 Stat 764 authorizes the Commission in its

discretion and for good cause shmvn to

permit a common carrier by water in foreign COlllmerce or conference of such

carriers to refund a portion of freight charges collected from a shipper or waive

the collection of a portion of the charges from a shipper where it appears that

there is an error in a tariff of a clerical or administrative nature or an error

due to inadvertence infailing to file a new tariff and that such refund or waiver

will not result in discrimination among shippers P1 ovilled fU1 ther lhat the

common carrier by water inforeign commerce or conference of such carriers has

prior to applying for authority to make refund filed a new tariffwith theFederal

Maritime Commission which sets forth the rate on which such refund or waiver

1

This decision becamethe decision of the Commission December 16 1969

13 F M C

135
136 FEDERAL MARITIME COMMISSION

would be based Provided t1wther That the carrier or conference agrees that 

permission is granted by theFederalMaritime Commission an appropriate notic

will be published inthe tariff or such other steps taken as the FederalMaritim

Commission may require which give notice of the rate on which such refund o

waiver would be based and additional refunds or waivers as appropriate sha

be made with respect to other shipments in the manner prescribed by the Com

mission in its order approving theapplication Ana p1 ovided tU1 the1 That app

cation for refund or waiver must be filed with the Commission within on

hundred and eighty days from the date of shipment

The file submitted to the examiner necessitates an examination o

the circumstances incident to the filing of the application in order t

determine whether it wasfiledwithin the statutory period of 180 days

The shipment was made onApril 14 1969 and the application origin

ally translnitted to the Commission from the conference office in Ital

by letter dated August 1 1969 vell within the 180 day period Th

application wassubmitted on the form prescribed by the Commission 

Rules and Regulations but was not signed by the complainant Lyke

Bros and the signature of the conference secretary was not notarize

The conference letter of transmittal stated that notarization was no

the local procedure usually and because you are so familiar with th

signature of the undersigned we feel that you may have no difficult

in accepting these documents as they are presented also inasmuch a

the facts are true and proper

On August 13 1969 the Commission retuTIled the application to th

conference stating th t if nota rization was a locaproblenl th

application could be forwarded to the carrier Lykes in New Orlean

for the notarized signature of an official of that company Applican

however secured the signature of the New Orleans complainant b

complied with the notarization suggestion by having the signature o

the original application notarized in Italy The notary s certificate w

dated October 27 1969 subsequent to the expiration of the 180 da

period The corrected application was promptly forwarded to th

Commission

Although the application in its final form was not transmitted 

the Commission untilafter the expiration of the l80 day period it w

originally filed well within that period Ithas been held that failu

to verify a complaint filed under section 22 oftheShipping Act 191

may be cured by verification prior to hearing and that the Commi

sion vas not deprived of jurisdiction if the unverified complaint w

timely filed although the verification was made subsequent to expir

tion of the statutory limitation Docket 6 646 Henry Gillen s So

Lighterage Inc et aZ v American Stevedores Inc tal 1 FM

3 5 1969 Public Law 90 298 does not require verification or sign

ture ofthe complainant only that a common carrier by water or co

13 F M C
MESSRS DA PRATO FLORENCE ETC V MED GULF CONF ETC 137

ference of such carriers file within 180 days ofthe date of shipment

The Commission assumed jurisdiction over the application as of the

date of the original filing and the fact that the application was re

turned to the applicant for compliance with formalities set forth in

a Conullission rule would not alter the original date of filing It is

concluded that the application was timely filed

Prior to the date of shipment April 14 1969 complainant sub

nlitted a

request to the conference for a reduction in the rate onGlass

ware N O S which was at that time 99 V The conference advised

complainant that they would consider reducing the rate to 90 V

provided the minimum quantity loaded aboard a conference vessel was

90 tons and requested complainant to reply and state whether the

reduction wassatisfactory and when thefirst shipment would be made

On April 10 1969 complainant wrote the conference that the first

shipment at the reduced rate would be moving onApril 14 1969 how

ever due toa strike involving the Italian Post Offices the letter did

not reach the conference untilApril 23 1969 The conference then filed

the new rate with the Commission effective April 28 1969 and

Lykes lllacle a manifest correction to assess the shipment at the new

rate collecting 11 373 31 1 137 33 less than would have been charged

under the 99 rate

Applicant has filed a tariff setting forth the rates here sought to be

applied prior to submission of the application No other shipments

were made of the commodity here involved during the approximate

time period complainant s shipment was carried The rate applied to

complainant s shipment was late filed by reasons beyond the control

of the parties and this late filing is properly considered as resulting

from inadvertence Good cause appearing Lykes Bros Steamship Co

is authorized to waive collection from United China and Glass Co

the sum of 1 137 33 Applicant shall publish the appropriate notice

referred to in the statute above set forth and in 46 C F R 502 9

HERBERT K GREER

Presiding Examiner

WASHINGTON D C November 934 1969

Itis ordered That Lykes Bros Steamship Co is authorized to waive

collection of 1 137 33 from United China and Glass Co

Itis furtAe1 ordered That applicant publish promptly in its appro

priate tariff the following notice

Notice is hereby given as required by the decision oftheFederallVlari

time Commission in Special Docket No 419 that effective April 14

1969 the rate on glassware N O S from Leghorn Italy to New

13 F M C
138 FEDERAL MARITIME COMMISSION

Orleans Louisiana for purposes of refund or waiver of freigh

charges during the period from April 14 1969 untilApril 28 196

is 90 W subject to all other applicable rules regulations terms an

conditions of the said rate and this tariff

By the Commission

SEAL FRANCIS C HURNEY

Secreta lY

13 F M C
FEDERAL MARITIME COMMJSSION

DOCKET No 68 29

us PACIFIC COAST AuSTRALIA NEW ZEALAND SOUTH SEA

ISLANDS TRADEUNAPPROVED AGREEMENTS

December 16 1969

Respondents failure to file for approval their agreement of June 4 1965 author

izing the payment of brokerage in the Pacific Coast Australia New Zea

land and South Sea Islands trade and their tariff rules pursuant to such

agreement violated section 15 of the Shipping Act 1916 The payment of

brokerage under the rules was the unlawful carrying out of an unapproved

agreement

Respondents agreement of December 9 1965 prohibiting the payment of broker

age and the tariffrules pursuant thereto nothaving been filed for approval

were in violation of section 15

Respondents agreement of February 1 1966 to cancel all tariff references to

brokerage and the tariff rules pursuant thereto not in violation of section

15 since cancellation was at Commission s request and no evidence of im

propriety surrounds such cancellation

Respondents not found to have operated under an unfiled agreement or under

standing not to pay brOkerage between February and May 1966 inasmuch

as no exlJress agreement is produced and individual member action is

logically explained as sound business practice

The payment of brokerage by respondents between May 1966 and February 28

1968 on shipments to Australia found to have been pursuant to an unfiled

agreement or understanding because evidence demonstrates that parallel

action question is not explainable as conduct of individual judgment

Respondents found to have not agreed to ban brokerage on shipments to New

Zealand and the lesser islands between June 1965 and August 15 1968 inas

much as no express agreement is produced and individual action is logically

explained as sound business practice

The Commission is not estopped from making findings with respect to respond

ents tariff rules which were to have become effective February 15 1966

prohibiting thepayment of brokerage inasmuch as proceeding on which such

estoppel is alleged to be based did not consider same questions

Robert L Harmon for respondents

J Richard Townsend for Pacific Coast Customs and Freight Bro

kers Association and Gerald H Ullman for New York Foreign

139
140 FEDERAL MARITIME COMMISSION

Freight Forwarders and Brokers Association Inc and Nationa

Customs Brokers Forwarders Association of America Inc

interveners

Robert H Tell G Edward Borst and Donald J Brunner Hear

ing Counsel

REPORT

By THE COMMISSION James F Fanseen Vice Chairman Ashton C

Barrett James V Day George H Hearn COlnmissioners

vVe ordered this investigation to determine whether the nlemhe

ines of the Pacific Coast Australasian Tariff Bureau Conference

01 respondents entered into and carried out understandings or ar

rangements fixing controlling or limiting compensation to freight

forwarders without Commission approval in violation of section 15

of the act The time period under investigation was June 1965 to

farch 1968 By amended order the time period vas extended to

August 15 1968

New York Foreign Freight Forwarders and Brokers Association

Inc National Customs Brokers Forwarders Association ofAmerica

Inc and Pacific Coast Customs and Freight Brokers Association

jntervened Hearing counsel also participated

Hearings were held before examiner C VV Robinson who issued

an initial decision Exceptions to the initial decision were filed and

we heard oral argument

FACTS

The conference operates under Agreement No 50 as amended in

the trade from U S Pacific coast ports and Hawaii to ports in

Australia New Zealand and the lesser South Sea islands

Of the contference members Australasia Line Ltd Japan Line

Ltd and Transatlantic Steamship Co Ltd serve or fornlerly served

Australia only Crusader Shipping Co Ltd and New Zealand

Pacific Line serve New Zealand only and Columbus Line The Oce

anic Steamship Co and Peninsular Oriental Steam Navigation

Co serve Australia and New Zealand Pacific Shipowners Ltd and

Australas1a Line were not operating in the trade at the time of the

hearing Dec 10 11 1968 Except as to Oceanic Steamship Co the

record does not show which of the lines serve thelesser islands either

direct orby transshipment

In June 1965 the member lines of the Conference were operating

pursuant to Agreement No 50 approved under section 15 of the

ChaIrman Helen Dellch Bentley did not participate

13 F M C
U S PACIFIC COAST AUSTRALIA ETC UNAPPROVED AGREEMENTS 141

act The agreement covered the establishment maintenance and reg

ulation of agreed rates and charges for transportation of cargo

in vessels of the member lines No article in the agreement contained

any specific provision with respect to the payment of brokerage or

compensation to forwarders Prior to June 1965 no carriers in the

Conference paid brokerage to forwarders in the trade area covered

by the agreement

Effective June 1 1965 Columbus Line announced that it would

pay brokerage on shipments to Australia and New Zealand At a

special meeting on June 4 the Conference voted to include a broker

age rule in its tariffs effective June 14 Such a rule was published in

both the overland and local tariffs permitting the payment of bro

kerage not exceeding 114 percent on lall cargo except heavy lift and

long length open rated commodities and certain named commodities

Neither the agremnent of June 4 northe subsequent tariff rules were

filed for section 15 approval Brokerage was paid in accordance with

the tariff rules

The Commission s staff requested the Conference by letter of Octo

bel 19 1965 to cancel the brokerage rules inasmuch as the staff

could find no authority in the organic agreement permitting the Con

ference to agree upon limitation regulation or prohibition of bro

kerage The Conference did not cancel its rules Rather at its meeting

ofDecember 9 1965 the Conference unanimously agreed that broker

age vould be prohibited This action was not filed for section 15

approval The pertinent tariff rules were amended to prohibit the

payment of brokerage effective February 15 1966 These amendments

likewise were not filed for section 15 approval

On February 2 1966 the Commission served on respondents an

order to show cause Docket No 66 5 why the proposed tariff rules

prohibiting the payment of brokerage should not be stricken from

the tariffs since they appear contrary to the order of the Commis

sion in Practices Agreements of Oommon Oarriers 7 F M C 51

1962 Docket No 831 in which it was determined that concerted

prohibition of brokerage payments is detrimental to the commerce

ofthe Unimd States On the day before the service of the show cause

order the Conference had agreed to cancel the tariff rules prohibiting

brokerage payments The cancellation was effective February 4

Amended tariff rules to this end were filed but not for section 15

approval Docket No 66 5 was discontinued on February 16

Although the rules prohibiting payment of brokerage were can

celed before their effective date the member lines nonetheless dis

continued paying brokerage after approximately February 15 1966

13 F M C
142 FEDERAL MARITIME COMISSION

Having heard that Japan Line intended to enter the Australian

trade and would pay brokerage of 114 percent the Conference held

a special meeting on May 24 1966 at which the matter of brokerage

was discussed At about this time the lines resumed the payment

of brokerage to Australia only The resumption of such payments

by each of the members corresponded with their first sailing after

the May 24 meeting The lines also exempted the same specific com

modities which had been exempted in the June 1965 tariff rule

Japan Line became a member of the Conference in March 1967

On September 14 1967 the Conference voted to amend its organic

agreement in such manner as to enable it to publish brokerage rules

in its tariffs The amendment then was submitted for Commission

approval Correspondence between the Conference and the Commis

sion s staff as to the intent and meaning of certain provisions of the

amendment resulted in a statement by the Conference Chairman that

the lines intended to pay brokerage of 114 percent to Australia only

on all commodities except lumber The amendment Agreement No

50 17 was approved by the Commission on February 28 1968 and

the overland and local tariffs were amended accordingly effective

1arch 8 Brokerage continued to be paid on shipments to Australia

up to the time of the hearing except on lumber Brokerage payments

were not resumed on shipments to New Zealand and the lesser islands

Additional facts are set forth where pertinent in the discussion

portion of this report

DISCUSSION

The examiner concluded that the Conference had violated section

15 in respect to certain arrangements or agreements concerning pay

ment of brokerage We are in partial agreement with the examiner

Our discussion of each of the alleged violations of section 15 will

demonstrate the areas of agreement or disagreement between our

conclusions and those of the examiner

1 Agreement of June 4 1965

As mentioned above the Conference on June 4 1965 in response to

Columbus Line s decision to pay brokerage to Australia and New Zea

land voted to include a brokerage rule in its tariffs The rule per

mitted the payment of brokerage not exceeding 114 percent on all

cargo except heavy lift long length open rated commodities and

certain specifically named commodities

The examiner concluded that since there was no reference to bro

kerage in the Conference organic agreement this action of the Con

ference clearly was an agreement requiring section 15 approval and

13 F l10
U S PACIFIC COAST AUSTRALIA ETC UNAPPROVED AGREEMENTS 143 

the Conference s failure to file this agreement constituted a viola

tion of section 15 The examiner also found that failure to file the

tariff rules effectuating the unfiled agreement for approval also was

a violation of section 15 and that since the lines paid brokerage under

the rules the lines were unlawfully carrying out the unapproved

agreements

On exception the Conference repeats the argument it made to

the examiner to the effect that no specific reference to brokerage is

required in the organic agreement before rules relating thereto may

be adopted The Conference states that no authority has been cited

to support the examiner s decision to the contrary

T

e have previously held that brokerage agreements among com

mon carriers regulate competition and that such agreements are

within the plain compass of section 15 Practices and AgreenMnts of

OOl11 Jnon Oarriers 7 F M C 51 57 1962 Being within the compass

of section 15 such agreements are required to be filed for approval

Ve further held in Investigation Practices Etc N AtlanticRange

Trade 10 F l1 C 95 109 1966

that while an agreement fixing or regulating the amounts of brokerage

was an agreement within the meaning of section 15 that had to be filed for

approval once a conference agreement had been approved conference arrange

ments regarding brokerage payment to forwards were permissible without

separate section 15 approval

Contrary to respondents contention the intended meaning of this

statement is that once a conference agreement which fixes or regulates

the amounts of brokerage has been approved further conference

arrangements regarding brokerage are permissible without sepa

rate section 15 approval It does not mean that once any organic

agreement has been approved further arrangements regarding bro

kerage are permissible

It follows then that unless approval of a specific provision regard

ing the fixing or regulating of amounts of brokerage has been ob

tabled further arrangements regarding brokerage payments such

as by tariff rule are prohibited without separate section 15 approval

The Conference also contends that we have previously permitted

the regulation of brokerage matters through rules and tariffs alone

They argue that our predecessor s statement in Agreements and

Practices He Brolcerage 3 U S l

fC 170 177 1949 to the effect

that respondents in that proceeding were required to ren10ve bro

kerage prohibitions whether contained in their basic confer

ence agreements the rules and regulations of their tariffs or both

13 F MC
144 FEDERAL MARITIME COMMISSION

recognizes that the practice of regulating brokerage through

tariff rules alone had been in effect

Our predecessor in the above cited case in no way passed upon the

question of whether such tariff rules were unlawful for failure to

have authority in the organic agreement Rather the case concernedl

whether tariff rules prohibiting the payment of brokerage had been

correctly and adequately fou ld to be detrimental to the commerce of

the United States and contrary to the public interest

The Conference alternatively argues that since its organic agree

ment contains broad authority to regulate matters which affect the

establishnlent 111aintenance and regulation of agreed rates and

charges conference action regarding brokerage paYlnents COlnes with

in the terms of the agreement The Conference s point is that pay

Inent of brokerage to freight forwarders is a factor in ratemaking

and accordingly it should be dealt with as are other ratemaking

Inatters by tariff rules under the authority conferred in the Confer

ence organic agreement

The Conference s argmnent would be well taken if it had specific

authority in its organic agreement to regulate brokerage similar to

the authority to regulate rates 1Vhile we recognize that payment of

brokerage might in some way ultimately affect the ratemaking proc

ess we want to reemphasize that specific reference to payment of

brokerage must be contained in an approved conference agreement

before regulation of brokerage by a conference of carriers can be

accomplished by tariff rules

The Conference has also argued that section 15 filingand Commis

sion approval were not necessary for its agreement of June 4 1965

because the agreement did not require the parties thereto to do any

thing different from that which they already were entitled to do

under the law without such an agreement More specifically the Con

ference argues that since section 15 ofthe ShippingAct 1916 requires

the filing of agreements which control regulate prevent or destroy

competition an agreement permitting thepayment ofbrokerage which

the parties thereto are free to disregard cannot control regulate pre

vent or destroy anything A closer scrutiny of the agreement shows

that the conference members were not free to disregard the agreement

The agreement provided that when the conference members paid bro

kerage their payments could not exceed 1 percent and payments

couldnot bemade on heavy lift land long length cargo open rated com

modities or certain specified commodities Such restrictions and pro

hibitions clearly control regulate prevent or destroy competition

Therefore the agreement of June 4 1965 and the resulting tariff rules

13 F M C
U S PACIFIC COAST AUSTRALIA ETC UNAPPROVED AGREEMENTS 145

weresubject to filing for approval under section 15 and the failure to

file is a violation of section 15

As the examiner found it is undisputedthat the lines paid broker

age under the tariff rules This constituted an unlawful carrying out

of an unapproved agreement

2 Ag1 eement of December 9 1965

As stated above the Conference onDecember 9 1965 agreed to pro

hibit the payment of brokerage and filed an amendment to its tariff

rules to this effect to be effective February 15 1966 The examiner

concluded that the Conference s failure to file the amendment for

approval resulted in a violation of section 15 The rules were subse

quently canceled before their effective date

The Conference has excepted to the examiner s

findings in respect

to the December 9 1965 agreement It is contended that the agree

ment was contingent on Commission approval and was not intended

to be effective until February 15 and since it never in fact became

effective no violation of section 15 can be found

The Conference argues on exception that its action of December 9

was taken subject to Commission approval The Conference recog

nizes that no evidence was introduced at the hearings held in this

matter to demonstrate that Commission approval was sought for the

Tule in question The Conference however seeks to show on excep

tion that its counsel initiated correspondence with the Commission to

determine the necessity of additional section 15 authority This cor

respondence is said to show that Commission approval was intended

to be obtained and that the agreement in question was pending ap

proval at the date of its cancellation

We find no support in the record for the proposition that the

agreement ofDecember 9 1965 and the tariff rules pursuant thereto

were pending section 15 approval The only way in which they could

have been submitted for approval was pursuant to the procedure for

filing agreements with the Commission under section 15 The Confer

ence and its counsel were obviously familiar with this procedure

since agreements of the Conference had previously been filed for the

Commission s approval However the only filing received by the

Commission staff was an amendmen to the Conference s tariff rules

which shows the Conference agreed to prohibit brokerage payments

This filing does not constitute a filing which could be construed as a

section 15 filing seeking approval of the Conference action The cor

respondence which theConference submitted onexception further dem

onstrates that the only filing received by the Commission was the

amendment to the tariff rules That the agreement in question had

13 F M C
146 FEDERAL MARITIME COMMISSION

not been filed for approval is demonstrated by the reply of the Com

mission staff which cautions the Conference that implementation of

the filed tariff rules would be an effectuation of an unapproved modi

fication of the conference agreement However the agreement had

already been reached and no approval had been sought

In answer to the Conference s contention that no section 15 viola

tion can be found because the tariff rules never became effective we

need only repeat what we have already said in 111edite1 ranean Pools

Investigation 9 Flt1 C 264 1966 wherein we stated at page 301

that

Section 15 actually renders unapproved agreements unlawful in two situa

tions First section 15 requires that agreements when reached must be imme

diately filed with the Commission Thus an agreement which is made but no

filed tor approval is unlawful even though no aotion is taken by the parties

under it Secondly section 15 makes it unlawful to carry out in whole

or inpart directly orindirectly an unapproved agreement Emphasis supplied

Thus while the Conference canceled the December 9 1965 agree

ment prohibiting payment of brokerage it nevertheless failed to file

it immediately for approval as required by section 15

3 The agreement of February 1 1966

On February 1 1966 the Conference agreed to cancel the brokerage

rules in their entirety and amended its tariff to this end effective

February 4 The examiner found the February 1 1966 cancellation

to constitute an unfiled agreement in violation of section 15

The Conference takes violent exception to this conclusion charac

terizing it as unreasonable and unjust The Conferenec asserts tha

its brokerage rules were canceled in compliance with requests of the

Commission s staff The staff sought I cancellation because the basic

conference agreement contained no authority to regulate brokerage

There is no question that the Commission staff actively sought to have

the Conferenec remove all tariff rules relating to brokerage inasmuch

as the basic conference agreement contained no authority to reglL

late brokerage It appears that the Conference action to remove th

brokerage rules was undertaken as a result ofthe staff s efforts There

is no evidence that the Conference undertook the action for its ow

benefit and no evidence of any impropriety on the part of the Con

ference in respect to such action

In view of the circumstances surrounding the Conference action

we find that no violation of section 15 can attach to the Conference 

failure to filethe agreement in question

4 Agreement not to pay brokerage after February 15 1966

As mentioned above all references in the Conference tariffs to bro

t3 F M C
U S PACIFIC COAST AUSTRALIA ETC UNAPPROVED AGREEMENTS 147

kerage were removed February 4 1966 The record shows however

that brokerage ceased to be paid by the Conference lines after approxi

mately February 15 1966 with the date for a particular line depend

ing upon the position of the individual vessels

The intervening forwarder associations and hearing counsel took

the position before the examiner that in spite of the cancellation of

all reference to brokerage in the tariff rules the Conference members

agreed to carry out the February 9 1965 agreement to discontinue

brokerage payments effective February 15 1966 They argued that

even though no express understanding to this effect has been shown

the parallel action of all the members sufficiently demonstrates the

existence of such an agreement or understanding

The examiner found that the lines did not operate under an unfiled

agreement or understanding not to pay brokerage after February 14

1966 He recognized that the lines fully intended as of December 9

1965 to stop paying brokerage Hereasoned however that on Febru

ary 4 1966 when all reference to brokerage was removed from the

tariff rules the groundwork already had been laidnot to pay broker

age and no further collective steps were needed for the lines to indi

vidually return to the practice which had existed in the trade for

years prior to June 1965 The examiner also observed that having

been checked up sharply by the Commission s staff for not having

any basic authority for brokerage the Conference would not likely be

so foolish as to undertake an informal agreement not to pay broker

age He stated that whereas the lines inquired among themselves

as to whether brokerage was being paid this is further indication

that there was no agreement orunderstanding not to pay brokerage

Interveners have excepted to the examiner s findings in this respect

They argue that an agreement is shown to exist by virtue of a par

ticular sequence of events The carriers all of which were paying

brokerage got together and agreed on December 9 1965 that effec

tive February 15 1966 they would discontinue the payment of all

brokerage The Federal Maritime Commission notified the Confer

ence that this appeared to be an unlawful agreement Interveners state

that although the Conferenec then agreed to cancel the agreement

each of the carriers proceeded to discontinue the payment of bro

kerage effective on the previously agreed date of February 15 1966

or with their next sailing thereafter Interveners conclude that the

carriers were obviously carrying out their supposedly canceled

agreement

Interveners also attack the examiner s reasoning Interveners state

that almost every line or the examiner s statement or reasoning sup

13 F M O
148 FEDERAL MARITIME COMMISSION

ports rather than negates the finding of an unlawful agreement

Interveners point to the examiner s acknowledgment of the intent

of the lines concertedly reached on December 9 1965 to stop paying

brokerage They allege that no subsequent action was taken by the

Conference to nullify this agreement Interveners characterize the

examiner s acknowledgment that the December 9 1965 agreemen

laid the groundwork for discontinuance of brokerage payments as

fortifying a finding of an unlawful agreement They suggest tha

after the lines jointly laid the groundwork it is not believable tha

subsequent conduct was arrived at individually Interveners also state

that when the examiner says that no further collective steps were

needed to put the policy of discontinuing brokerage payments into

effect he should have recognized that the member lines had taken al

the collective action required to effectuate their unlawful agreemen

and that nothing further needed to be done Interveners wonder how

the examiner could have logically concluded that no agreement existed

and that the subsequent conduct was arrived at individually

Ve agree with the examiner that no unlawful agreement or under

standing is shown to exist in respect to the conference lines decision

to discontinue payment of brokerage Ve find the arguments on ex

ception to be unpersuasive

Vhile the sequence of events outlined by interveners taken alone

would portray a picture of concerted action or agreement by the Con

ference members we conclude that in the absence of evidence of an

express agreement the counter explanations offered by the Confer

ence cast sufficient doubt on the existence of such an agreement Ac

cordingly we conclude that the record will not support a finding o

a section 15 violation in respect to the alleged agreement

Itis indeed plausible that the Conference members acted individu

ally For some 20 years prior to June 1965 brokerage had never been

paid by the Conference members Vhen the Conference first com

menced paying brokerage and adopted a rule permitting such pay

ment it did so in response to the institution of brokerage payments

by Columbus Line InDecember 1965 the Conference members agreed

to prohibit the payment of brokerage and issued a rule to that effect

Itdid so on the basis that experience under the previous rule permit

ting payment had demonstrated no real advantage to be gained by

payment of brokerage The Conference had repeatedly been warned

by the Commission staff of its lack of authority to issue such a rule

Vhen in response to this pressure the Conference canceled all of

its tariff rules and reference to brokerage it is not too surprising that

the Conference memoors individually would revert to the practices

13 F lfC
U S PACIFIC COAST AUSTRALIA ETC UNAPPROVED AGREEMENTS 149

which had been in effect before the Conference had any rules relat

ing to brokerage i

e no brokerage would be paid This is especially

true in view of the experience gained by the lines that payment of

brokerage had not been beneficial and in view of the fact that com

monsense would dictate each line to remove the burden of brokerage

payment in the absence of any compelling need for such payments

Interveners cite Unapp o ved Sect 15 Agreements S African

Trade 7 F l1 C 159 1962 for the proposition that proof of an ex

press agreement is not necessary to find a violation when evidence of

obvious parallel action on the part ofthe parties to the alleged agree

ment indicates an undel stallding or agreement is being carried out

Interveners ask us to apply the SOlttll African case to this situation

and to conclude that the Conference members werein fact carrying out

an agreement to discontinue brokerage payments

Ve fully agree with the principle of the South African case How

ever we think that fairness would not permit its application to this

fact situation

In the South African case as here the examiner had concluded

that the respondents had not entered into or carried out any agree

ment in violation of section 15 In reversing this conClusion the Com

mission at page 187 said

The examiner likewise had difficulty in tbis respect His report aclmowledges

that responde ts held numerous rate discussions and conferences and that these

covered various rate matters including the 15 percent general increase that all

of them put into effect on March 1 1955 and the plan for 48 hours advance notice

of a rate change The examiner further found that respondents discussions nd

conferences generally but not always resulted in the quotation of similar

rates and by February 1956 had resulted in Robin Farrell Lykes Dreyfus

Nedlloyd and Safmarine having rates on most items that were identical In

our view such findings logically lead to a conclusion just the opposite from

the one the examiner reached

We cannot regard obvious anticompetitive activity as though it were normal

business conduct Nor can we regard the use of parallel rates following joint

rate discussions as though it were the fortuitous product of independent judg

ment or just the result of business economics Both law and reason demand

of us a considerably more realistic approach than this Persons subject to the

act who eAPOect us to give credence to such claims should conduct their activi

ties in a way that is consistent with the claims I I

The South African case involved the setting of identical specific

rates by several carriers on several specific items Itis indeed difficult

to fathom how such action could be the fortuitous product of inde

pendent judgment In this case however we have several carriers

each deciding to discontinue a single practice of paying brokerage

13 F MC

428 264 71 11
150 FEDERAL MARITIME COM1 1ISSION

and reverting back to the previous practice of 20 years standing

The two situations are similar but not comparable

vVhile an inference of concerted activity can be drawn from the

action of the Conference members we think that the possibility o

individual determination is sufficiently plausible so as to render un

warranted a

finding of concerted activity and to preclude a

finding

of a violation As mentioned above this conclusion is supported by

the evidence that the Conference members individually and collec

tively were not satisfied with the results of their experiment in

paying brokerage

Interveners stress that brokerage payments were discontinued by

all the lines on or about the same date and that this discontinuance

corresponded with the date that the Conference members previously

had agreed would be the cutoff date for payment of brokerage

Itcannot be denied that the Conference members had intended to

concertedly discontinue brokerage payments effective February 15

1966 They had done so on the basis of agreed dissat sfaction wit

their recent experience of paying brokerage Vhen the rules relating

to brokerage were canceled at the insistenye of the Commission staff

and it was then up to the individual Conference members to decide

whether to continue brokerage payments could we expect that the

individu llineswould ignore what they had learned abopt

the experi

enc ot all the Conference members in respect to lack of benefit from

brokerage payments We think not To so conclude would place the

lines in a true dilemma They could continue to make the unprofitable

and undesirable brokerage payments and avoid accusations of carry

ltlg out an lnapproved agreement or they could discontinue uch pay

ments and be subject to accusations of violating section 15 We do

not think that when it became incumbent on the individual lines to

decide about brokerage they could be expected to act as if they did

not have the benefit of the experience of their fellow members in

relation to the profitability of paying brokerage

5 Payment of brokerage com7nencing 1

ay 1966

As mentioned above in May 1966 Japan Line announced its future

entry into the Australian trade and the payment by it of brokerage

The Conference held a special meeting onMay 24 at which brokerage

was discussed The payment of brokerage by the member lines was

resumed on shipments to Australia at about that time Payments were

withheld on the same specific commodities previously exempted by

rule vVhile payments by the member lines did not start simultaneously

the evidence shows that the payments started for each member line

13 F M C
U S PACIFIC COAST AUSTRALIA ETC UNAPPROVED AGREEMENTS 151

on the first sailings after the announcement by Japan Line and the

meeting of the Conference members

The examiner concluded that the persuasive evidence negatives the

idea of any concerted action on the part of the ines He relied sub

stantially on interoffice memoranda and letters or Conference mem

bel s which indicated that each line recognized that it would decide

on its own as to the payment of brokerage He stated that the fact

that there was uniform exclusion of brokerage on the specific com

modities did not necessarily reflect uniform action for those com

modities had been exempt as far back as June 19 5 He stated that the

lines individually were doing just what they did collectively between

June 1965 and February 1966 and that whatever payments were

made at thistime wereby the individual lines for competitive reasons

alone taking into consideration their best interests

lIe concluded that during the period under consideration there

was no agreement or understanding by the conference lines either

direct or implied to pay brokerage and hence there was nothing for

them to file for section 15 approval

Interveners except to this conclusion and urge that the unanimous

resumption of payment of brokerage was pursuant to an agreement

among the Conference members They state that at the Conference

meeting of ltIay 24 concerted agreement was reached inasmuch as all

of the lines proceeded to take uniform action in resuming the pay

ment of brokerage all of them proceeding to pay brokerage of 114

percent ofthe freight only to Australia and not to New Zealand and

excluding brokerage on the specific commodities which had previously

been excluded in the Conference tariff effective June 14 1965 Inter

veners state that such uniformity of action could not possibly have

been sheer coincidence and that it shows that the lines were success

ful in reaching an agreement on brokerage

Ve agree with interveners and conclude that the evidence relating

to the action of the Conference members in respect to their resump

tion of brokerage payments leads to the conclusion that concerted

action was taken

The circumstances surrounding the resumption of brokerage pay

ments in this instance are more similar to those in the South African

case discussed above In this instance the entire Conference mem

bership took precisely the same action in very minute detail As

pointed out by the interveners each line resumed payment of broker

age at the sallie specific level in respect to a single particular trade

excluding payments on the same specific commodities As was indi

cated in the South A f1 ioan case such obvious parallel action follow

13 F M e
152 FEDERAL MARITIME COMMISSION

ing joint discussion could not be the fortuitous product of independe

judgment or merely the result of business economics

The Conference maintains howeyer that it was a matter of bus

ness economics since freight forwarders maintain a powerful pos

tion in the shipping industry and any line which did not respon

to another line s announcement that it would pay brokerage by al

commencing the payment of brokerage would soon find itself o

of business

vVe understand the stated justification for instituting payment 

brokerage Howeyer it is not readily apparent that if left to ind

yidual determination each line would feel compelled to resume bro

kerage payments especially in view of the recent experience of th

lines that brokerage payments were not so beneficial What we fin

unlawful is not the decision to meet competition but the manner 

which it was accomplished In order to meet the competition ofJapa

Line the Conference members reached an understanding unautho

ized under the approved agreement to resume payments ofbrokerag

on shipments to Australia However lawful the objective it may n

e accomplished unlawfully

Additionally we think much of the correspondence upon which th

examiner relies for his conclusion will equally support our conclusio

The examiner quotes from a letter written by Columbus Line 

its New york agent the day before the Conference met to discus

brokerage Columbus Line informed its agent that two carriers alread

indicated a willingness to pay brokerage and that two othe

would not follow suit and that another carrier will undoubted

eventually agree

On the same day prior to the fay 24 meeting Oceanic Steamsh

Co advised its local representatiyes that some of the Conferenc

members had auyised that they would pay brokerage and that ther

fore Oceanic would follow suit

Then on May 27 3 days after the Conference meeting Crusad

ShippingCo Ltd s California agent informed its principal in Londo

that the matter of brokerage had been discussed at the Conferenc

meeting and that tliey belieyed brokerage payments would be limite

to Australia

The correspondence written the day before the Conference meetin

indicates the lines were conferring with each other on the matter 

brokerage at least to get an idea as to what each line was doing 

the matter and most likely with a view toward reaching agreeme

of all members The descriptions that certain lines will follow su

and other will eventually agree indicate cooperation among t

13 F M C
U S PACIFIC COAST AUSTRALIA ETC UNAPPROVED AGREEMENTS 153 

lines was intended Then whcn the lines uniformly institute the prac

tice of paying brokerage it is logical to conclude that the lines suc

ceeded in reaching the agreement which the correspondence indicates

they were trying to reach

6 Brokerage to LVew Zealand and the lesser islands

It had been alleged by hearing counsel and interveners that the

Conference members agreed to discontinue or prohibit payment of

brokerage on shipments to New Zealand and the lesser islands

The decision to ban such brokerage payments was said to have been

reached on December 9 1965 As discussed above the Conference

on that date amended its tariff to prohibit payment of brokerage

The prohibition was to apply on shipments to New Zealand as well

as to Australia It was alleged that the December 9 1965 prohibi

tion was put into effect around February 15 1966 and has continued

in effect up to the time of hearing

The examiner stated that the evidence regarding brokerage pay

ments on shipments to New Zealand is meager He concluded that

there was no evidence of an agreement by the Conference not to pay

brokerage to New Zealand and the lesser islands during the periods

under investigation in this proceeding

Technically the examiner is incorrect The record is clear that

the December 9 1965 agreement to prohibit payment of brokerage

was to apply on both shipments to Australia and New Zealand In

this sense the Conference did agree to prohibit payments on ship

ments to New Zealand We have found that this agreement was

entered into unlawfully However as is also indicated above the

rules accomplishing this prohibition were canceled prior to their

effective date and we have also concluded that when the Conference

members in February 1966 individually discontinued payments of

brokerage to Australia they were not concertedly carrying out their

canceled agreement There is no evidence that the discontinuanc at

the same time of such payments on shipments to New Zealand was

reached in a different fashion

Interveners suggest that in June 1966 when the Conference resumed

payments in shipments to Australia the Conference agreed to con

tinue the prohibition on shipments to New Zealand Again there is

no evidence to this effect Having determined that the original dis

continuance of such payments was arrived at individually and there

being no competitive reason for the Conference to change that policy

we can only conclude that it is not shown that the continued prohibi

tion was by concerted action

13 F M C
154 FEDERAL MARITIME COM MISSION

The Conference agreement was amended in September 1967 

permit publication of brokerage rules in the Conference ta

Vbile the Conference tariff rules were amended effective Marc

1968 to permit payment of brokerage on shipments to Australia 

New Zealand brokerage payments on shipments to New Zea

have not been resumed However again there is no evidence 

the continued failure to make such payments is by concerted ac

Therefore we can find no illegal section 15 agreement and no vi

tion of our decision in Docket No 831 which would prohibit 

certed Conference prohibition of brokerage payments

7 Estoppel to redete1mine issue

The Conference had maintained that the Commission is estop

from determining whether the tariff rules to become effective Fe

ary 15 1966 prohibiting the payment ofbrokerage were in viola

of section 15 inasmuch as Docket No 66 5 referred to hereinab

is dispositive of the issue

The examiner observed that Docket No 66 5 involved an o

to show cause why the rules proposed to become effective Febru

15 should not be stricken from the tariffs on the ground that t

appeared to be in violation of the order in Docket No 831 wh

found concerted prohibition ofbrokerage payments to be detrime

to commerce Docket No 66 5 was terminated after the Confere

removed from the rules all reference to brokerage The order of 

continuance stated that the issues involved herein have been moot

The examiner concluded that the question of whether respond

violated section 15 by not filing the rules for approval was no

issue in Docket No 665 and was not considered in that proceed

He stated that the question is in issue in the present proceeding 

concluded that the Conference s position on the point is not w

taken

The Conference takes exception to this conclusion The Con

ence s position is that in Docket No 665 the Commission s real int

and concern was not simply to force the Conference to cancel 

tariff rules prohibiting payment of brokerage but to require i

delete all reference whatsoever to the payment of brokerage in 

tariffs The Conference suggests that in view of contemporane

Commission attempts to require the Conference to delete all re

ence to brokerage rules in its tariff the examiner erroneously c

cluded that the question ofwhetherthe Conference violated section 

by not filing the rules for approval wasnot in issue in Docket No 66 

The Conference feels that since Docket No 66 5 has been disc

13 F M 
U S PACIFIC COAST AUSTRALIA ETC UNAPPROVED AGREEMENTS 155

tinued the Commission is estopped on equitable principles from re

opening matters which were declared to have been mooted

1Ve are not estopped from considering the question of section 15

violations for the simple reason that nothing is being redetermined

here which was determined in Docket No 66 5 Docket No 66 5 was

dismissed without investigating or determining the question of law

fulness ofthe rules because the Conference had canceled the rules

The examiner correctly concluded that the order to show cause

in Docket No 66 5 did not raise the question ofwhetherthe rules were

in violation of section 15 of the Shipping Act Consequently the

Commission s order discontinuing that docket cannot possibly be said

to be a determination that the brokerage rules were not in violation

of section 15

Signed FRANCIS C HURNEY

Secretary

13 F M C
FEDERAL lVIARITIlVIE COlIMISSION

DoCKET No 69 51

AGREEMENT No 9810 STOCK PUllCHASE AGRERllIENT BETWEE

PRUDENTIAL LINES INC AND V R GRACE CO AN SALE AN

TRANSFER OF PRUDENTIAL ASSETS AND OBLIGATIONS TO GRACE LINE

INC

DecidedDecen bel 19 1969

Agreement No 9810 providing for the purchase by Prudential Lines Inc of a

of the outstanding capital stock of Grace Lines Inc and the sale of Pruden

tial s operating assets to Grace Line approved under section 15 of th

Shipping Act 1916

GeO l ge N jJ cNair for Respondents Grace Line Inc and iV R

Grace Co

David Si lTwn and Ma l

tin F Richnwn for Prudential Lines Inc

11 al kK Neville for intervener 1ark IeNeville

J B H Garter and Alfred Gortise Jl

for intervener Sun Ship

building and Dry DockCompany

Donald J Brunner and Paul J Fitzpatrick Hearing Counsel

REPORT

By THE COlUHSSION Helen Delich Bentley Ghai1 1nn James 

Fanseen Vice Ghai1 Jnan Ashton C Barrett James V Day

GeorgeII Hearn G omn1issione JS

THE PROCEEDINGS

iVe instituted this proceeding to determine whether Agreeme

9810 a stock purchase agreement between Prudential Lines Inc an

iV R Grace Co should be approved under section 15 of the Ship

ping Act 1916 Notice ofthe agreement was published August 6 196

The usual 20 day period for filing COlnments orprotests wasextende

to September 12 1969 No protests or comments were received O

September 30 1969 we issued our order of investigation primarily 

secure additional information about the circumstances and condition

156
AGREEMENT NO 91810 157

prompting the proposed agreement and the impact or the agreement

if approved upon the rele 7ant trades in our foreign commerce Inthe

order we invited persons desiring to be heard on the proposed agree

ment to indicate whether they desired an evidentiary hearing and

if so to provide a clear and concise statement ofthematters upon which

they desire to adduce evidence Only two persons requested an

evidentiary hearing Sun Shipbuilding Co and one lfark Ie Neville

neithe rof vhich filed a comment or protest to the proposed agreement

when it vas noticed in the Federal Register even though the notice

period was extended some 15 days Ve have rejected both requests

Neither due process nor a full and fair hearing on the merits of this

case require an evidentiary hearing on the grounds suggested either

by SUll or Neville and before turning to the merits of Agreement

No 9810 we shall disposeofthis threshold question

Sun alleges that it is a creditor of Grace Line with a claim out

standing of some 7 million According to Sun this claim arises under

the Uniform Fraudulent Conveyance Act as enacted in New York

Pennsylvania Connecticut and Delaware The claim is based on the

construction or six vessels for Grace Line by Sun In requesting an

evidentiary hearing Sun simply states that it has asked Grace Line

for additional information apparently of a financial nature and

that if this information should not be forthcoming or if it discloses

substantial impairment of Grace Line s ability to meet the claim Sun

intends to pursue the judicial and administrative remedies avail

able to it Appended to its request is a

copy of an amended complaint

filed in United States District Court for the Eastern District ofPenn

sylvania Reduced to its essentials this amended cOlnplaint merely

alleges that the consummation of the purchase and sale agreement

will violate the secured rights of Sun under the laws of New York

PennsylvaJlia Connecticut and Delaware

Our jurisdiction over agreements such as 9810 is found in section

15 of the Shipping Act That section requires the filing with us of

agreements between common carriers by water which fix or regulate

transportation fares give or receive special rates accommodations

or other special privileges oradvantages control regulate prevent

or destroy competition pool or apportion earnings losses or traffic

allot por ts or restrict or otherwise regulate the number and character

of sailings between ports limit or regulate in any way the volume or

character of freight or passenger traffic to be carried or in any

mannerprovid for an exclusive preferential or cooperative working

arrangement Under section 15 we are required to approve such agree

ments unless the agreement is unjustly discriminatory or unfair as

13 F M C
158 FEDERAL MARITIME COMISSION

between carriers shippers exporters importers or ports or betw

exporters from the United States and their foreign competitors 

operates to the detriment of the commerce of the United States 

is contrary to the public interest or in some way violates some ot

provision oftheShipping Act 1916

Sun s request for an evidentiary hearing does not ask us to rece

evidence bearing upon a violation of any provision of the Shipp

Act rather it asks that we take evidence which presumably wo

show that the consummation of Agreement 9810 would somehow 

contrary to the provisions of the Uniform Fraudulent Conveya

Act as passed in several of the States Obviously the proper for

for such an action is the one in which Sun already has an aotion 

U S District Court We are simply without jurisdiction to decide s

a claim Thus the evidentiary hearing requested by Sun could se

no useful purpose under the Shipping Act since the request wo

involve the taking ofevidence on matters beyond our jurisdiction a

whi h bear no real relevance to the issues before us

The request of Mark Ie Neville for an evidentiary hearing is ba

on an alleged offer by Neville to purchase Grace Line for 50 milli

In requesting an evidentiary hearing Neville lists some 11 matt

upon which he would adduce evidence They fall into three ca

gories 1 Those which are irrelevant to any proper considerat

under section 15 2 those which should be directed to the Mariti

Administration and 3 those which are so vague as to not meet 

criteria of the order instituting this proceeding Thus the quest

ofwhy Grace Co rejected Neville s offer in favor ofPrudent

lower offer is in our opinion not a proper consideration under 

tests of section 15 as they apply to this proceeding While it is co

ceivable that there might arise a situation where we would be call

upon to decide which of two potential purchasers of a common car

should be allowed to prevail such is not the case here Furthermo

there remains the more than considerable doubt concerning the fin

cial capability of Neville to purchase Grace Line for 50 millio

Correspondence in the record shows that although requested by Gra

Line to show evidence of financial responsibility Neville failed 

do so

All things being equal Grace is free to select among offers usi

such criteria as itfeels will best insure such things as its own financ

well being the continued reputation ofits corporate image etc Sim

1

Such a situation could perhaps arise if as between two potential buyers one of th

If allowed to acquire the carrier up for sale would establish a monopoly in the relev

market while such a result would not flow from a sale to the other potential buy

13 F M C
AGREEMENT NO 9i810 159

larly the question or why is a

recipient or large governmental sub

sidies entitled to still additional subsidies to the exclusion or others

is one properly addressed to the Maritime Administration2

Finally

the question or whether the merger constitutes a restraint or trade

is so vague as to fail totally to meet the criteria set forth in our own

orderofinvestigation

THE AGREEMENT

Reduced to its essentials the stock purchase agreement provides for

the purchase by Prudential ofall the capital stock or Grace Line Inc

from W R Grace Co The purchase price is 44 500 000 Imme

diately arter acquiring the stock or Grace Line Prudential will sell

its vessels and other operating assets to Grace Line which will assume

the related obligations of Prudential Thereafter Grace Line will be

the sole operating company Prudential will be a holding company

owning all of Grace Line s stock and W R Grace will no longer own

ny interest in Grace Line The sale and transfer or Prudential s

assets and obligations to Grace Line will be at the rail market value

as determined by the Maritime Administration ofPrudential s vessels

vessel and barge contracts and otheroperating assets

Prudential and Grace Line both subsidized carriers now serve

entirely different and unrelated trade routes

Prudential operates a fleet of five ships on a

single trade route

Trade Route 10 which covers U S east coast ports and ports in the

l1editerranean Its present fleet consists of five ships three victory

ships 24 years old and two C4s built in 1966 Prudential s subsidy

contract requires it to make a minimum of 28 and a maximum of 35

sailings ayear

Grace Line operates a fleet of 22 ships on five trade routes Nos 2 4

23 24 and 25 covering U S east and west coast ports and ports in

Central and South America and the Caribbean Grace s fleet is com

posed or two 300 passenger combination passenger cargo ships 11

years old IOUI 121 passenger combina tio passenger cargo ships 5

years old six new cargo ships builtin 1966 67 and 10 cargo ships

all more than 25 years old Grace s subsidy contracts require it to

make an aggregate ofat least 212 sailings but no more than269 sailings

a

year

DISOUSSIONS AND CONOLUSIONS

In our order instituting this proceeding we requested specific in

formation on a number of matters concerned with the results which

2

The question refers to the fact that Prudential and Grace Line are both recipients of

subsidy under the Merchant Marine Act of 1936 the relevant provisions of wbich are

administered by theMaritime Administration

13 F M C
160 FEDERAL MARITIME COM MISSION

would flow from any approval we might grant Agreement 9810 unde

section 15 The requests and a

summary of the responses are set fort

below in theorder in which they appeared in the order ofinvestigation

A Provide a Zistof all potential savings

The respondents anticipate that the combining of the Grace Lin

staff and the Prudential staff will through the elimination of ove

lapping areas result in economies estimated at 1 600 000 per yea

The combined operation should afford better service to the shippin

public at reduced cost e g

Prudentials accounting services can b

tied into Grace Line s existing computer tape systmn at a

very sma

initial cost with resultant savings through increased efficiency Add

tionally considerable savings will result from the combined use o

terminal facilities Early savings will come from consolidating th

present facilities of Grace Line and Prudential in the Port of Ne

York which represents Prudentials major terminal expense Thes

savings are estimated at 420 000 per year There fin be addition

economies when the LASH operation is introduced in Grace Line 

service to South America since then existingLASfI terminalfacilitie

would be utilized in US east coast ports

The LASfI concept is perhaps Prudential s

Inajor argument fo

approval of Agreement 9810 The LASH system can be considere

a major new development in the Inaritime industry Itpromises gre

advantages to shippers shipO vners and ports Basically LASH

Lighter Aboard Ship consists of a vessel designed to carry barge

or lighters the lighters themselves and a

gantry crane which on a

off loads the lighters 3The LASH vessel is capable of carrying bu

cargoes containerized cargoes palletized cargoes or mixed cargo

consisting of almost any combination of cargo in lighters cargo 

containers palletized cargo and bulk cargo

4

Since Prudential 

already comn1itted to LASH in the ecliterranean future economi

from approval of Agreement 9810 will be in the form of operation

savings which will result from the future conversion of Grace Line 

South American service to a LASfI operation A common pool 

LASH lighters could then be used both for the South American se

ice and the 1ecliterranean Itappears that shippers can expect to ben

fit from LASI

throughreduceclloading and unloading time increas

frequency ofcalls and a broader range ofport calls

3Normally the lighters would be towed to and from the mother vessel but they co

be made self propelled qui te easily

4

The Maritime Administration has backed the promise of the LASH system by dir

subsidy investment of 120 million

13 F M C
AGREEMENT NO 9 810 161

Finally it would appear that ports in the United States and their

terminal opei ators will also benefit fronl the introduction of LASH

There should be reduced congestion at piers and increased service to

more local shippers 5

B Provide details of all improvel1Mnts from alleged strengthened

rnanage1nent

Among the improvements in the management and financiaJ struc

ture of the combined company that would result from Prudential

ownership of Grace Line is the ability of the two companies to pool

earnings and thereby accelerate Prudential s present LASH replace

ment program and provide for the eventual progranl of LASH re

placement for Grace Line s existing vessels Grace Line s present

ownership continues to defer its obligation to further vessel replace

ments under its subsidy contract while Prudential intends to pursue

a accelerated r placement program to the maximum extent possible 6

Savings should also result from combined cargo and passenger

solIcitation through the elimination of overlapping areas

O Provide an estin ate oi udndnistrative economies including but not

lin1ited to propos d payroll reductions combined equilJment

usage andeffect on thelabor force

Included in the estimated overhead through combined administra

tive services are payroll reductions of about 800 000 see A above

The savings to be achieved through combined equipment usage are

dealtwith in Babove

While there is some expected contraction of the two companies ad

ministrative force crews of Prudential and Grace Line vessels will

not be affected by the consummation of the stock purchase agreement

because the existing fleets of Grace Line and Prudential will continue

to serve their respecti ve trades 7

D P1 ovide all plans f01 initiation and implementation of improved

transportation methods of operations and expenditu1es needed to

acc01nplish stuch P1 oposals foreach trade area

Prudentials plan for the complete replacement of its fleet in the

1editerranean service with LASfI vessels has been underway for

6This would stem from the fact that the lighter with its shallower draft would not

be restricted to the deep water portion of a port area as are oceangoing liners

oGrnce Line has become only a minor part of the assets and business of W R Grace

which is a major diversified company and W R Grace desires to divest itself Of Grace

Line a

conditlon hardly conducive to vigorous operation and timely replacement of vessels

7 Both the National Maritime Union find the Sailors Union of the Pacific hae confirmed

to respondents that they have no objection to the combination of Grace Line and Prudential

13 F l

1C
162 FEDERAL MARITIME COMMISSION

some time Under the agreement Grace Line will take over Prud

tials contracts Total construction cost involves some 124 mill

including 50 percent construction differential subsidy by the Unit

States under the 1erchant Marine Act 1936 Prudentials share 

beiI gfinanced 75 percent by bond issues insured by the United Sta

under titleXI of the Merchant 1arine Act and the balance wil

paid out of the capital reserve fund and operating revenues

On the South American routes Grace Line s present fleet of22 sh

in active service includes 10 overage cargo ships which will need Cct

replacement Prudential has announced its commitment to seek

replacement as early as possible usingLASH vessels However ex

plans depend upon Maritime Administration approvals and the av

ability of construction differential subsidy

E Explain the effect upon competing carriers in the trades invol1

and subJnit separately for each trade route a listing of all co

peting carriers including fleet sizes and foreign and Americ

flag lines Provide also for each trade route statistical data co

paring tonnages carried by respondents and competing carri

if available for the preceding 3 calendar years

Since Prudential and Grace Line will continue their respective 

erations as before the agreement there is no change in the competit

posture vis a vis each other The statistical data furnished on oth

lines in the trade indicates that Prudential carries from 5 to 8 perc

of the lines tonnages in the Mediterranean trade while Grace Li

carries widely varying percentages of the jnes tonnages depend

upon the particular country involved It does not appear that 

approval of Agreement 9810 would substantially alter this pictu

F Submit copies of any complaints protests and or comments if a

J eceived by respondents with respect to the proposed agreem

Aside from Sun Shipping and Neville dealt with above Americ

Export Isbrandtsen Lines Inc after first indicating a tentative o

position to the proposed agreement later stated that there would 

no objection provided that the 1aritime Subsidy Board Maritim

Administration would enter an addendum to Grace Line s operat

subsidy contract providing that the present Prudential fleet and t

present Gra e Line fleet would each continue to serve the respect

trade routes presently served by each fleet The MaritimeAdministr

tion acceded to the request or Prudential to add such an addendu

and America Export Isbrandtsen withdrew its objection See Let

of Approval dated December 5 1D69 Iaritime Administration 

Prudential

13 F M C
AGREEl lENT NO 918 10 163

I

G Provide details of conditions in the trades involved which are con

sideredjustification for the lJroposed agreement

The purchase of Grace Line will allow Prudential to introduce the

LASH systenl into the South American trades now served by Grace

Line with the resultant increased economy and efficiency of service

The eventual introduction of LASH to the South American trades

served by Grace would go a

long way to alleviate what would appear

to be a major problem throughout South American portsport con

gestion A brief resmne of portconditions at Grace Line s ports ofcall

is offered to illustrate the benefits which would flow from the approval

ofthe stock purchase agreement

In Venezuela LaGuaira and Puerto Cabello are the most important

general cargo ports serving the United States Both are congested be

cause of too few piers and manpmver problems s Since a LASHvessel

itself does not require a

regular berth it can remain at a safe anchor

age offshore while barges are towed to and from shoreside facilities

the introduction of LASH should avoid those delays caused by slow

cargo handling thereby allowing the fleet among other things to

cover additional ports

Equador s niajor port is Puerto 1aritimo It now takes some 8

hours to travel up and down the Guayas River in order to senre Puerto

l1aritinlo Itis estimated that with LASfI vessels this time will be

cut in half because operations 9

will be handled at Puna Island located

at the moutl ofthe Guayas River Itis also asserted that even further

time will be saved because bananas that now take 36 to 48 hours to

load will have been preloaded into LASH barges before the mother

ship arrives This would resultin a time savings of some 241to 36 hours

In Peru port congestion labor difficulties and other delays are

common Even at so called lighter ports delays are encountered be

cause of insufficient floating equipment and labor force to handle the

large shipments of fishmeal which is the major commodity handled

by such lighter ports LASH should permit Grace Line to alleviate

the problem by evening out theworkloads and minimizing the amount

of floating equipment requiredat lighter ports

In Chile the situation is much the same There is considerable port

congestion compounded by labor problems and other delays Here

too LASH operations should help alleviate the problems Much the

8 Maracaibo is a major port serving the oll industry and although not affected by port

congestion delays are encountered because labor is not available from noon Saturday

until 8 am

Monday Numerous holidays compound the delays Because of this Grace

Line has had to omit calls at Maracaibo in order to maintain afortnightly service to

La Guaira and Puerto Cabello

9 Presumably the off and on loading of lighters from the mother ship

13 F M C
164 FEDERAL MARITIME COMJ 1ISSION

same can be said for Argentina and Brazil Indeed it is asserted tha

port congestion is a

way of life in the two countries LASII would

have the same beneficial effect here as in the areas already discussed

The foregoing demonstrates that our approval of Agreement 981

should provide an impetus to the technological advancement of Grac

Line operations in the South American trades The assertions o

Prudential concerning their intentions and plans for the introduction

of the LASIIsystem into Grace Line s operations is unchallenged by

any party to the proceeding and we have no reason to doubt thos

intentions and plans As we have already noted section 15 calls fo

the approval of such agreements unless it is shown that the particula

agreemerit in question would work one of the four proscribed result

set outin section 15 oftheShipping Act

The record before us shows that the purchase by Prudential ofGrac

Line would not operate in a

way which is unjustly discriminatory o

unfair as between carriers shippers exporters importers or ports o

between exporters of the UnIted States and their foreign competitors

To the contrary shippers exporters and importers should as resu

of our approval of Agreement 9810 realize a more efficient and eco

nomical service in the relevant trades Itis also probable that servfc

in those trades will in the future be expanded to include more port

and shippers

That approv lofthe agreemen would not operate to the detrimen

ofthe commerce of theUnited States has been more than amply dem

onstrated Even the least sanguine forecast would indicate tha

Pru 1ential ownership of Grace Line will result in the enhancemen

of the operations of both carriers with a resultant benefit to th

shippers exporters and consumers all of whom are suchan im

portant part of our foreign commerce Ve think it equally clear tha

approval of the agreement wOlJld not be contrary to the public in

terest 10 Quite the opposite the encouragement of sound business prac

tices and technological improvements in the maritime industry is i

the public interest and the record before us indicates that just thes

results will flow from our approval of Agreement 9810 Finally it 

10 Whether or not consideration of tbe public interest requires us to protect the mere

asserted rights of a creditor like Sun Shipbuilding when approving an agreement und

section 15 te question has been rendered moot by certain conditions nttached to th

Maritime Administration s approval of tbe proposed agreement l hereunder PrUdential 

required to arrange for a Letter of Credit for 11 500 000 in favor of Grace Line whi

the net purcbase price of Prudential assets by Grace isto be met by 10 million withdraw

from Grace s capital reserve fund and notes of 7 101490 which are subordinate to a

otber obligations of Grace Line Moreover see paragral h XX of the Maritime Administr

tion s letter ot approval dated December 5 19G9 wherein the litigation agreement 

discussed

13 blIC
AGREEMENT NO 981 165

patently clear that Agreement 9810 in no way violat s any other

provision oftheShipping Act 1916

On the basis ofthe foregoing we shall approve Agreement 9810 An

appropriate order will be issued

By the Commission

ORDER

This proceeding having been instituted by the Federal Maritime

Commission and the Commission having fully considered the matter

and having this date m ade and entered of record a Report containing

its findings and conclusions thereon which Report is hereby referred

to and made a parthereof Therefore

It is ordered That pursuant to the Commission s authority under

section 15 of the Shipping Act 1916 Agreement No 9810 between

Prudential Lines Inc and W R Gr ce Co be and it hereby is

approved and this proceeding be and ithereby is discontinued

By the Commission

Signed FRANCIS C HURNEY

Seoretary

13 F M C

4lk 24 il 12
FEDERAL MARITIl1E COMMISSION

DOOKET No 69 2

A P ST PHILIP INC

v

THE ATLANTIC LAND AND IMPROVEMENT COMPANY AND SEABOARD COAS

LINE RAILROAD COMPANY

Decided December 29 1969

Contract whereby terminal operator purports to condition vessel access to it

facilities upon the exclusive use of a designated tugboat operator is an unjus

and unreasonable practice within the meaning of section 17 of the Shippin

Act 1916 and constitutes undue and unreasonable prejudice and disadvantag

inviolation of section 16 of theAct

J AltonBoyer andMichael Joseph for complainant

Ralph O Dell and HarveyE Schlesinger for respondents

Joseph B Oofer and Richard A Bokor for intervener Tampa Ba

Towing Company

Donald J Brwnner and Paul M Tschirhairt Hearing Counsel

REPORT

By THE COMMISSION James F Fanseen Vice Chairman Ashton C

Barrett James V Day and George H Hearn Commissioners

This proceeding was initiated by the complaint of A P St Philip

Inc against theAtlanticLand andImprovement Co andthe Seaboar

Coast Line Railroad Co alleging that respondents had violated se

tions 15 16 and 11 of the Shipping Act 1916 by entering into an

honoring the provisions of an exclusive contract with Tampa Ba

Towing Co to furnish all tugboat services for the phosphate elevato

at PortTampa Florida Complainant sought reparation in the amoun

of 100 0001 and an or4 r

requiring respondents to cease and desi

Chairman Helen Delich Bentley did not participate

1

Complainant s request for reparation was withdrawn at the prehearing conference he

in conjunction with this proceeding

166
A P ST PHILIP INC V ATLANTIC LAND IMPROVEMENT CO ETC 167

from engaging in activities allegedly violative of the act Tampa Tow

ing aFlorida corporation engaged in thebusinessofproviding tugboat

s rvice to vessels in the Port Tampa area and hearing counsel inter

vened in the proceeding The case is now beforeus on exceptions taken

to the initial decision of the examiner Herbert K Greer

FACTS

St Philip is a Florida corporation which since 1961 has been provid

ing tugboat service to vessels docking and undocking at terminals in the

geneval area of thePort of Tampa Florida St Philip competes with

intervener Tampa Towing

Respondent Atlantic a

Virginia corporation is the owner of lands

and terminal facilities along a navigable body of water known as Port

Tampa Canal which is part of and extends into Old Tampa Bay a

navigable body of water situated in the general area of the Port of

Tampa Florida2

All of Atlantics outstanding stock is owned by

respondent Seaboard R R also a Virginia corporation and the princi

pal offices of both corporations are held by the same individuals

Included in the terminal properties owned by Atlantic are certain

phosphate elevator facilities used to load phosphaterock shipped to the

port via railroad cars by Seaboard R R 3

The phosphate elevator

facilities are terminal facilities used in connection with common car

riers by water in the interstate and foreign commerce of the United

States within the meaning of section 1 of the Shipping Act 1916

Although a lease between respondents which wasin effect at all times

material herein grants to Seaboard R R inter alia the sole and ex

clusive right power and authority to hold occupy use enjoy and

operate the phosphate elevators Atlantic and Seaboard R R have

stipulated that they both carry on the business of furnishing the

phosphate elevator facilities with Seaboard Railroad engaged

in their day to day operation pursuant to a lease

Prior to 1958 Atlantic owned and operated a tugboat that handled

all vessels needing tug assistance at Port Tampa vVhen thisoperation

became unprofitable Atlantic entered into a contract with one Roy E

Leonardi then operating as Tampa Bay Towing Co no relation to

intervener under which Leonardi agreed to furnish tugboat services

to vessels using Port Tampa Canal This contract by its terms expired

2

The Port Tampa Canal and the immediate surrounding area are known as Port

Tampa as distinguished from the Port of Tampa which constitutes the general area

3

Phosphate rock comprises an excess of 50 percent of all the export cargo from Port of

Tampa The Port of Tampa phosphate elevator is one of the two prIncipal phosphate

facilities at Port of Tampa

13 F M C
168 FEDERAL MARITIME COMMISSION

in 1963 and was followed by another contract dated April 17 1963

between Atlanticandthe intervener Tampa Towing 4

The latter contract presently remains in effect and commits tIle 90

foot tug illontclair 5

to provide adequate and satisfactory tug service

operations for Atlantic for which Tampa Towing is given an exclu

sive contract for handling all vessels requesting tugboat service at Port

Tampa during the period of the contract except barges

for which the tugboat service is provided 6

On or about December 30 1967 St Philip began to furnish tugboat

services to vessels using the Port Tampa Canal including vessels

docking and undocking at the phosphate elevator Tampa Towing

demanded that St Philip cease and desist from handlingships at Port

Tampa and that ship s agents not employ St Philip s tugs for that

purpose St Philip hOvever continued to furnish these services to

vessels at the Port Tampa phosphate elevator whereupon Tampa

Towing instituted in the Circuit Court ofthe 13th Judicial Circuit of

the State of Florida a suit against St Philip and Atlantic seeking

inter alia to have complainant enjoined from interfering with thecon

tract between Atlantic and Tampa Towing and asserting its exclusive

right to serve vessels usingthePort ofTampa Canal

The State Court in a decision rendered on November 22 196

interpreted the contract as bestowing an exclusive franchise onTampa

To ving and permanently enjoined St Philip during the telll1 of the

Atlantic Tampa Towing contract from contracting with any vessel to

provide tugboat service to or from the phosphate elevators in the Port

Tampa Cana17

Further Atlantic was enjoined frOln permitting or

allowing any tug owned by anyone other than a tugowned orsupplied

by Tampa Towing to handle any vessel coming and going to or from

the phosphate elevators on thePortTampa Canal The court however

found that it was without jurisdicti n to pass on the defenses raised

by St Philip concerning alleged violations of the Shipping Act 1916

since the Federal Maritime Commission has original jurisdiction to

construe that act Although the court did not consider such issues ad

judicated in its order it nevertheless declined to stay its proceedings

Roy Leonardi no longer has any connection with Tampa Towing Since 1963 however

he has continued to operate at locations in Port of Tampa other than Port Tampa as

an individual

In performing this contract Tampa Towing uses other tugs in addition to the Montclair

and these tugs are kept at Port Tampa Canal so that prompt service may be prOVided to

vessels using the canal

010 1964 wben W O Savage requested of Atlantic the right to provide tug services at

Port ampa Atlantic advised W O Savage that it had an exclusive contract withTampa

Towing to provide all tugboat services for vessels using Port Tampa Canal

7 Tan pa Bay 1 owing COl pany v A P St Philip Inc anll the Atlantic Lana a

l1nprovemcllt Company Civil No 166238 Division D Cir Ct Fla 1HGS

13 F M C
A P ST PHILIP INC V ATLANTIC LAND IMPROVEMENT CO ETC 169

pending a determination by the Commission on the issue of the Ship

ping Act violations St Philip subsequently posted a supersedeas bond

in the amount of 42 000 and appealed from the court s order which

appeal remains pending

Following the posting of the bond St Philip has continued to

furnish tugboat service to vessels docking and undocking at the phos

phate elevator Tugboat service is and customarily has been requested

of St Philip and othertugboat operators

8

in theTampa are by vessel

operators directly and by local ship s agents representing theoperators

Since St Philip began furnishing tugboat services at Port Tampa

approximately 10 to 12 vessels per month have requested St Philip to

perfonn such services in connection with docking and undocking at

the phosphate elevator In addition both Tampa Towing and another

tugboat operator in the Tampa area have subcontracted to St Philip

certain of their contractobligations to furnish tug service at the phos

phate elevator

Both Tampa Towing and complainant are competent and have the

equipment necessary to furnish tug assistance to vessels moving through

the Port Tampa Canal and docking and undocking at the phosphate

elevator At the present St Philip owns eight tugs and charters an

additional tug all fully equipped St Philip leases a docking facility

for a

tug in Old Tampa Bay approxilnately 7 minutes steaming time

for the Port Tampa Canal Tampa Towing has three tugs which are

all docked at PortTampa

Seaboard R R the operator of the phosphate elevator terminal has

not at any material time refused to handle vessels serving the phosphate

elevator because they employed tugboat operators other than Tampa

Towing Tugboat companies inquiring about furnishing such service

were advised of the Tampa Towing Atlantic contract and it appears

that they then made no attempt to compete with Tampa Towing

During December 1967 St Philip was advised by Seaboard R R that

the exclusive contract existed but Seaboard R R did not refuse to

permit any vessel using St Philip s tug service to dock or undock at

the elevator As a result of the Florida State court s injunction Sea

boa rd R R intends to honor Tampa Towing s exclusive contractwith

Atlantic

In its complaint St Philip alleged 1 that the exclusive contract

between Atlantic andTampa Towing is prima facieunduly prejudicial

to St Philip and to vessels desiring to utilize its tugs in violation of

section 16 of the Shipping Act 1916 2 that the exclusiv 3 contract

S In addition to the parties to this proceeding Port of Tampa is served by Leonanli

Towing Co and Gulf Towing Co who operate two and one tugs respectively

13 F M C
170 FEDERAL MARITIME COMMISSION

requiring the use ofTa mpa Towing tugs is an unreasonable regulation

and practice for a terminal facility in violation of section 17 of the

act and 3 Atlantic and Seaboard R R have entered into a tacit

agreement regarding the operation of the phosphate elevator which

agreement although subject to section 15 is being carried out without

prior Commission approval in violation ofthat section

DISCUSSION AND CONCLUSIONS

In his initi l decision the examined found thatthe exclusive r

granted Tampa Towing to furnish tugboat service to all vessels dock

ing and undocking at the Port Tampa phosphate elevators gives to

Tampa Towing an undue or unreasonable preference or advantage in

violation of section 16 First ofthe Shipping Act 1916 The examine

rejected the contention that the exclusive towing arrangement also

violated sections 15 and 17 ofthe act In dismissing the complaint the

examiner declined to issue a cease and desist order on the grolmd tha

Seaboard R R the only party found by him to be subject to the

had not yet in fact prevented any tugboat operator from servicing

vessels atthe phosphate elevators

For reasons set forth below weconcur in the examiner s

finding tha

the exclusive towingarrangement in question violates section 16 ofthe

nct but diSagree with his disposition ofthe other major issues raised

in this proceeding

Persons engaged in the business of furnishing wharfage dock

warehouse or other terminal facilities in connection with a common

carrier by water are by section 1 made subject to the Shipping Act

1916 Section 16 First thereof makes it unlawful for any such person to

subject any particular person locality ordescription oftraffic to an

undue or unreasonable prejudice or disadvantage in any respect what

soever Section 17 of that act imposes upon such persons the obliga

tion of establishing and observing just and reasonable practices re

lating to or connected with the receiving handling transporting stor

ing ordeliveringof property

The threshold question to be resolved in this proceeding is whethe

respondents are persons subject to the Shipping Act 1916 The ex

aminer was manifestly correct in concluding that Seaboard Rai

road operating a

facility which provides a dock where common carrier

by water take on cargo is a person subject to theAct Seaboar

nR clearly is such a

per son Itoperates all of the terminal facilitie

along the Port Tampa Canal including the phosphate elevators i

question and consistent therewith has terminal tariffs on file with

this Commission

13 F M O
A P ST PHILIP INC V ATLANTIC LAND IMPROVEMENT CO ETC 171

Atlantic as lessor ofthe phosphate elevators on the other hand was

found by the examiner to have abandoned any function itmay have

previously had as the furnisher of terminal facilities and accord

ingly washeld not subject to the Commission s

jurisdiction as set forth

in section 1 of the act We cannot agree To exclude Atlantic from the

jurisdiction of the Shipping Act would be to ignore the effect of

Atlantic s own admissions and its actual activities which are morethan

sufficient to make it a person subject to the Shipping Act Although

the lease in effect between respondents grants to Seaboard R R the

exclusive right to operate the phosphate elevators respondents have

in fact stipulated at the commencement of this proceeding that both

Atlantic and Seaboard Railroad carryon thebusiness offurnishing

the phosphate elevator facilities with Railroad engaged in their day

to day operation pursuant to a lease Thus by its own admission

Atlantic is a

person subject to the act Under these circumstances

and in view of the intercorporate relationship between Atlantic and

Seaboard it is necessary to go beyond the specific provisions of the

lease

Atlantic s participation in the operation ofthe phosphate elevators

is more than amply borne out by Atlantics own activities with regard

to those facilities What ever the lease in effect between respondents

may provide as to the control of the terminal facilities it is clear as

St Philip contends that Seaboard R R did not acquire the exclusive

right to operate and control the phosphate elevators since Atlantic

exercised a measure of that control by entering into a contract with

Tampa Towing conditioning the availability of such phosphate ele

vators to vessels who employed Tampa Towing The contract between

Tampa Towing and Atlantic precludes any finding that Atlantic has

relinquished all control overthe facility in question

The examiner however felt that any finding of retained control by

Atlantic presupposes that the providing oftugboat services to vessels

docking and undocking at a terminal is an activity covered by section 1

or the act He concluded that the furnishing of tugs concerns

the operation or the vessels as distinguished from services related to the

terminal Thus the examiner not only found that Atlantic wasnot a

person subject to the act but he rejected the contention that any viola

tion of section 11 had occurred since the service involved did not con

cern the receiving handling transporting storing or delivery of

property Wecannot agree withthe examiner s conclusions

Normally it is true that the selection or the tugboat operator is

withinthe exclusive province of the carrier and that terminals them

selves do not become involved in the actual docking and undocking of

13 F M O
172 FEDERAL MARITIME COMllISSION

vessels or in the arrangements therefor iVewould therefore ordina

ily agree that tugboat service does not constitute a terminal functio

within the scope of section 17 Where as here however the termin

operator has usurped the normal function of the carrier and made th

very access to the terminal facilities dependent upon a commitment 

Tampa Towing for tug service under the terms of an exclusive righ

contract the furnishing of tugboat service has in effect been tran

formed into a terminal function intimately related to the receivin

handling transporting storing or delivering of property

vVe see no relevant distinction between the situation here and th

existing in Tnwk and Lighter Loading and Unloading 9 F MC 5

1966 In that case we required terminal operators who maintaine

and operated lighters an operation normally vithout the function o

terminal to adopt just and reasonable lighter detention nlles or regu

tions because

The assumption by the terminal operator of thecarrier s traditional obligati

of loading and unloading of necessity carries with it the responSibility for 

suring that just and reasonable rules govern the performance of the obligatio

9F M C at 514 1966

Thus by the execution of the exclusive contract vith Tampa To

lng Atlantichas throughits participationin the operation and cont

of the terminal facility subjected itself to the jurisidiction of the Shi

ing Act and the question now becomes whether the practice of co

I

litioningthe availability ofthe terminal facilities only to vessels w

utilize theservices of a designated tugboat operator isunreasonable 

unjust withinthe meaning of section 17 ofthat act

In Galif S B 00 v Stockton Port Dist 7 F MC 75 82 1962

the Commission considered nd struck down an arrangement where

a grain elevator operator granted to thePort ofStockton an exclus

right to perform all stevedoring services at those facilities In findi

this arrangement both unjust and unreasonable in violation of s

tion 17 we stated therein that

Such a practice runs counter to the antimonopoly tradition of theUnited Stat

upsets the long established custom by which carriers pick their own stevedo

companies deprives complainants and other stevedoring companies of an op

iunity to contract for stevedoring work on ships using Elevators facilities a

opens the door to evils which are likely to accompany monopoly such as p

service and excessive costs

Such a practice is pl ima faoie unjust not only to stevedoring companies s

ing work but to carriers they might serve and the general public which is 

titled to have the benefit of competition among steYedo ing companies serv

13 F M C
A P ST PHILIP INC V ATLANTIC LAND IMPROVEMENT CO ETC 173

ships carrying goods in which the public is interested as shipper or consumer

forthesame reasons it is prima taci e unreasonable

O

The principle announced in the Stockton Port case sup1 a applies

with equal force to a situation Yfhere a vessel owner s right to select

a

tugboat operator is denied by exclusive contract The arrangement

before us now also elimina tes competition and is prima facie unjust

and unreasonable not only to tugboat companies seeking to render

service to vessels docking and undocking at the phosphate elevators

but also to the carriers that they might serve Thus unless justified

the arrangement must be struck down and it is incumbent upon re

spondents to furnish the justification l1oreover as we stated in the

stockton Port case however the burden of sustaining such practices

as just and reasonable is a heavy one

Respondents have totally failed to sustain this burden Neither At

lantic nor Seaboard R H has made any attempt to justify the exclu

sionary arrangement as being necessaryto the operationofthe term

preferring rather to challenge the Commission s jurisdiction over the

parties and the arrangement with Tampa Towing Intervener sought

justification for the a

rrangement in that its purpose was to provide a

competitive posture for Port Tampa vis a vis other terminal facilities

in the port of Tampa This justification based on the size and geo

graphical location of the phosphate elevators in relation to the other

facilities at Port Tampa was found singularly unpersuasive by the

esaminer who found and concludedquitethe contrary

Tampa Towing and complainant both have the equipment and operational

efficiency to serve vessels using the Port Tampa Canal While at one time Tampa

Towing was the only operator with a tug immediately available at all times at

the canal that situation no longer exists Complainant also has a tug available

forprompt service when called upon

Cases cited and argument offered by intervener in suppart of the exclusive

arrangement have been considered but nothing is found contrary to the principle

that such an arrangement must be fully justified Itis concluded that the burden

of justifying the giving of a preference and advantage to Tampa Towing by

permitting only its tugs to serve vessels docking and undocldng at th phosphate

elevator terminal facility bas not been met No transportation need or public

benefit has been demonstrated which would warrant Railroad giving the prefer

ence nor does it appear that a valid regulatory purpose woul 1thereby be served

Justification for depriving the master of a

vessel who is responSible for the

vessel s safety of the right to select tugs to assist in moving through the canal

and docking and undocking at the phosphate elevator isnotdisclosed

oSee also Agreements 8225 a1Hl 8225 1 5F l LB 648 1959 which holds that where

the responsibility for the vessel s safety is with the master strong justification must

appear to warrant depriving him of the right to select persons who perform services

relatl ng thereto

J 3 F M C
174 FEDERAL MARITIME COMMISSION

We concur fully with the examiner that the record demonstrates 

present justification for the exclusive towing arrangement and ad

this finding as our own

The examiner s conclusion that the subj eet towing arrangem

violates section 16 of the act is also proper and well founded T

manifest purpose of section 16 of the Shipping Act is to impose u

persons subject to this Act the duty to serve the public impartia

In no other area is this requirement ofequality of treatment betw

similarly situated persons more important than in the terminal ind

try The reason is obvious Terminals are for all practical purpo

public utilities TranspO l

tation of Lumber Through PClInama OCl

2 U S M C 143 1939 Thus the operation of terminal facilities 

poses upon those who furnish them the same duties and obligations 

attach to any otherpublic utility Or as we explained in Investigat

of Free Time Practices Port of SanDiego 9 F MC 525 547 196

While not always specifically franchised terminals nevertheless areenga

In thebusiness of regularly supplying the public with a

service which is of pu

consequence and need and which carries withit the duty to serve the public 

treat all persons alike This is the essence of the public utility concept

The contract between Atlantic and Tampa Towingeffectively de

access to the docking facilities at the phosphate elevators to all 

operators but Tampa Towing and to any vessel who desires to emp

the service of a competing tugboat company This arrangement 

only unlawfully prefers Tampa Towing to the prejudice of c

plainant and other tugboat operators at Port Tampa but also unla

fully prejudicies those vessels usingthe services of tugboat compan

other than Tampa Towing

Section 16 does not forbid all preferential or prejudicial treatme

only that which is undue or unreasonable Intercoastal Oancellat

and Restrictions 2 U S MC 397 400 1940 As we have heretof

indicated however no justification for the exclusive towing arran

ment in question has been demonstrated on the record In fact 

evidence is quite to the contrary Complainant as well as Tampa To

ing has the equipment and expertise to provide excellent serv

Accordingly we find that the exclusive towing arrangement exist

between Atlantic and Tampa Towing results in undue and unreas

able preference and prejudice in violation of section 16 ofthe act

Since neither of the parties is presently engaging in the cond

llere found unlawful there is of course no reason to issue a cease a

desist order Consequently no such order will be issued now Iowever

should either party at some future time attempt to effectuate the 

clusive arrangement we have declared unlawful under sections 16 a

13 F M C
A P ST PHILIP INC V ATLANTIC LAND IMPROVEMENrr CO ETC 175

17 of the act all the cOlnplainant need do is to petition us for the

issuance ofsuch an order and onewill beissued

Having found that the exclusive towing arrangement violates sec

tions 16 and 17 of the act we find it unnecessary to consider whether

the arrangement also violates section 15

By the Commission

Signed FRANCIS C HURNEY

Seoretary

3 F lVI C
FEDERAL l1ARITI11E COMl1ISSION

SPECIAL DOCKET No 405

HARRISONS CROSFIELD PACIFIC INC

v

NEDLLOYD HOEGH LINES

Adopted December 30 1969

Respondent is permitted to refund to complainant the sum of 165 55 as pa

of the freight charges assessed and collected for the transportation of boo

boats from Portland Oreg to Tawau East Malaysia in May 1969

lV W Litch for applicant respondent

John Porel Jr for complainant

INITIAL DECISION OF C V ROBINSON PRESIDING EXA1 lINER

r

By applioation filed on June 6 1969 concurred in by cOlnplaillan

Transpacific Transportation Co as agent for Nedlloyd IIoeg

Lines Nedlloycl a joint service ofNecllloyd Lines and Hoegh Line

requests permission to refund to complainant the SUln of 165 55 

part of the charges assessed and collected by Necllloyd for th

transportation of the cargo referred to in the next paragraph 2

Pursuant to bill of lading number PO I dated at POltland Oreg

on 1ay 20 1969 complainant delivered to Nedlloyd at Portland tw

skid mounted boom boats for transportation on Necllloyd s vess

Hoeqh Elan to Tawau East 1alaysia with transshipn1ent at Sing

pore consigned to order of complainant The boats weighed 15 5

pounds and n1easured 1 892 cubic feet Freight charges of 3 452 

were assessed in accordance with the rate of 73 per cubic foot app

cable on BOATS AND LAUNCHES published in Item 295 

7th Revised Page 46 of Pacific Straits Conference Local Freig

Tariff No 7 FMCl effective April 1 1969 other charges also we

assessed but are not here involved The charges were collecte

Ivfay 29 1969

1 This decision became the decision of the Commission Dec 30 1969

2

Public Law 90 298 90th Congress 75 Stat 764 approved Apr 29 1968

176
EARRISONS CROSSFIELD INC V NEDLLOYD HOEGH LINES 177

Between December 1 1966 and iarch 31 1969 the rate on the

articles under consideration was 65 75 per ton weight or measure

ment It was the intention of the conference to increase the rate on

April 1 1969 to 69 25 weight or measurenlent 7 percent but

through error of the conference staff the published increase was 12

percent or 73 Effective May 26 1969 or 6 days after the boats were

loaded Item 295 of the Tariff was amended to read as follows

BOAT AND LAUNCHES

Measu ing up to and including 20feet overall

Contract 35 75

Noncontract 41 00

Measuring over20 feet and including 30 feet overall

COlltract 48 25

Noncontract 69 50

Over 30feet overall

Contract 60 50

Noncontract 69 50

The failure to publishthe rate which theconference had agreed upon

was an administrative error which justifies relief Having complied

with all of the preliminary requirements of the statute applicant

hereby is authorized to refund to complainant the sum of 165 55

which is the difference between the charges collected and the oharges

which would have been collected under the amended rate Applicant

shaH publish the appropriate notice referred to in the statute refund

shall be made within 30 days of such notice and within 5 days there

after applicant shall notify the Commission of the date of the refund

and of the lnanner in which payment has been made

Signed C vV ROBINSON

Presiding ElJa 171i1 er

Tashington D C

Decmnber3 1969

Itis orde1ed That Nedlloyd and Hoegh Lines refund to IIarrisons

and Crosfield Pacific Inc the sunl of 165 55

It is furthe1 o1 de1 ed That Nedlloyd and Hoegh Lines publish

promptly in its appropriate tariff the following notice

Notice is hereby given as required by the decision of the

Federal iaritime Commission in Special Docket No 405 that

effective iay 20 1969 the rate on boats and launches from Port

land Oregon to Ta vau East lalaysia for purposes of refunds

orwaiver of freight charges on any shipments which may have

been shipped on vessels of Nedlloyd and Hoegh Lines during the

period from iay 20 1969 until May 26 1969 is 69 50 per 40

13 l M C
178 FEDERAL MARITIME COMMISSION

cu ft subject to all otherapplicable rules regulations terms and

conditions of the said rate and this tariff

It is further ordered That Nedlloydand Hoegh Lines notify the

Secretary on or before January 30 1970 of the date and manner in

which the refund herein ordered was made

By THE CoMMISSION

SEAL Signed FRANCIS C HURNEY

Secretary

13 F M C
FEDERAL l1ARITIME COl1MISSION

SPECIAL DOCKET No 416

GHISELLI BROS INC

v

MICRONESIA INTEROCEAN LINE INC

Application to refund deposited in United State mails within 180 days of date

of shipment found timely filed

Proceeding remanded to Hearing Examiner for considerat on on the merits

KaiAngermann for Applicant

REPORT

By THE COMMISSION HELEN DELICH BENTLEY Ol airman JA ES F

FANSEEN Vice Ohairman ASHTON C BARRETT JAl1ES V DAY

land GEORGE H HEARN Oom missioners

This is an application filed pursuant to Rule 6 b of the Commis

sions Rules fPractice and Procedure 46 CFR 509 92 by Micronesia

Interocean Line Inc Micronesia for an order authorizing it to re

fund to Ghiselli Bros Inc Ghiselli the sum of 84 61 in connection

with a shipment of bagged potatoes from San Francisco California

to Majuro TrustTerritory of the Pacific Islands

Examiner C W Robinson issued an Initial Decision in which he

denied the application as being time barred This proceeding is now

before us on our motion to review the Examiner s decision

FACTS

For some time prior to the shipment in question an agreement has

existed between Micronesia and the Trust Territory of the Pacific

Islands whereby the former agrees to assess rates at a level no higher

than those in effect for shipments moving via Pacific Far East Line

t the Trust Territory by way of Guam or moving on vessels of

InlUal Decision on remand adopted by the Commission January 6 1970

179
180 FEDERAL MARITIME COMMISSION

various other carriers serving the Trust Territory via Japan vVh

issuing its Tariff No 1 FMC No 1 in September 1968 Microne

listed only rates on commodities known to it to be moving in the tra

being somewhat handicapped by reason of the destruction of cert

statistical records by Typhoon Jean Although other carriers in 

trade had commodity rates on bagged potatoes a rate for this co

modity was erroneously omitted from Applicant s tariff l

On November 5 1968 Ghiselli delivered to Micronesia at S

Francisco a

shipment of 30 bags ofpotatoes for carriage aboard A

plicant s vessel GOLDEN SWAN to Majuro Trust Territory of 

Pacific Islands An on board bill of lading was issued therefor 

November 8 1968 Since at the time of shipment Applicant had 

commodity rate for potatoes MicronesJ s N O S rate of 94 50 

cubic foot for nonhazardous cargo was applied to the cargo Veigh

3 030 pounds and measuring 90 cubic feet the shipment was asses

freight charges of 212 63 The charges were paid by Ghiselli 

Micronesia on November 21 1968

If at the time of shipment Applicant s tariff had accurately 

flected its agreement with the Trust Territory the rate of 84 50 p

2 000 pounds would have applied This would have resulted in a to

charge of 12802 of 84 61 less than was actually assessed and c

lected As a result of the foregoing l1icronesia on l1ay 5 1969 s

mitted to the Commission s

T est Coast office in San Francis

California an application for permission to refund to Ghiselli the s

of 84 61 which application was transmitted to the Office of 

Secretary in Washington D C on or about lIay 5 1969 and l eceiv

there onMay 8 1969

DISCUSSION AND CONCLUSION

Public Law 90 298 pursuant to which present Rule 6 b of 

Commission s Rules of Practice and Procedure was promulgate

authorizes the Federal Maritime Commission to permit a comm

carrier by water in foreign commerce or conference of such carrie

to refund a portion ofthe freight charges collected from a shipper 

waive the collection of a portion of such charges where it appears th

there is an error in a tariff of a clerical or admiliistrative nature 

where throughinadvertence there has been a failure to filea particu

tariff reflecting an intended rate After setting forth the requireme

that a carrier or conference must meet before an application for refu

1 When Micronesia discovered that certain commodities moving in the trade had b

omitted it revised its tAriff to include rates on these commodities Accordingly a r

on bagged potatoes was establi hed effective March 13 i969

13 F M C
GHISELLI BROS V MICRONESIA INTEROCEAN LINE INC 181

orwaiver may evenbe considered the statute provides That applica

tion for refund orwaiver mJUst be filed with the Commission withinone

hundred and eighty days from the date of shipment Emphasis

added The sole question presented in this proceeding is whether the

application for refund submitted by Micronesia was filed within

180 days of the shipment date as specified in the statute

The Examiner in his Initial Decision determined that the applica

tion in question had not been timely filed within the meaning of

PL 90 298 and accordingly denied it In so concluding theExaminer

relied on the definition of filed as used in Commission General Order

13 governing the filing of tariffs by common carriers in the foreign

commerce of the United States Under section 536 2 ofGeneral Order

13 a tariff is filedwith the Commission only when actually received

by it at its offices in Washington On the basis of this interpretation

the Examiner found that since Micronesia s special docket application

wasnot actually receilVed by the Commission in Vashington untilMay

8 1969 181 days after the shipment date of November 8 1968 it was

time barred Ve do not agree The Examiner s conclusion requires an

unnecessarily strict construction of the word filed

The filing of a schedule with the Commission evidences that the

rates and charges contained therein have been put in force or estab

lished for the future The purpose ofrequiring the submission oftariff

schedules under section 18 b ofthe Shipping Act 1916 2

and regula

tions promulgated pursuant thereto is to secure uniformity and

equality of treatment in rates and services to all shippers Requiring

the public establishment oftariff schedules prevents special and secret

agreements thereby suppressing unjust discrimination and undue

preferences As the court explained in United States v Illinois Termi

nal R 00 168 Fed 546 549 1909 in discussing section 6 of the

Interstate Commerce Act after which our own section 18 b was

patterned

Carriers being engaged in a pubHc employment must serve all members of

the public on equal terms This was the doctrine of the common law Ithas been

explicitly stated and strengthened by the successive acts to regulate commerce

The requirement of the act that all rates should be published is perhaps the

chief feature of the scheme provided for the effective outlawing of all discrimi

nations Ifthis portion of the act is not strictly enforced the entire basis of

effective regUlation will be lost Secret rates will inevitably become discriminat

B Section 18 b in partrequires

every common carrier by water in foreign commerce to file with the Com

mission and keep open to publiC inspection tarUfs showing all the rates and charges of

such carrier orconference of carriers for transportation to and from United States ports

and foreign ports between all points on its own route and on any through route which

has been established

13 F M C

428264 71 13
182 FEDERAL MARITIME COMMISSION

illg rates Vhenever discriminating rates or practices are made public a th

sand forces of self interest and of public policy will be set at work to red

them to fairness and equality

In order for this Commission to effectively enforce and adminis

section 18 h as well as other sections or the Act especially th

relating to unjust discrimination and undue preferences tariff sch

ules required to be filed must be actually received by the Commiss

before there can be compliance since section 18 b makes the o

legal charge for the transportation of goods the rate duly on file w

he Commission To hold otherwise would not only effectively frustr

the purpose of section 18 b put would also invariably result in c

fusion and controversies

While the very natureand purpose ofregulations requiring the fil

of tariffs demand that nothing less than actual receipt of the 

schedules by the Commission shall constitute a filing within 

meaning ofthose regulations there is no reason to impose such a s

interpretationto the filing of special docket applications P L 90 

itself is permissive and affords the Commission wide latitude ofdis

tion in the granting of special docket applications Moreover p

ceedings under Rule 6 b of the Commission s Rules of Practice 

Procedllre are nonadversary in nature ancl therefore the individ

interests and the legal rights of the parties would not be prejudi

by adopting a more liberal attitude towards filings in spe

docket situations In short as pertains to applications submitted

suant to PL 90 298 and Commission Rule 6 b we see no regula

purpose to be served by equating filed with received All tha

required is thatthe application be deposited in theUnited States m

for delivery to the Commission in Washin gton within the time sp

fied by statute the postmark date shall be considered the filing d

Applying these principles to the factual situation before us 

clear that 11icronesia s application was timely filed The shipm

in question wasmade on November 8 1968 and the subject applica

was mailed on either May 5 M ay 6 or the latest May 7 1969 

elapsed time between shipment date and filing date being in 

event no nlore than 180 days 3

8

The envelope containing the Micronesia application has been lost and we ha

actual Indication as to the exact postmark date Since the application was mailed 

California and received by the Commission in WaShington on May 8 however 

reasonable to assume that the application cou not have been mailed later tpan M

13 F M 
GIDSELLI BROS V MICRONESIA INTEROCEAN LINE INC 183

The Examiner in denying Micronesia s application on the ground

that it was time barred never reached the substantive issues in this

proceeding We are therefore remanding the proceeding to the

Examiner for consideration of the application on the merits

By the Commission

SEAL Signed FRANCIS Ce IIURNEY

Secretary

13 F M C
FEDERAL 1ARITIME COMIfISSION

SPECIAL DOCKET No 416

GHISELLI BROS INC

1

J1rCRONESIA INTEROCEAN LINE INC

Application to refund to complainant the sum of 84 61 as part of the fre

charges assessed and collected forthe transportation of a shipment of bag

potatoes from San Francisco Calif to Majuro Trust Territory of 

Pacific Islands inNovember 1968 granted

KaiAngermann for applicant respondent

INITIALDECISION ON REMAND OF C V ROBINSON HEARING EXAMIN

The facts and background of this proceeding are fully set forth 

the initial decision 1of the Examiner issued Septenlber 26 1969 a

the report of the Commission issued December 1 1969 Suffice it 

say that the Commission disagreed with the conclusion of the Exa

ner that the application for refund had not been timely filed wit

the wording and the intent of the statute 2

The matter was remand

to the Examiner for consideration of the application on the merit

The failure to have on filea rate for potatoes was an administrat

error which justified relief Having complie with all of the preli

nary requirements of the statute applicant hereby is authorized 

refund to complainant the sum of 84 61 which is the difference 

tween the charges collected and the charges which would have b

collected under the rate as published subsequent to the movement 

the commodity Applicant shall publish the appropriate notice 

ferred to in the statute refund shall be made within 30 days of s

notice and within five days thereafter applicant shall notify the Co

mission ofthe date ofthe refund and ofthe mannerin which paym

has been made

WASHINGTON D C

December 9 1969

Signed C W ROBINSON

Presiding EwamiJne

1

13 FMC 186

iIPublic Law 90 298 90th Congress 75 Stat 764 approved April 29 1968

184
GHISELLI BROS v MICRONESIA INTEROCEAN LINE INC 185 

Itis ordered That Micronesia Interocean Line refund to Ghiselli

Bros Inc the sum of 84 61

It is further ordered That ficronesia Interocean Line publish

promptly in its appropriate tariff the following notice

Notice is hereby given as required by the decision of the Commission in

Special Docket No 416 that effective November 8 1968 the rate on bagged

potatoes from San Francisco California to Majuro Trust Territory of the

Pacific Islands for purposes of refund or waiver of freight charges on any ship

ments which may have been shipped on vessels of Micronesia Interocean Line

during the period from Novembe 8 1968 until January 1 1969 was 84 50 per

ton of 2 000 pounds subject to all other applicable rules regulations terms and

conditionsof the said rate and this tariff

It is further ordered That Micronesia Interocean Line notify the

Secretary on or before February 7 1970 of the date and manner in

which therefundherein ordered wasmade

BytheCommission

Signed FRANCIS C HURNEY

SeCetary

13 F M C
FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 416

GHISELLI BROS INC

V

MICRONESIA INTEROCEAN LINE INC

Application to refund to complainant thsum of 84 61 as part of the frei

charges assessed and collected forthe transportation of a shipment ot bagg

potatoes from San Francisco Calif to Majuro Trust Territory of 

PacificIslands inNovember 1968 denied

Kai Angermann for applicant respondent

INITIAL DECISION OF C W ROBINSON PRESIDING EXAMINER 1

This is an application filed May 8 1969 by Micronesia Interoce

Line Inc applicant concurred in by complainant for permission 

refund to complainant the sum of 84 61 as part ofthe charges asses

and collected by applicant for the transportation ofthe cargo refer

to below

On November 5 1968 complainant delivered to applicant at S

Francisco Calif a

shipment of 30 bags of potatoes for carriage 

applicant s vessel Golden Swan to Majuro Trust Territory of 

Pacific consigned to order of shipper An on board bill of lading w

issued therefor on November 8 1969 Weighing 3 030 pounds a

measuring 90 cubic feet the shipment was assessed freight charges 

212 63 in accordance with the rate of 94 50 per 40 cubic feet c

tained in Item 140 of applicant s Tariff No 1 FMC No 1 applica

to nonhazardous cargo NOS The charges were paid by complaina

to applicant onNovember 21 1968

By agreement between applicant and the Trust Territory of 

Pacific Islands the former s rates are to be no higher than those 

effect for shipments moving via Pacific Far East Line to the Tr

Territory by way of Guam or moving on vessels of various ot

S The Commission remanded this proceeding to the Examiner for reconstderatlon of 

application

186
GillSELLI BROS V MICRONESIA INTEROCEAN LINE INC 187

carriers serving the Trust Territory via Japan At the time of the

shipment applicant had no commodity rate for potatoes hence the

assessment ofthe rate for cargo NOS Other carriers in the trade had

commodity rates for potatoes which prompted applicant to amend its

tariff to publish a rate on that commodity of 84 50 per ton of 2 000

pounds effective January 1 1969 The difference between the charges

assessed at the measurement rate of 94 50 212 63 and the weight

rate of 84 50 128 02 is 84 61

Public Law 90 298 90th Congress 75 Stat 764 approved April 29

1968 under which this application is filed provides among other

things that an application for refund must be filed with the Oo l77JTnis

sian within one hundred and eighty days from the date of shipment

Italic supplied Transportation may be said to begin either

when the merchandise is placed in the possession of a carrier or when

the merchandise actually starts in the course oftransportation Ooe v

Errol 116 U S 517 525 1886 So Pac Terminal 00 v Int Oom m

Oomm 219 U S 498 527 1911 Texas N O R R 00 v Sabine

Tr JJn 00 227 U S 111 123 1913 Penna R 00 v P U Oomm n

298 US 170 175 1936 Oontinental Oil 00 v K a8 Oity Southern

Ry 00 311 IC C 288 289 1960

Giving applicant the benefit of the alternative dates shipment

commencing on November 8 1968 as against delivery to applicant on

November 5 1968 time began to runas of November 9 1968 Whether

the application was received within 180 days from date of shipment

depends upon whether for the purposes of the statute the date ofthe

mailing of the application or the date received by the Commission

controls The application was transmitted on fay 5 1969 and was

received by the Commission on fay 8 1969 Ifthe transmission date

is to be considered as the date of filing with the Commission then the

application has been filed in time On the other hand if the date of

receipt is to be considered as the date of filing then the application is

time barred

The statue is explicit the application must be filed with the Com

mission which means that it must be received by the Commission

within 180 days of shipment 2Rule 8 f of the Rules of Practice and

Procedure 46 CFR 502 116 does not come into play for that Rule

refers to the service ofpapers by parties Applicant is not required to

General Order 13 governing the filing of tar 1frs by common carriers In the foreign

commerce of the United States states in section 536 2 Where used In this part the

words fi ling filed or file when used with respect to time of filing with the CommIssIon

shUll mean actual receipt by the Federal Maritime Commission at Its offices In WashIngton

DC United States of America

13 F MC
188 FEDERAL MARITIME COMl1ISSION

serve the application upon anyone but he must file the applicatio

with the Commission within 180 days ofshipment

Under the circumstances the application was not filed within 18

days from the date of shipment accordingly the application hereby i

denied

WASHINGTON D C

September 5 1969

Signed c W ROBINSON

Presiding Exa lWiner

13 F M C
FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 413

ANSOR CORPORATION

V

MICRONESIA INTEROCEAN LINE INC

Refunds authorized of portions offreight charges collected because of

errors due to inadvertences in fuilure to file new tariff items on two

shipments from San Francisco California to Yap Western Oaroline

Islands and to Majuro l1arshall Islands Application to refund por

tion offreight charges on shipment to8aipan Mariana Islands barred

because not timely filed

Kai Angermann for respondent

INITIAL DECISION OF CHARLES E MORGAN PRESIDING EXAMINER 1

January 19 1970

This application under section 18 b 3 ofthe Shipping Act 1916

the Act was mailed on orabout May 5 1969 and was received by

the Commission on May 8 1969 The respondent seeks permission to

refund to the complainant portions of the freight charges collected

on threeshipments ofvarious articles from San Francisco California

to Saipan Marian a Islands on September 27 1968 to Yap Western

Caroline Islands on November 8 1968 and to Majuro Marshall

Islands on November 8 1968 Insofar as the shipment to Saipan is

concerned it is barred because it was not timely filed within 180 days

from the date of shipment

An agreement between the Trust Territory of the Pacific Islands

and the respondent calls for freight rates no higher than those in

effect on shipments on vessels of thePacific Far East Line via Guam

oron vessels of various othercarriers viaJapan to theTrustTerritory

The two other shipments herein were charged on the basis of a

cargo

llThis decision becamethe decision of theCommission January 19 1970

189
190 FEDERAL MARITIME COMMISSION

N O S rate of 94 50 a ton W1M whereas they apparently could hav

been moved at rates via other carriers of 80 25 a ton W1M to Ya

and of 66 25 a ton W1M to Majuro applying respectively on toy

and games and on kitchenware The 80 25 rate on toys and game

is a conlbination of the rate of Pacific Far East Line Inc to Gua

of 63 25 plus Micronesian Lines rate of 17 00 from Guam to Ya

The rate of 56 25 on kitchenware applied via Micronesian Lines an

several other lines

Based on the respondent s newly established rates of 80 25 vV1

on toys and games and 66 25 W1M on kitchenware and cookin

utensils both effective March 13 1969 the freight charges would 

88 28 and 10103 respectively instead of the charges actually c

lected of 103 95 and 144 11 The refundable differences are 15 

and 43 08 or a total of 58 75 No other shipments of toys and game

and of kitchenware and cooking utensils moved on respondent s li

during this period in issue and the authorization of the refund w

not discriminate among any shippers Section 18 b 3 of the A

permits the Commission in its discretion and for good cause show

to permit refunds of portions of the freight charges collected as 

the circumstances herein provided that among otherthings the carr

shall publish in its tariff the appropriate notice referred to in statu

giving notice of the rates on which the refunds are basecl This noti

shall be as follows

Notice is hereby given as required by the decision of the

Federal aritime Commission in Special Docket No 413

that effective November 8 19 8 the rate on toys and games

from San Framcisco California to ap Western Oaroline Is

lands for purposes of rernnds or waiver of freight charges

on lany shipments which may have been shipped on vessels of

the respondent from Navember 8 1968 until 1arch 12 196 9

inclusive is 80 25 aton W1M and the rate on kitchenware

and cooking utemsils from San Francisco California to

Majuro Marshall Islands ror purposes of refunds or waiver

of freight charges on any shipnlents which may have boon

shipped on vessels of the respondent from November 8 1968

to March 12 1969 inclusive is 66 25 a ton W1M both rates

subject to all otlter applicable nlles regulations terms and

conditions or the said rate and of this tariff

Good cause shown the respondent hereby is authorized to refund 

the complainant the total or 58 75 providedthat the respondent up

receiving final permission to make this refund publishes in its ta

13 F M C
ANSOR CORPORATION V MICRONESIA INTEROCEAN LINE INC 191

the appropriate notice required by the statute The respondent shall

notify the Commission within 30 days after the date of final decision

herein of the date and manner in which the refund herein authorized

was made

Signed CHARLES E MORGAN

Presiding Eroaminer

WASHINGTON D C December 30 1969

IT IS ORDERED That Micronesia Interocean Line refund to Ansor

Corporation the sum of 58 75

IT IS FURTHER ORDERED That Micronesia Interocean Line publish

promptly in its appropriate tariff the notice set forth in the Ex

aminer s initial decision

IT IS FURTHER ORDERED That Micronesia Interocean Line notify the

Secretary on or before February 18 1970 of the date and manner

in which the refund herein ordered was made

By the Commission

Signed FRANCIS C HURNEY

SeJretary
FEDERAL MARITIl1E COl1l1ISSION

DOCKET No 69 52

JOHNS 1ANVILLE PRODUCTS CORPORATION

PETITION FOR DECLARATORY ORDER

Decided Janua1y7 1970

Carrier s specific commodity description conduit or pipe cement containing

asbestos fibre sufficiently descriptive to include an asbestos fibre cemen

air duct

Commission need not consider use of product or manufacturer s description

for sales purposes when product clearly falls within specific commodity

description

H S Ray for Johns 1anvilleProducts Corporation

R E Grego1 yand Gordon O L11ason for Dillingham Line Inc

REPORT

By THE COMMISSION Helen Delich Bentley Ohai1 man James F

Fanseen TTice Ohair1nan Ashton C Barrett James V Day

George H Hearn Oommissione1 s

Johns Manville Products Corporation has petitioned the Comn1is

sion seeking a declaratory order to terminate a controversy between

Johns Manville and Dillingham Line Inc The controversy involves

the application of a specific commodity description in Dillinghaln 

tariff No 1 FMC F No 1

By order dated October 15 1969 the COlnmission limited the pro

ceeding to filing ofaffidavits of fact and briefs of law with provision

for evidentiary hearing upon request of either party Hearing has no

been requested Affidavits of fact and memoranda of law have bee

submitted

FACTS

In September 1968 Johns Manville tendered three shipments o

asbestos cement air ducts to Dillingham Bills oflading were prepaid

by Johns Manville at the rates specified in Dillingham s tariff in Item

192
JOHNS MANVILLE PRODUCTS CORPORATION

407 Conduit or pipe cement conta ining asbestos fibre In J anuary

1969 Dillingham submitted balance due bill totaling 5 16168 alleging

nlisdescription of the three shipments and basing the balance clue Oll

Iten15 ofthe tariff Merchandise cargo or freight N O S

The allegation of misdescription is based on Dillingham s belief

that Johns 1anville s air ducts do not fall within the specific com

1110dity description of conduit 01 pipe cement containing asbestos

fibre

Johns 1anville contends that the article shipped falls within the

specific description

Johns JlIanville has s vorll to the foHowing facts which are un

disputed by Dillingham

Johns Manville manufactures and ships asbestos cement pipe at

eight locationsin Canada and the United States including Long Beach

Calif The product is sold under the name TRANSITE which is

the registered Johns Manville trademark for its brand of asbestos

cement products including pipe Johns n1anville TRANSITE pipe

is manufactured by a process of laminating a precise mixture of

asbestos fibre portland cement and silica sand to a polished steel

mandrel Itis made in sizes from 4 to 36 inches and is sold for use in

wruter supply systems sewerage lines irrigation systems conveyanceof

cold and warm air industria l waste systems both gaseous anclliquid

encasing telephone and electrica l distributions systems and a myriad

of other applications Sales are to Federal State and municipal

govermnents contractors water districts suppliers and home owners

Approximate prices rangefrom under 15 per foot for 36 inches ofduct

pipe to over 40 per foot for pressure pipe The shipment herein

involved consisted of the lowest val ted pipe in the diameter manu

factured and contained identical ingredients as all other classes of

asbestos cement pipe only in lesser quantities

Johns l1anville s asbestos cement pipe products are invariably de

scribed for transportation purposes as pipe or conduit cement contain

ing asbestos fibre This description appears in domestic rail and truck

tariffs on file with the Interstate Commerce Commission as well as

State regulatory agencies and the Federal n1aritime Commission

These descriptions with slight variations have been in common use

for many years at all Johns Manville s shipping locations as well as

those of its competitors and have never been challenged by any regu

latory agency or carrier

DISCUSSION

Jolms l1anville contends that the article shipped comes within the

tariff description that it cannot be disputed that Transite Air Duct

13 F M C

193 
194 FEDERAL MARITIME COMMISSION

is a pipe or conduit cement containing asbestos fibre that the co

modity shipped is no different than other transite products such 

irrigation house connection or sewer pipe insofar as composition 

concerned all being specifically ratable per Item 407 Johns Manv

feels that the words duct conduit and pipe could be used inte

changeably and that their description of the product as an air d

instead of pipe or conduit does not bring it without the commod

description We agree with Johns Manville

Our predecessors long ago recognized that tariff terms should 

interpreted reasonably InNational Oable and Metal 00 v Americ

Hawaii S S 00 2 U S MC 471 473 1941 the former Commissi

stated

In interpreting a tariff the terms used must be taken in the sense in wh

they are generally understood and accepted commercially and neither carri

nor shippers should be permitted to urge for their own purposes a strained 

unnatural construction Tariffs are to be interpreted according to the reasona

construction of their language neither the intent of the framers northe pract

of thecarrierscontrols forthe shipper cannot be charged withknowledge of s

intent or with carrier s canons of construction A proper test is whether 

article may be reasonably identified by the tariff description

We think it reasonable to interpret the specific commodity descript

conduit orpipe cement containing asbestos fibre to include an 

duct made of cement and asbestos fibre In fact to conclude otherw

would result in astrained and unnatural construction As sugges

by Johns Manville its air duct is manufactured by the same proc

as its other products which are used in water supply systems sewera

lines irrigation systems etc The composition of the articles is sim

varying in quantities of asbestos and cement Since the other asbes

cement products are carried under the specific description the air d

should be similarly carried

Additionally we think the accepted meaning of the terms condu

pipe and duct is such that the terms could be used interchangea

for rating purposes Vebster s Dictionary 1

defines a duct as a p

tube or channel by which a substance as water gas air is convey

Thus it is shown that under common construction a duct is a pipe 

can be used to carry water gas or air The vords could therefore 

used interchangeably

A simple reading of vVebster s definition also refutes Dillingha

contention that the commodity description in question applies onl

a

conveyor of liquids whereas Johns Manville s product is used 

conveyor ofair KellyPipe 00 v Amer Ha1oaiianS S 00 286 IC 

1

See Websters Third New International Dictionary Unabridged 1964

13 F M 
JOHNS MANVILLE PRODUCTS CORPORATION 195

328 1952 which stands for the proposition that it is the nature or

character of a commodity and not its Wle which determines the appli

cable rate additionally refutes Dillingham s contention

Dillingham contends however that since J ohns 1anviIIe adver

tises its product as an air duct andsince in its description ofthe product

attempts to convey the impression that the product is a higher or

different grade material than either common asbestos cement pipe or

ordinary asbestos cement conduit commodity Item No 407 is not

applicable

Dillingham cites several ICC cases

2

for the proposition that the

manufacturer s description of a commodity for sales purposes can be

accepted as determinative of its identity for transportation purposes

We find that itis sufficiently clear that the nature or character of a

cement asbestos fibre air duct is such that it comes within the com

modity tariff description conduit orpipe cement containing asbestos

fibre Accordingly it would be unnecessary to look to the use of the

commodity or the manufacturers description of the commodity for

sales purposes to determine its identity for transportation purposes

The principle ofthecited ICC cases only comes into play when it is not

clear whether a commodity would be carried under a

specific descrip

tion orwhen there aretwo rather specific descriptions under which the

commodity might be carried and it must be determined yhich is more

applicable In this case the alternative to the specific description is a

cargo N O S rate and it simply is not necessary to consider the manu

facturer s description of the product to determine which rate would

be moreapplicable

Finally Dillingham points out that FMC Tariff Circular No 3 pro

vides that corrunodity rates must be specific and shall not apply by

implication on analogous articles Dillingham contends therefore

that the commodity rate applicable to pipe and conduit cannot

be applied by analogy to a duct in the absence of the word duct in

the commodity description

Ve think what has been said above disposes of this contention A

fair and reasonable reading of the terms of the tariff lead to the con

clusion that Johns 1anville s air duct clearly falls within the specific

commodity description Ve do notthink itinvolves a question ofapply

ing the commodity description by implication to analogous articles

S See Marlstein v MissouriPac R 00 243 I C C 345 at page 348 1 H1 Meaa Johnson

00 v Atlantio Ooast Line R 171 I C C 5 1930 Northern Pump 00 v Ohicago M

St P P R 00 190 I C C 421 1932 Ford 00 v M O RR 00 19 IC C 507 1910

and BullDog Floor Olip 00 v Ohicago R I P Ry 00 225 IC C 313 1937

13 F MC
196

CONCLUSION

FEDERAL MARITIME COMMISSION

VTe conclude that Johns Manville s shipnlents in question 

asbestos cement air ducts wereproperly billed per Item 407 of Dillin

ham s tariff The bills of lading having been prepaid at the rat

specified in Item 407 no additional sum is owing to Dillingham

Bythe Commission

SEALJ Signed FRANCIS c HURNEY

Secretary

13 F l1C
FEDERAL IVIARITIl1E COl1l1ISSION

SPECIAL DOCKET No 420

ROBERT S OSGOOD INC Los ANGELES

v

NORTON LILLY CO INC AS AGENTS

SHIPPING CORP OF INDIA LTD SCI LINE

Febntary 17 1970

NOTICE OF ADOPTION OF INITIAL DECISION AND ORDER AUTHORIZING

REFUND

No exceptions having been taken to the initial decision of the

Examiner in this proceeding served January 20 1970 the Commis

sion having determined not to review same notice is hereby given in

accordance with Rule 13 gof the Commission s Rules of Practice

and Procedure that the decision became the decision of the Commis

sion on February 17 1970

It i8 ordered That respondent refund to Robert S Osgood Inc

Los Angeles the sum of 178 33

It i8 fU1 the1 orde1ed That respondent publish promptly in its

appropriate tariff the notice set forth in the Examiner s initial

decision

It is further orde1ed That respondent notify the Secretary on or

before March 23 1970 of the date and manner in which the refund

herein ordered was made

By the Commission

SEAL Signed FRANCIS C HURNEY

Secretary

197

42 8 264 71 14
FEDERAL l1ARITIl1E COMMISSION

SPECIAL DOCKET No 420

ROBERT S OSGOOD INO Los ANGELES

v

NORTON LILLY Co INC AS AGENTS

SHIPPING CORP OF INDIA LTD SCI LINE

Adopted February 1 190

Respondent permitted to refund the sum of 178 32 as a portion of freight cha

collected on a shipment of plywood and veneer from Calcutta India to 

Angeles Calif

INITIAL DECISION OF JOHN MARSHALL PRESIDING EXAMINER 

This application under section 18 b 3 oftheShipping Act 19

the Act seasonably filed by respondent on December 18 1969 

concurred in by complainant seeks permission to refund to compl

ant 178 32 as a portion ofthe freight charges collected on a shipm

ofplywood and veneer in crates from Calcutta India to Los Ange

Calif on a bill of lading issued July 17 1969

On June 18 1969 agent Norton Lilly Co Inc was instru

by its principal Shipping Corp ofIndia Ltd owners and opera

of SCI Line to file a

temporary rate reduction with the Commis

reducing the then existing rate of 30 50 per cubic meter 43 18 

50 cubic feet to 33 per 50 cubic feet to be effective July 1 1

through July 31 1969 As a result of clerical oversight Norton L

failedto do so untilDecember 11 1969 3

Charges for the above shipment billed at the original rate tota

756 13 Had the billing been at the reduced rate the charges w

have totaled 577 81 or 178 32 less

1

This decision became the decision of the Commission February 17 1970

246 USC 817 b 3 as amended by PublicLaw 90 298 75 Stat 764 approved Ap

1968

3

See SCI Tariff No 1 FMC 16

198

13 F M 
ROBERT S OSGOOD INC V NORTON LILLY CO INC 199 

No other shipment of plywood and veneer in crates moved on re

spondent s line during the period in question and the authorization

of the refund will not otherwise result in discrimination between ship

pers Section 18 b 3 of the Act permits the Commission in its dis

cretion to permit a refund of a portion of freight charges collected

because of errordue to inadvertence in failing to filea new tariff This

section further provides that when such permission is granted the

carrier shall publish in its tariff appropriate notice of the rate on

which the refund is based This notice shall be as follows

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket No 420 that effective July 1 1969 the rate on

plywood and veneer in crates from Calcutta India to Los Angeles California

for purposes of refunds or waiver of freight charges on any shipments which

may have Ibeen shipped on vessels of thesCI Line from July 1 1969 through

July 31 1969 is 33 00 per 50 cu ft subject to all other applicable rules regula

tions terms and conditions of said rate and of this tariff

Good cause appearing respondent is hereby authorized to refund to

complainant the sum of 178 32 The carrier shall publish the above

notice in its tariff and respondent shall notify the Commission within

30 days after the date of final decision herein of the date and manner

in which refund was made

Signed JOHN MARSHALL

Presidmg Exa lrlJiner

13 Jj M C
FEDERAL MARITIME COl1MISSION

DOCI ET NO 69 60

REJECTION OF TARIFF FILINGS OF

SEA LAND SERVICE INC

Decided March 24 1970

Rejection of tariffs filed on behalf of Sea Land Servtce Inc found imp

under section 18 b of the Shipping Act 1916

Johnillasonfor Sea Land Service Inc

Howard A Levy for American Export Isbrandtsen Lines Inc

Ronald A Oapone for the North Atlantic Vestbound Freight A

ciation

DonaldJ BrunneT andNOTman D line I

learing Counsel

REPORT

By THE COMMISSION I

Ielen Delich Bentley Ohairman Jame

Fanseen Vice Ohairman Ashton C Barrett James V

oommissioners

On December 9 1969 the Secretary of the North Atlantic vV

bound Freight Association NAvVFAor the Conference filed a

direction of Sea Land Service Inc one of the Conference s mem

lines a reduction of the then applicable rates on wines and sp

Hroving fronl the Port ofGrangemouth Scotland to Elizabeth N 

Baltimore 1d and N orfolk Va The rates previously charged 

Sea Land had been those fixed by the Conference On Decembe

1969 these reduced rates wererejected by the Commission s Burea

Compliance because 1 They were contrary to the terms 

NA VFAs basic conference agreement to the terms of which 

Land was bound by virtue of its membership in NA VFA and 

they were contrary to the terms of N AvVFAs wines and spirits 

rate agreement to which Sea Land is a party

Sea Land appealed the Bureau s rejection to us urging that 

Bureau s action exceeded any authority granted by section 18 b 

200 13 F M 
REJECTION OF TARIFF FILINGS OF SEA LAND SERVICE INC 201

the Shipping Act 1916 As a result of this appeal and because it pre

sented novel questions involving the proper interpretation of section

18 b rwe issued the order instituting this proceeding In that Order

we directed Sea Land to show cause vhy its reduced rates on wines

and spirits should not have been rejected under section 18 b as con

trary to the terms of NA TFAs basic agreement and its dual rate

agreement and thus unlawful under sections 14b and 15 of the

Shipping Act and the rules and regulations promulgated by the

Commission

American Export Isbrandtsen Lines Inc intervened in support of

the rejection and NA VFA intervened as its interests might appear

Hearing Counsel became a party under our rules of practice and

procedure

Our order limited the proceeding to affidavits of fact memoranda

of law and oral argument but provided that any party feeling that

such a procedure wasinadequate could request an evidentiary hearing

by setting forth the facts to be proven and their relevance to this pro

ceeding No such request was received T

e heard oral argument on

J

anuary 20 1970

DISCUSSION AND CONOLUSIONS

The basic issue present in this proceeding is wh0ther section 18 b

4 of the Shipping Act authorizes the rejection or the tariff on

the grolUld that it violates some other substantive provisions of the

Act in this case sections 14b and 15 Section 18 b 4 provides

The Commission shall by regulations prescribe the form and manner in which

the tlriffs required by this section shall be published and filed and the Com

mission is authorized to reject any blJriff filed with it which is notin conformity

withthis section and with such regulations Upon rejection by the Commission a

tariffshall bevoid and its use unlawful

Sea Land s argument challenging the validity or the Bureau srejec

tion runs as follows

The Bureau s rejection was not grounded upon any lack ofconform

ity with the requirements of section 18 b the express and only

grounds for rejection rather it was based upon alleged violations or

section 14b and 15 Thus the Bureau undertook to find a violation or

the Shilpping Act in direct contravenrtion or the terms of sootion 23 of

the act which specifically requires that violations of the act can only be

found after fullhearing Thus the rejection wasunlawful as a matter

of law and there is no need to consider the merits or the rejected filings

under the Conference agreement the dual rate agreement or sections

14b and 15

13 F M C
202 FEDERAL MARITIME COMMISSION

Hearing Counsel who present thebest reasoned argument in supp

of the rejection contend that the Commision must necessarily h

the p

ower under 18 b to reject a tariff which is obviously unlaw

under a substantive provision of the Act If it were otherwise 

would have the impossible situation wherein the agency entrusted w

enforcing compliance with the Shipping Act must tolerate an obvi

infraction of the law it administers while undertaking the burden 

formal proceedings of indefinite duration before making an obvi

finding Export argues much the same thing substituting per 

violations for Hearing Counsels obvious violations The diffic

which inheres in this position is best demonstrated by a considerat

of the violations asserted in support of the rejection in this case

The supporters of the rejection contend that Sea Land s

indepe

ently reduced rates were unauthorized by NAWFA s basic agreem

approved under section 15 and thus are in violation of section 

Sea Land however points to Article 10 of that agreement as auth

izingits rates Article 10 provides

In the event of competition by vessels notowned managed or controlled by 

parties to this Agreement the Lines at the port directly affected shall h

liberty by unanimous agreement at that port to meet the competi Uon theL

at the other ports to be advised immediately through the Secretaries and t

kept advised as to the rates quoted and or accepted or arrangements made 

theperiods covered The Lines operating from any other port may by unanim

agreement at that part modify their Tates similarly or make siimilar arra

ments if they consider such action necessary upon similar advice through 

Secretaries to all the other pa ties to thisAgreenrent

Without going into the circumstances which prompted Sea Land 

independently reduce its wines and spirits rates the reduction po

several questions offact underAIticle 10 i e Is the competition to 

melt by vessels not owned managed or controlled bya party to 

Agreement Is GrangemourtJh the port direotly affected by this com

tition and Vas the reduction only that which was necessary to m

this competition 1

Moreover the provisions of Article 10 ofthe O

ference agreement are difficult to reconcile with the language of cla

10 of the wines and spirits dual rate agreement which Sea Land c

tends disposes of the assertion that its reduced rates violate sect

14b Clause 10 provides

Nothing in the AGREEMENT shall prohibit the Carriers from reducing 

stipulated rates provided that any reduced rate shall be effective for not 

than 30 days from date o notice and due notice shall be given to the Natio

Association of Alcoholic Beverage Importers Inc and further provided 

1

Sea Land s

reduced rates were Intended to meet the competitIon of Export Itse

member of NAWFA and Is but the most recent outbreak in a long standing dis

between the two lines For a discussion of the particular operation of Export to w

Sea Land objects see our decision In Disposition oj Oontainer Marine Lines 11 F 

476 1968

13 F M 
REJECTION OF TARIFF FILINGS OF SEA LAND SERVICE INC 203

Contractors will at all times be accorded the lowest rate at whic any Wines or

Spirits are carried by the Carrieas inthe trade covered by this AGREEMENT

Both sides rely on the language ofthis clause to support their position

and neither of their arguments exceeds the bounds of reason Again

possible factual questions are posed

From the foregoing it should now be clear that even were we to

accept the criteria of the supporters of the rejection the violations

asserted in support of that rejection are neither obvious nor per se

z

Our order in this case posed the further question of whether Sea

Land s reduced DWtes were in violation of any rule or reguJation pro

mulgated under section 18 b It is alleged that Sea Land sfiling

violates section 532 2 c of our General Order 13 vhich provides

No carroier or conference shall publish and file any tariff or modification thereto

which duplicates or conflicts with any other tariff on file withthe Commission to

which such carrier is a alrty whether filed by such carrier or by an authorized

agent

Itis alleged that Sea Land s reduced rates are in conflict with the

NAWFA tariff but since the success of this charge depends upon

whether N A iVFAs basic agreement authorizes an independent filing

by Sea Land we have come full circle and cannot in this proceeding

conclude that a violation has been established

iVe conclude that the rejection of Sea Land s reduced rates at issue

in this proceeding was improper and that the tariffs were valid and

properly filed

YVhile we are reluctant to do so we feel compelled to comment on the

conduct of certain counsel in this proceeding This conduct is best

illustrated by two extra record letters which we received after we

heard oral argument Each letter refers to statements made during

thatargument

Counsel for Sea Land in a letter dated January 20 1969 the pur

pose of which was to instantly require the immediate correction ofthe

record characterizes the challenge by counsel for Export to veracity

ofcertain Sea Land officials as reckless malicious and irresponsible

We are urged to take immediate steps to maintain the responsibility

and dignity that should prevail at Commission proceedings In his

reply of January 26 1969 counsel for Export defends his statements

as constituting an oral rebuttal to the irrelevant facts Sea Land has

spread upon the instant record There is neither the need nor is this

a proper proceeding to comment upon the merits of either side ofthis

2

In all fairness to Hearing Counsel they realize and state 1111 culling out the obvious

violations upon which arejection may be based precise lines of demarcation cannot be

drawn And whIle wedo not here decide that arejection under section 18 b may DQt be

supported by a violation of another section of the Shipping Act we are well aware of

the difficulties anddangers In such acourse

13 F M C
204 FEDERAL MARITIME COl1MISSION

dispute because it is solely concerned with statements assertions a

allegations the content and import of which are totally irrelevant 

the issues presented in this proceeding 3The penchant for departin

from the issues displayed by both sides was not confined to or

argument Counsel for NA VFA considered it necessary to comme

on some reprehensible statements made on brief because they dealt n

with the overt actions of his client but the covert intentions behin

those actions what appeared particularly distressing was that th

assertions in question had no real relevance to the issues in this cas

There is an unseemly contrast between the paucity of cogent analys

of the issues and the abundance of irrelevant factual assertions Th

penchant for departing from the issue affiicts both sides of the disput

Ve are urged to take action to prevent the recurrence of this situ

tion in order to preserve our dignity but our dignity is not so muc

dependent upon the conduct of those who appear before us as it 

upon the e tento which we are able to justify and fairly resolve t

controversies brought to us As we are entrusted with the duty 

determination so equally are counsel entrusted with the advocacy of 

particular side ofany controversy in the way best suited to insure th

justice is done Acrimony and innuendo have no place before a

administrative tribunal and any attempt to intrude them there ca

only prejudice the cause in whose behalf they are summoned 7Th

more could be said we trust this is sufficient to preclude any recurren

oof thistype ofsituation again

vVe would however express our concern over the failure 

NA VFA to implement the throughroute authority we approved fO

jt some 6 Jllonthsago The establishment of such a series shou

resolve or at least alleviate the unseemly dispute between Sea Lan

and Export Ifit is the failure to obtain unanimity among all th

members of NA 7TFA which prevents the effectuation of the throug

route authority we would remind NAvVFAand its members that the

need only properly demonstrate that the Conference unanimity 

operating in a way which is detrimental to Conference efforts 

achieve stable efficient and progressive service in the trade and w

will assist the Conference or any member in achieving a

just solutio

to the problem Ve urge NA VFA to continue and strengthen 

efforts to restore harmony and fair competition to the trade

3 Hearing Counsel who were not involved in the dispute nevertheless properly identif

their cause when they urged that in order to prevent future occurrences we include 

show cause orders aclause reminding the parties to confine themselves to the issues

and to refrain from making allegations of fact and disputing facts before the Commissio

We f hould hope that the future should render it unnecessary to remind counsel appear

bcfore us to do that which the hallmark of their profession requires

13 F M C
REJECTION OF TARIFF FILINGS OF SEA LAND SERVICE INC 205

Finally we will on our own motion institute an investigation to

resolve those issues raised by the Bureau s rejection but undetermined

by ourdisposition ofthis case

This proceeding is hereby discontinued

oommissioner Hearn Dissenting

The rejection oftariffs fiJed on behalf ofSea Land Service Inc was

notimproper

First Ibelieve the Commission has the authority to reject the filing

Contrary to Sea Land s assertion grounds for rejection of a tariff

filing can be found elsewhere than in section 18 b e

g

sections 14 b

and 15 Ifsuch authority did not exist it would be impossible for the

Commission to reject tariff filings which for example include rates for

dual rwte contrwts filed on less than 90 days notice contain dual rates

with more than a 15 percent spread or bar consideration of shipper

complaints At least in such cases I

cannot imagine the Commission

being without authority to reject the filings Specific cases must be

determined on their own facts and circumstances hen they are be

fore us

Here Ifind Sea Lands tariff subject to rejection for the following

reasons Sea Land relies in part on Ar

ticle 10 of the basic NA TFA

agreement as authority for its tariff That article contains three

criteria for pennitting a conference member Or members to meet cer

tain competition by rate orarrangement Te need go no further than

the first criterion That the competition be by vessels not owned

managed or controlled by the parties to this Agreement This can

not be read as anything other than a reference to completely independ

ent carriers and not to a carrier such as AEIL vhich is a conference

member That AEIL may operate in a dual capacity does not divest

AEIL of ownership management or control of their vessels in the

trade in question Such must have been the intended meaning of the

words when they werewritten because the situation involving AEIL

could not then have been envisioned Although the Commission can

and does permit flexibility of interpretation when warranted this is

not such a case Conference agreements cannot be construed so as to

leave the Oommission and the public at the conference s mercy when

it chooses to apply provisions in a manner not consistent with the ac

cepted interpretation when the Commission granted initial approv

Consequently Sea Land s tariff filing is not authorized by the confer

ence agreement is duplicative ofthe conference tariff and is in viola

tion ofGeneral Order 13 and subject to rejection

Sea Land here is trying to have its cake and eat it too IfSea Land

wishes to meet AEIL s competition Sea Land may do so The compe

tition must however be On equal terms Sea Land feels discriminated

13 l M C
206 FEDERAL MARITIME COMMISSION

against because AEIL s

through intermodal tariff filings were 

given similar treatment in 1968 Itshould be recalled however th

AEIL s tariffs werenot accepted as filed Only after much revision 

the Commission werethe tariffs accepted

Ido not think the Commission should be in the position ofprote

ing the trade position of one or another innovative carrier Nevert

less the Commission should not permit competition for its own s

when it is premised on unlawful tariffs IfSea Land wishes to m

AEIL s competiition with an AEIL type tariff Iwould be amena

to accepting it if under current circumstances and all things c

sidered it is unlawful As matters stand Sea Land s tariffs are un

ceptable for filing andshould be rejected

Further itappear to methat appropriate conference action wo

have made itunnecessary for Sea Land to file its tariff and still f

ther that the issues of the filing s acceptability or validity co

quickly be rendered moot by Commission action Inits report in doc

68 8 the Commission said that conferences should be at the forefro

in stinlulating and encouraging improvements in transportation a

that the Commission does notintend to create orpermit impedime

to the improvement of shipping services Disposition of Oontai

Marine Lines Through Intermodal Oontainer Freight Tariffs 

F l1C 476 482 and 489 1968

In Jlme 1969 the Commission approved an amendment to 

NAWFA

agreement authorizingthe conference to establish a

throu

service NA VFA has not yet exercised this authority but ifthey h

done so without such delay this proceeding would have been avoid

vVith this in mind and there appearing no end to the delay Ithink 

Commission can and should take expeditious action to obtain 

inmlediate elimination of any mternal conference obstacles to 

establishment ofaconference through service

SEAL S FRANCIS C HURNEY

Secretary

13 F M 

U GOVERNMENT PRINTING OFFICE Inl
FEDERAL MARITIME COMMISSION

DOCKET No 68 9

FREE Tr IE AND DEMURRAGE CHARGES

ON EXPORT CARGO

Decided April 9 1970

Practice of granting unlimited free time on export cargo at Ports of New York

and Philadelphia found to be unjust and unreasonable within the meaning

of section 17 Shipping Act 1916 and rules and regulations determined

prescribed and ordered enforced which provide

1 Free time for export cargo at such ports shall notexceed 10 working

dars except upon U S Government cargoes and cargoes intheAustralian and

African trades where upon request free time up to a total of 15 working

days may be granted Up to 5 working days consolidation time after the

expiration of free time may also be granted upon request on consolidated

shipments

2 Demurrage at compensatory levels shall be assessed for first period

following demurrage free time and at penal levels forlater periods

3 Demurrage shall be assessed against thevessel in case of vessel delay

In case of vessel cancellation with respect to cargo noton demurrage com

pensatory level demurrage runs against the vessel from time of receipt of

eargo at terminal to announced date of sailing with earlier termination if

shipper has another vessel nominated for loading removes cargo from the

terminal or stores cargo Cargo on demurrage on announced date of can

celed sailing remains on demurrage for account of shipper until shipper has

another vessel nominated removes cargo from terminal or stores cargo

4 Additional time free of demurrage shall be granted for cargo not on

demurrage and assessment of demurrage at compensatory level for cargo

on demurrage shall be made in case of factors preventing vessel loading by

immobilizing pier facility or facilities inall or in part

5 Storage facilities may he provided at the terminal subject to certain

donditions

Joseph A Byrne for intervener the New York Terminal Confer

ence and constituent members

Sidney Goldstein F A Mulil 3nA thur L TVinn Jr San1Awl H

Moe ma nJ Raymond Olark Douglas TV Binns and James M Hen

derson for intervener The Port of New York Authority

Michael TVestgate for intervener the Department of Marine and

Aviation of the City of New York

13 F M C 207
208 FEDERAL MARITIME COMMISSION

Gerald H Ullman for intervener the New York Foreign Freig

Forwarders Brokers Association Inc

Justin Stern for intervener E Miltenberg Inc

O Buolvthal and Ourt Dreifus8 for intervener Pana Internation

Corp

Francis A Scanlan for intervener Port of Philadelphia Marin

Terminal Association

George E Pratt and Tho mas V LeFevre for intervener Greate

Philadelphia Chamber of Commerce

lIforris Duane lIfartinA Heckscher and George F Mohr for inte

vener Delaware River Port Authority

Joseph J Oonnolly and Ohester H Gourley for intervener Port 

Boston M arine Terminal Association

Neil J Lynch Ohester H Gourley and George lV Stttf11 tfor inte

vener Massachusetts Port Authority

Philip G raemer for intervener the Maryland Port Authority

Ernest E Ball for intervener the Norfolk Marine Termin

Association

Blair P Wakefield J Robert Bray and Arthu1 lV Jacoc1cs for i

tervener theVirginia State Ports Authority

Oyrus O Guid10y and John Otlnnin qham for intervener the Boa

of Commissioners of the Port of New Orleans

O lV He1 bert for intervener the Greater Baton Rouge Po

Commission

D O Davis for intervener the Portof Lake Charles Lake Charle

Harbor and Terminal District

Burton H White and Elliott B Niwon for interveners the Norb

Atlantic Baltic Freight Conference the North Atlantic Contin nt

Freight Conference the North Atlantic FrenchAtlanticFreight Co

ference the North Atlantic Mediterranean Freight Conference a

the North Atlantic United l

ingdom Freight Conference

MarcusE Rough for intervener the U S Atlantic and Gulf Au

tralia New Zealand Conference

E W Norberg John K Ounningham and Seymour H Kligler fo

intervener the American Vest African Freight Conference

WarrenPrice Jr Frank Hiljer and R L Da USend for interven

Sea Land Service Inc

Joseph A Ryan John J Hudgins John O Kennedy OharlelJ W

Buoy Karl O B1 annan Earl L Saunders Harold M Oarter Willia

A Imhof and Neal A Jackson for intervener theSecretary ofAg

culture of the United States

Donald J B1ounner Norman D Kline Robe1 tH Tell and Jan

N Albert as Hearing Counsel

13 F M C
FREE TildE AND DEMURRAGE CHARGES ON EXPORT CARGO 209 

REPORT

By THE COMMISSION Helen Delich Bentley Ohai Jmanj Ashton C

Barrett George H Hearn Oommi8sioners

We instituted this proceeding pursuant to sections 17 22 and 43 of

the Shipping Act 1916 to determine the reasonableness of the free

time practices on export cargo at the Ports of New York New Yorkl

and Philadelphia Pa and to determine whetherrules and regulations

governing those practices were necessary

l Numerous parties includ

ing forwarder shipper ocean carrier marine terminal and port

authority interests most of whom actively participated in the pro

ceeding intervened Examiner Charles E lorgan issued his Initial

Decision finding that the practice of offering unlimited free time on

export cargo at the Ports of New York and Philadelphia was unrea

sonable and prescribing certain regulations to govern free time and

demurrage practices at those ports The proceeding is before us now on

exceptions to Examiner Morgan s decision

THE SITUATION AT NEW YORK AND PHILADELPHIA

A

shipment in the export trade normally requires land transporta

tion to the port Presently at the Ports of New York and Philadelphia

the export cargo destined for one ship cannot as a general matter all

be delivered to a pier in trucks railroad cars or by other means in

anyone day Because of the physical limitations of and the limited

access to the piers about half of it arrives more than 3 days prior to

departure of the vessel Cargo is usually booked by an ocean carrier

for a particular sailing well in advance of the vessels scheduled ar

rival the cargo arrives about a week more or less before the vessel and

is accepted for that sailing Some cargo however arrives at the pier

under an indefinite booking and is not designated for any sailing Such

cargo bears the instructions of the exporter which are passed on by

the carrier to the terminal operator to hold the cargo and await

further instructions Such cargo is known as hold on dock cargo

Cargo may be d signated hold on dock for various reasons such as

consolidation with other lots completion of necessary export docu

mentation and even in many instances utilization of free storage on

the piers Depending on the exporter s instructions such cargo may be

held on the piers for weeks months or even up to a

year without lim

itation and without any specific charge for the use of the pier space

1 Notice of proposed rulemaking and hearing was published in the Federal Register on

Feb 16 1968

13 F M C
210 FEDERAL MARITIME COMMISSION

New York and Philadelphia are the only major ports in the Unite

States which afford export cargo unlimited free time i e a perio

during vhich cargo may remain on the piers or docks without 

curring demurrage charges

In 1963 the Commission examined the effect of free storage 

export cargo in the Port of New York in its Fact Finding Investig

tion No 4 and found that the terminal operators weredeprived of v

uable and limited work areas on the piers Additional moneys had 

be spent for the handling care and protection of export cargo stor

for long periods on the piers This waste and inefficiency cOntinu

at the present time In fact the conditions in 1968 if anything ha

worsened in comparison to conditions in 1963 and the record in th

proceeding shows that millions of pounds of export cargo may 

present at one time on a single pier and that th average length 

time that hold on dock export cargo remains on the piers excee

30 days Instances in which such cargo occupies valuable transit spa

for as much as a

year are not unknown The record furtJler sho

that the presence of hold on dock expolt cargo greatly aggravat

pier congestion following the 2 week longshore work stoppage 

lVIarch 1968

About 90 percent or more of all export cargoes moving through t

Port ofNew York is received within 10 working days before the 

ings of the ships on which these cargoes move and the same is gen

ally true at Philadelphia Itis predicted bya knowledgeable witne

that if the Commission were to promulgate a

regulation limiti

free time to 10 working days adj1 lstments could be made by shippe

with the result that only 2 or 3 percent of outbound cargoes wo

be adversely affected From an operational standpoint the termin

at New York and Philadelphia generally do not need any more th

10 days to load a vessel with its export cargo including the ti

needed to admit thecargo ontothe pier

In recent years more and more cargo is b

ing delivered to mar

terminals in carrier or shi

pper

owned containers or trailers Incre

ingly large quantities of cargoes shipped through the Ports of N

York and Philadelphia are in this containerized category Spee

handling is one ofthe primary benefits derived from containerizati

nd the high value of the containers and trailers make iteconQmic

imperative that their movemel t be expedited Additionally on p

assembly of such cargo may be avoi4ed Although the evidence a

testimony developed in this proceeding did not generally relate 

containerized cargo it seems clear that less time may be neede9 

the admission to and transit of the pier by such cargo thanis usua

the case in break bulk cargo

13 F M C
FREE TIME AND DEMURRAGE CHARGES ON EXPORT CARGO 211

Although the matter of unlimited free time an export cargO at the

Parts af New Yark and Philadelphia has been a matter of concern

to the Cammissian and its staff since the days afFact FindingInvesti

gation NO 4 ve preferred if passible to have the terminal operatars

salve thisprablem themselves Thus in Agreement No 8005 4 Modi

fication of Conf Agreement 10 FliC 314 1967 we approved a

madificatian af the agreement af the New York Terminal Conference

specifically empawering its members marine terminal aperators can

tract stevedares andcamman carrieTs by water whO furnish marine

terminal facilities and services in thePart af New Yark and vicinity

to establish free time limitatians an expart cargO Iawever nO limi

tatian an free tilne an expart cargO became effective Tille many acean

carrier and terminal interests in these twO parts cauld nat agree an

free time restrictions and failed to act unilaterally to establish them

because afthe cancern that same campeting steamship line0 1 terminal

in the same part might abtain a

campetitive advantage with the ship

per exparters by rea san af allawing mare free time an expart cargO

01 by having a less restrictive rule Generally speaking and natwith

standing the fact that New Yark has the advantage af more frequent

sailings thanPhiladelphia the terminal aperatars afthe Part af Phil

adelphia felt and still feel that the T cauld gO alang with almast any

reasanable rule established at the Part af New Yark but that they

cauld nat establish a rule far the Part af Philadelp hia unilaterally

because af the campetitian between the Parts af New York and

Philadelphia

Atthe majar parts af the United States ather than New Yark and

Philaq elphia acharge generally cal1ed demurrage is impased after

the expiratian of a free time periad Such charge is impased at Nmv

Yark and Philadelphia with respect to cargO in the import trade One

purpase of demurrage is to compensate the awner 01

aperatar af the

terminal facility far the use by lthe cargO afthe pier space and far the

casts af furnishing watchmen fire protectian and ather services far

the safekeeping af the cargO An additianal and mare impartant pur

pase af such charge hawever is to encaurage the prampt remaval af

the oarga The area accupied by cargO moving acrass the piers priar to

the laading af a ship in the expart trades 01 the remaval fram the ter

minal facility by truck 01 rail in the impart trades is thai adjacent to

the waterfront called generally transit space and is nat designed far

lang periods af storage Itis essential to the efficient aperatian af ter

minal facilities that this area be kept as fluid as passible It is there

fare the s ap9ard practice at mast af the m jar parts including New

York and Philadelphia with respect to import cargo after the assess

13 F M C
212 FEDERAL MARITIME COMMISSION

ment of demurrage at alevel designed to compensate the terminal fo

the use of the pier space and the services rendered the cargo calle

ompensatory demurrage to assessdemurrage at a higherlevel called

penal demurrage to discourage the extended use ofpier transit spac

for warehousing orstorage

Presently the ocean carriers otherthan those fewwho operate the

own terminals pay the terminals certain rates or fees for stevedorin

and other expenses in connection with export cargo including th

expense ofproviding pier space

2

The export freight rates of the ocea

carriers are intended to reimburse them for their various costs includ

ing expenses incurred with respect to export cargo by reason of pay

ments made to theterminal operators

The free time and demurrage regulations originally proposed by th

Commission and set fOlth in the notice ofproposed rulemakingin thi

proceeding would have established a free time period on export carg

at New York and Philadelphia of 10 days exclusive of Saturdays

Sundays and legal holidays beginningat 12 01 onthe day after carg

is received at the terminalfacility and ending at 11 59 on the final da

of free time Vhen a vessel is delayed beyond the announced date o

arrival through no fault of iets own up to 5 days additional free time

beyond the 10 days was proposed No penalty demurrage was to b

assessed in such delay situations At the expiration of free time de

murrage charges in successive periods were proposed the first perio

charge to be assessed at a compensatory level and charges for subse

quent periods to beassessed at penal levels No demurrage charges wer

to be levied on or after the day a vessel has commenced to load Finally

ifthe loading ofthe vessel is prevented or delayed by a strike or wor

stoppage involvinglongshoremen or terminal or water carrier person

nel cargo on free time wasto be grantedadditional free time and carg

on demurrage wasto be assessed demurrage charges atfirst period leve

untilthesituation is remedied

During the course of the hearings and on brief many suggestion

weremade with respect to theproposed rules

THE EXAMINER S DECISION

In his Initial Decision the Examiner established 10 working days 

as the basic free time period on export cargo at New York and Phila

delphia butprovided for theextension ofthis free time up to 21 calen

2

Generally speaking these rates orfees are on a tariff basis at Phlladelphia and 

negotiated basis at New York

S Working days are all days other than Saturdays Sundays and legal holidays

13 F M C
FREE T E AND DEMURRAGE CHARGES ON EXPORT CARGO 213

dar days for U S Government 01 charitable cargoes and cargoes in

certain tradeareas Atotal of21 days free time wasgranted shipments

consolidated onthe piers

The Examiner ordered the assessment ofdemurrage at a

compensa

tory level immediately after the expiration of free time and penal

demurrage duringsubsequent periods

The Examiner required the assessment of demurrage against the

vessel in some cases ofcancellation and after the eAiension of 5 addi

tional days free time in case of vessel delay

In situations where a vessel is prevented from loading because of

hrunobilization ofthe pier facility the Examiner ordered the extension

of free time to cargo on free time and the grant of compensatory

demurrage to cargo on demurrage

Finally the Examiner required the designation of the vessel at the

time of delivery ofcargo to the pier facility and allowed for the estab

lishment ofstorage facilities

DISCUSSION AND CONCLUSIONS

1 The General Free Ti fne Lirnitation

All parties exceptingor replying to exceptions to the Initial Decision

agree that a limitation on free time should be placed on export cargo

at the ports of New York and Philadelphia and all but two of them

agree with the Examiner that such limitrution should in general be 10

working days Virginia State Port Authority and Norfoll 1arine

Terminal Association Virginia seek a limitation of 5 working days

and U S Atlanticand Gulf Australia New Zealand Conference Aus

tralia Conference seeks free time on a next available sailing or

sailing followingthe first available one basis with a 15 working day

maXlmum

Free time is not a gratuity to be granted or denied at the whim

ofthe provider of ocean transportation it is required as a

necessary

part of the carrier s

transportation obligation Investigation of Free

Ti71M Practices PortofSan Diego 9 F 1 C 525 53 9 1966 see also

A71Le1ican P1 esident Lines Ltd v Federal Ma1itime Board 317 F 2d

887 888 D C Cir 1962 The free time obligation must be met

through the provision of terminal facilities adequate to render such

free time meaningful and realistic and may be fulfilled either by the

carrier itself or through an agent iThere as is generally the situation

at the Ports of New York and Philadelphia the required terminal

facilites are furnished by terminal operators rather than the carriers

the operators become the agents of the carriers with respect to such

13 F M C

428 264 71 15
214 FEDERAL MARITIME COMMISSION

services and are bound by the same obligations that apply to 

carriers with respect to them Baltimore O R 00 v United Sta

201 F 2d 795 796 7 3rd oil 195 3 Penna Motor Truck Ass 

Phila Pierrs Inc 4 F 1B 192 197 1953 Nor is the extent of s

obligation nebulous T he reasonableness of the free time perio

fixed broadly speaking by determining the period necessary for 

shipper to assemble in the export trade or the consignee to rem

his cargo in the import trade prior to loading the goods on 

ship or after discharge of the goods from the ship Investiga

of Fl ee Ti11w P1 actices Port of San Diego S ltpra at 539 The pe

established must also be realistically designed to allow a consig

sufficient time to deliver his cargo taking into account the transpo

tion necessities of the particular port or terminal including inter 

the physical limitations of the terminal facilities transportation 

lays frequency of sailings availability of truck and other mode

inland transportation and number of freight forwarders in the 

area Cf Investigation of F1 ee Time Practices Port of San Di

supra at 527 541

Because ofthe limited pier space available at New York and Ph

delphia it is as has been noted impossible for all cargo dest

for a particular ship to be deposited on the piers at the same t

Generally several days are necessaryfor this process the record he

indicating that 90 percent of the export cargo moving out of t

ports presently is received no more than 10 working days prior to 

sailing of the ships onto which it is loaded The record further sh

that all but 2 or 3 percent of such cargo can move across the p

within 10 days of receipt at the terminal including the time ne

to admit the oargo to the pier It thus appears that in genera

1nore than 10 working days free time is needed On the other h

while it is true that some cargo destined for a particular ship 

not use the full 10 working days egthat cargo which is able t

admitted to the terminal and loaded aboard ship within a da

two before a

ship sails it is obvious that the physical limitation

the terminal facilities are such that some cargo destined for 

ship will be forced to use the pier space for a time approxima

the full free time period Itwould be lmfair therefore to fix a m

mum free time period at less than 10 working days The reques

the Australia Conference for a maximum of 15 working days is 

necessarily generous in light of the need demonstrated on this re

for a general limitation of free time of only 10 working days w

the 5 working days suggested by Virginia is not sufficiently genero

satisfy the requirements shown to exist at the Ports of New York 

Philadelp

hia

13 F M 
FREE TIME AND DEMURRAGE CHARGES ON EXPORT CARGO 215

The evils of extending more free time than is necessary for the

accomplishment of its purpose have been enumerated ofter in our

earlier decisions and are almost self evident Valuable transit space

may be used without compensation thus threatening the economic

soundness of terminal operations To the extent that other cargo such

as import cargo at New York and Philadelphia which is subject to

demurrage charges pays for the use of terminal space and services

while export cargo occupying adjacent space and receiving indentical

services escapes the obligation to pay for them the import cargo

is being unduly and unreasonably prejudiced within the meaning of

section 16 First of theShipping Act 1916 and the terminal operator

has engaged in an unreasonable practice with respect to the receiving

handling and storing of property within the meaning of section 17 of

that Act 5Further such prejudice may occur even bebveen exporters

when certain exporters obtain more free time than is necessary while

others are unable to do SO

6

Vhen it is recalled that pier space at

New York and Philadelphia is limited the possibility ofunreasonable

andprej udicial practices is accentuated

More than just these inherent problems with excessive free time

exist at New York and Philadelphia however The dominant factor

in establishing free time limitations must be the public interest which

requires that congestion of ports be minimized in the interest of

efficient water transportation 7

and as has been seen the problem

of congestion has grown worse with the passage of time and this

congestion has been aggravatecl by the presence on the piers of cargo

enj oyingunlilnitedfree time benefits

We therefore find that the granting of unlimited free time at the

Ports of New York and Philadelphia constitutes an unjust and un

reasonable practice with respect to the receiving handling and storing

ofproperty withinthe meaning of section 17 Shipping Act 1916 and

that except as herein noted 10 working days is the reasonable maxi

mum free time period for export cargo at the Ports of New York

and Philadelphia Although we realize that competitive pressures may

tend as they have in the past to convert the maximum into a fixed

period the operators of terminal facilities are free to establish lesser

Investigation oj Free Time Practices Port of San Diego 8upra at 549

6

See Storage oJ Import Property 1 U S M C 676 682 1937 Storage Charge8 Under

Agreemcnt8 6205 ancl 6215 2 U S M C 48 52 53 1939 The unreasonableness of such

practice is magnified of course if the burden of defraying the cost of providing terminal

facilities and services for export cargo isactually shifted to the import cargo See San Diego

case supra at 549 see also Practices Etc of San Francisco Bay Area Terminals 2

U S M C 588 603 1941

G Cf Storage of Import Property ibid San Diego case supra at 544

7F1ee 7 ime and Demurrage Chat ges Ncw York 3 U S M 89 103 1948

13 F M C
216 FEDERAL MARITIME COMMISSION

periods if they can fulfill the necessary free time obligation in few

than 10 working days and are encouraged to do so in the interests 

efficiency ofpier operations and the maintenance oftransit area flu

ity This is particularly true in regard to containerized cargo wh

may by nature require less free time than other cargo and with resp

to which some parties have in fact indicated a desire to estab

shorter free time periods

2 Exceptions to the General Lirnitation

The Examiner granted three exceptions to the basic 10 work

day maximum free time provision to which objections have been voic

by several parties

A The GovermnentjOha1 itableException

The Examiner provided for free time not to exceed 21 calendar d

upon the request of the U S Government or for charitable purpo

such as relief cargoes

This exception wasdesigned to be responsive to the request for ad

tional free time by the Department ofAgriculture Agriculture T

type of cargo for vhich Agriculture seeks extended time is cargo wh

it moves in connection with CARE and voluntary relief agencies a

Public Law 480 shipments The programs involved are generally 

manitarian endeavors in which food medicine clothing and other ba

items are shipped to various parts ofthe world Although such ca

generally needs only 10 to 15 working days of free time the rec

herein does indicate that in some instances it is impossible for supp

which originate in various points in the country to be assembled a

inspected withinsuch time period Furthermore Agriculture s policy 

purchasing processed and packaged commodities often is based u

utilizing the excess capacity ofproducers so as to keep the cost to 

Government reasonable This factor ofpurchasing excesses ofprod

tion tends to require a flexible assembly period at U S ports Agric

ture fears that the imposition ofdemurrage under a 10 day free t

rule would reduce its volume of shipments require more funds fr

the U S Treasury and possibly divert cargoes away from New Y

and Philadelphia

13 F M 
FREE TIME AND DEMURRAGE CHARGES ON EXPORT CARGO 217

The major objection to this exception for US Government and

charitable cargoes is made by the New York Terminal Conference 8

The Terminal Conference contends that to allow such exception is un

reasonable inasmuch as the 10 day period is adequate No othertrans

portation interest it maintains is required to make or does make such

humanitarian sacrifices and the result will be greater pier congestion

Strictly speaking neither the time needed for cargo inspections nor

the flexible assembly period required for the most efficient utilization

of a program based on the utilization of a

supplier s excess capacity

appears to be a

transportation condition which would be sufficient to

support extended free time for an ordinary shipper

The time needed for cargo inspection has been rejected by this

agency and its predecessors as a basis for additional free time 9

and

such rejection seems particularly sound where as here there has been

no showing that such inspection either could not normally be com

pleted within 10 working days ofreceipt of cargo at the piers or could

not adequately be made at a place other than the piers 10 Insofar as

efficient utilization of a supplier s excess capacity is concerned it has

oftenbeen held that damage to merchandizing programs is not in itself

sufficient to justify extended free time l1

Vhen the Government is the shipper however it is not necessary

to make a strict showing of transportation necessity to establish the

lawfulness of extended free time

The policy ofspecial allowances for governmental cargo is embodied

in the shipping statutes 12 and has been recognized by the Commission

8 The Maryland Port Authority Maryland maintains that the exception should not be

granted because the railroads already grant 30 days free time to Government cargo Insofar

as this contention Is concerned it Is sufficient to note that the free time afforded by the

ocean carrier orhis agent is a

transportation obligation separate and distinct from that of

Inland carriers and its proper duration must be determined by applrlng the appropriate

principles of maritime regulatory law to the circumstances pertaining to the ocean trans

portation and ocean terminal facllltles The Board of Commissioners of the Port of New

Orleans New Orleans does not specificaHy except to this special allowance for Govern

ment and charitable cargoes but suggests an alternative rule which does not pro ide

for It

o

See e g Free Time anel Demurrage Practices at NY Harbor 11 F l LC 238 259 260

1967

10 Cf Free Time and Demurrage Charges New York supra at 95 101

11 See e g St01 age oj Import Property supra at 6823 American Paper and Pulp

Asso v B cG 0 R R Co 41 LC C 506 507 512 1916 Investigation oj Free ime

Practices Port ojSan Diego supra at 541

12 Section 6 of the Intercoastal Shipping Act 1933 an amendment to the Shipping Act

1916 provides

That nothing in this Act shall prevent the carriage storage or handl1ng of property

free or at reduced rates for the United States State or municipal governments or for

charitable purposes

IH F M C
218 FEDERAL MARITIME COMMISSION

as supporting the allowance of additional time for such cargo 

Docket 68 13 Assembly Time Port of San Diego 13 FMC 1

July 23 1969 Spec al treatment in favor of the Government is 

advantage to all the people and benefits the public by relieving them 

part oftheir burdens 13 Othertransportation interests pursuant to 

tion 6 or the Intercoastal Shipping Act 1933 or the policy ofsection 

ofthe Interstate Commerce Aot 40 U S C 22 upon which itwas p

terned 14

may offer concessions to U S Government cargoes and 

record in this proreeding shows that some or them do SO

15 Additio

any many ports offer extended free time on such cargoes and the 

minal operators at the Port or Philadelphia have no objection to 

Examiner s recommendation of such extension in the present proce

ing M oreover the free time extension recommended by the Exami

and permitted by the Qommission in Docket 68 13 is not mandat

but requires for its application a request by the cargo and the cons

ofthe operator orthe terminalfacility

The only significant problems in light ofthe lawfulness in princ

of an extension or free time of the type given by the Examiner 

the amount ofextended time to be prescribed the precise type of ca

to which it is to be granted and the conditions which should apply 

such grant

As the Examiner has properly maintained in the interests or re

edying the evils present at the ports here under consideration all sh

pers must adopt procedures which will keep the piers fluid Moreov

as he observed the United States Government should set an exam

for other shippers by doing an that it can to avoid situations wh

may contribute to the undue congestion on the piers of the Natio

ports Pursuant to this suggestion Agriculture has dropped its o

inal request ror 30 days free time and is now willing to accept the 

calendar days fixed by the Examiner In the case or the U S Gove

ment export cargoes at the subject ports the extention of 5 additio

working days rree time does not appear improper 16Very little Gove

13 See Tenne88ee Products ChemicaZ Corp v L N R R 319 IC C 497 503 19

14 The policy of section 22 which relates to rail carriers has been extended to a

to motor carriers water carriers and forwarders subject to the Interstate Commerce 

See 49 V S C U 317 b 906 c and 1005 crespectively

16 Some rall carriers offer extended free tIme on inland movements some ocean car

publish reduced rates for ocean carriage and individual forwarders may charge 

ocean brokerage waiving regular forwarding fees

IG FIfteen workIng days Is roughly the equivalent of 21 calendar days and is 

throughout as the maximum perIod for exceptions to the basIc free time perIod rather 

the 21 calendar days suggested by the Examiner since the basic period is expressed in te

of working days and we feel thatuniformity of terminology wlll lead to the more effic

admInIstration of the free time rules The substitution of working for calendar 

was orIginally suggested by theAustralia Conference

13 F M 
FREE TIME AND DEMURRAGE CHARGES ON EXPORT CARGO 219

ment export cargo moves throughthe Ports of New York and Phila

delphia such cargo accounting for only about 12 percent and 0 8

percent respectively of the total export tonnages at these ports

In light of the facts that at least in some cases 15 working days may

be necessary for admittance of Government cargo to and transit off

the piers that very little Government cargo

moves out of the subject

Ports and that such cargo has not been shown to be an important fac

tor in contributing to congestion at these ports we find that a maxi

mum 15 working days free time is a reasonable allotment for U S

IGovernment cargoes

The U S Department of AgricultuI wasthe only governmental or

charitable body that sought an extension of free time and it does not

appear from the record in this proceeding that other such groups

either desire or need extended free time Accordingly the exception

which we will establish shall be limited to U S Government cargo i e

commodities shipped for theaccount of theU S Government

Finally it appears appropriate for us to maintain surveillance over

lthe grants of extended free time to insure that the Government s privi

Jege is not abused Virginia has urged that requests for extended free

time be made in writing and a record kept of the requests Thile we

see no need to require that such requests be made in writing it does

appear necessary to us to require that the ports maintain records for 2

years of all grants ofextended free time including thecommodity its

tonnage the consignee and the additional free time usedY vVe rct

lize

in directing that the terminal operators keep such records we are at

least insofar as New York is concerned requiring them to assume an

obligation with respect to a privilege that they did not wish to grant

in the first place Ve would remind the terminal operators however

that the grant of the privilege is voluntary and that even if com

petitive pressures tend to make it mandatory there is no showing on

this record that 5 more working days free time on theminimal amount

lof Government cargo moving out of the subj ect ports has had or is

likely to have an appreci3lble effect on pier congestion Furthermore

the keeping of such records will not only tend to prevent the use of

additional free time by cargo not entitled to it but more importantly

is the best way to document the New York terminal operators fears

that the grant ofadditional free time to Government cargo will aggra

vate pier congestion The privilege of extended free time to Govern

ment cargoes is not an absolute one as the Government itself has

17 We imposed a similar requirement with respect to the grant of extended free time

on U S Government cargoes at the Port of San Diego in docket No 68 13

13 F MC
220 FEDERAL MARITIME COMMISSION

realized in accepting less free time than itoriginally sought and ma

be further curtailed if it appears necessary in the public interest o

maintaining efficient terminal facilities at the subject ports

B The Oonsolidated Shipment Excel tion

The Examiner provided for 21 calendar days free time for con

solidated shipments provided that they were designated as such o

the shipping documents and that the cargo comprising them wa

actually consolidated

The cargo involved in this exception originates at two or mo

supply points and is consolidated on the docks for shipment Suc

shipments move under a

single bill of lading and thus avoid the im

position of minimum bill of lading charges handling charges an

customs and forwarding fees which would otherwise be imposed o

the packages cOlnprising the shiplnents Consolidations on the dock

are frequently made pursuant to the instructions of a foreign con

signee who has placed orders with different American suppliers Co

30lidated shipments account for less than 5 percent ofthe total expo

tonnage handled through the Port of New York

The Examiner s allowance of extended free time on consolidate

shipments is opposed by several parties on the grounds that it is 

many cases not necessary and to the extent consolidations cannot 

made withinthe ordinary 10 day period the reasons relate to the com

mercial convenience of the consolidator or export shipper Since the

maintain that these consolidators can show no transportation oblig

tion of the terminal operator or carrier with respect to their cargo

which cannot be performed within 10 days these parties contend th

the extension offree time would require the terminal operators to pr

vide free warehousing weaken the financial security ofterminal ope

ators discriminate against other users of the facilities not afforde

additional free time and increase pier congestion without justific

tion IIearing Counsel rather than request the total removal of t

exception for consolidated shipments as have the other parties o

jecting to its allowance by the Examiner take what they characteri

as a middle ground and suggest that the 21 day free time period 

allowed to consolidators but that such special privilege terminate 

2 years They maintain that although the practice of eArt ending fr

time on consolidated shipments could as a matter of law be curtail

immediately it is not unreasonable to allow a 2year phasing o

period to prevent a disruption in the flow ofexports The 2 year perio

they feel will be sufficient to allow exporters to adopt alternati

means of exporting which will not involve extended use ofthe piers

13 F M C
FREE TIME AND DEMURRAGE CHARGES ON EXPORT CARGO 221

The most extensive argument in favor of the granting of additional

free time on consolidated shipments is made by the New York Freight

Forwarders Brokers Association Inc forwarders who contend

that there is a

transportation obligation of carriers and terminal

operators which cannot be performed within 10 days namely the

allowance of the time necessary to exporters to assemble their cargo

prior to loading on the vessels ISThe record demonstrates they main

tain that at least 21 days are needed because of cargo to be consoli

dated comes from nlany points of varying distances from the port of

export The alternative nlethods of shipment suggested by Hearing

Counsel are impractical and the 2 year limitation on the extension

of free time they assert is supported only by mere speculation as to

what pier conditions will be like 2 years frOlll now Lastly the for

warders contend that since less than 5 percent of the export tonnage

handled at the Portof New York moves as consolidated shipments an

allowance with respect to such traffic will have a minimal effect

There is evidence of record that 10 working days free time may not

be sufficient to satisfy the needs of exporters utilizing consolidated

shipments and that the majority of them need additional time There

is also indication that most consolidated shipments can and do transit

the piers within 15 working days of the arrival of their component

parts at the piers The record indicates that once all of the components

of a consolidated shipment have been admitted to the piers they can

typically be loaded into a vessel for export within 10 working days

Itis then the consolidation itself which gives rise to the need for addi

tional time

Because Iconsolidated shipments originate from inland supply points

which are often numerous and widely scattered and may move via

many different inland carriers there are difficulties in coordinating

the various inland movements to insure the arrival of all cargo to be

consolidated in time for assembly on the dock prior to a ship s sailing

These problems include the varying times required for the inland

transportation itself depending upon mileage from the port of ex

port and variations in the regulari ty frequency and dependability of

the service of the inland carriers As we have observed the physical

limitations of the piers are such that it generally takes about a work

ing week just to admit aU the cargoes which are to move on a particu

lar ship to the piers Vhen the delays attendant in admitting each

component of the shipments to be consolidated to the piers are added

18 The extension of free time on consolidated shipments is also supported by several

water carrier conferences the port and terminal lnterest at Philadelphia and the Port

of New York Authority

13 F M C
222 FEDERAL MARITIME COMMISSION

to the delays occasioned by the difficulties in coordinating all of th

inland movements to those piers the need for additional time free o

of demurragebecomes more readily understandable

However the mere fact that the component parts of consolidate

shipments come from many diverse origins for export does not ind

cate that a suitable inland consolidation point could not be found o

would be inappropriate The forwarders maintain that even if suc

places could be found the costs of utilizing off pier warehouses t

consolidate would be prohibitive The record is inconclusive on th

point 1any ofthe merchants who export their cargoes in consolidate

shipments are small businessmen who as uncontradicted testimony o

record plainly shows are unable to afford the use ofwarehouses in th

N ew York area to perforln consolidation There is some indication

too that consolidations at warehouses in other inland locations ma

also be costly because shippers would have to bear the expense o

transportation to the warehouse as well as to the piers and additiona

costs would be incurred by the movements in and out of the inlan

warehouses However the possibilities ofthe utilization ofinland con

solidation places other than warehouses in the immediate vicinity o

the ports do not appear to have been explored in any detailed or sys

tematic fashion Inland containerization of shipments a phenomeno

which as we have observed is becoming more and more common n

important in ocean transportation may also provide an economic

aIternative to on pier consolidation

Thus there is no real indication that consolidations of export ca

goes could not physically be made at off dock locations and that suc

consolidations could not be admitted to and deposited on the dock

in a condition ready for shipment within the ordinary 10 working day

free time period The primary purpose ofconsolidating shipments o

the piers is admittedly that of commercial convenience 9a purpos

which has consistently been rejected as a basis for the extension offre

time to nongovernmental or charitable shippers even in situation

where some economic injury nlay be caused by the imposition of mor

restricted free time 20 We are therefore unable to allow additiona

19 Some of the smallest exporters also fear that because of the slim profit margins o

which they operate they could not absorb the costs of demurrage for the use of the pie

if additional time for consolidation were not allowed and that difficulties may arise 

passing on the demurrage expenses to inland suppliers and foreign consignees

20 See e g l torage of Import Property Sltpra at 682683 Free Time anrl Demurra

Oharges New York supra at 103 Free Time and Demu1rage P1acticcs at NY

8ttpra at 241 42 American Paper Pulp Association Y B O RR 00 supra at 50

512 Plymouth Ooal 00 v Dl W RR 00 36 IC C 76 77 78 1915

Plymouth Ooal 00 Y L V RR 00 36 LC C 140 1915 TtH ner Dennis Lowr

L 00 Y Ohicago M St Paul Ry 00 2 F 2d 291 295 6 W O Mo 1924 afJ cl 27

U S 259 262 1926 Unite l States Y Union Pacific Railroad Oompany 173 F SuPp 39

408 S D Iowa 1959 affd 362 U S 327 1960 Merchants Planters 00 v G H H

RR 00 129 IC C 477 480 1927

13 F lC
FREE TIME AND DEMURRAGE CHARGES ON EXPORT CARGO 223

time usually known as free time for shipments consolidated on the

pIers

This is not to say however that cargoes consolidated on the piers

should not or cannot be allowed additional time free of demurrage Al

though on pier consolidations are made for the commercial con ven

ience ofexporters as that term is used in our cases relating to the free

time obligation problems are encolUltered in such consolidations

which as has been noted are due to transportation conditions for

which the exporter is not responsible e

g delays in inland transporta

tion and in admittance of the component parts of the consolidated

shipments to the piers Under such circumstances although additional

free time strictly defined based upon these delays is improper since

they cannot be said to be related to the transportation obligation of the

carrier or terminal operator the grant of some additional time on the

piers free of demurrage is allowable when a terminal operator desires

to provide it and where itis not otherwise unlawful

Docket 68 13 8up1 a is a case in point Inthat case in addition to the

grant of extended free time for U S Government cargo we allowed

additional processing time on the piers free of demurrage charges to

accommodate the bagging of chemical fertilizers for export Although

the bagging time was not assembly time in the sense in which that

expression is used to describe the transportation obligation of the

carrier or terminal operator to provide sufficient time for an exporter

to deposit his cargo on the pier and assemble it for shipment the evi

dence adduced in docket No 68 13 indicated among other things that

the need for extra time for the bagging operation was in part due to

the problems of delays encountered in the movements to the piers of

both the bags and the commodities to be bagged and the difficulties in

coordinating their Inovements to the piers 21 Recognizing that the grant

of such extended time is allowable however only where a terminal

operator desires to provide it and where it is not otherwise unlawful we

allowed 10 additional days processing time because the allowance of

such time was not shown to operate to the detriment of the efficiency

economy and financialsoundness of terminal operators

The record in this proceeding fails to sho v that the terminal opera

tions at the Ports of New York and Philadelphia will be materially

affected by the grant of 5 additional working days free of demurrage

to exporters nlaking consolidations on the piers for consolidation time

The record herein shows that the allowance of such additional time

InThe ports of discharge had no bulk unloading fncilities thus the fertilizer could

only be shipped in bugs

13 F M C
224 FEDERAL MARITIME COMMISSION

will be sufficient to allow the admission to the piers and loading aboard

vessels of a majority of consolidated shipments and port and termina

interests at Philadelphia and the Port ofNew York Authority are no

opposed to such concession The New York Terminal Conference fear

the consequences or extended time rree or demurrage to allow on pie

consolidations Itreasons that since at the present time only about 1

percen t of the cargo moving through the Port or New York uses the

piers for nlore than 10 working days and consolidations account fo

about 5 percent of the New York export tonnage the results of a

allowance or extended time to consolidators will be disastrous The ral

lacy orthis reasoning is that it assumes that one half ofthe cargowhich

has caused the pier congestion has been that of the exporters who con

solidate on the piers Persuasive evidence of record however indi

cates that most of the cargo consolidated on the piers for shipmen

occupies transit area space for no more than 15 working days and the

evidence or record which relates to the problems of congestion gen

erally deals with cargo which has been on the piers for 1 or more

months

In any event as we have stated we will not compel the termina

operators to grant additional time for on pier consolidations and i

they seriously rear that the efficiency economy and financial soundnes

or their operati ons will be endangered by the grant of such time they

should not do so The possibility that if some terminal qperatorsgran

extended time for on pier consolidations all will have to do so because

of competitive pressures seems rather remote The need to extend rree

time which in the past was caused by competitive pressures will with

the promulgation or a 10 working day rree time limitation applying

to nearly all the cargo exported rrom the subject ports no longe

exist Terminal operators have up till now been unwilling to make

limitations on rree time because they reared that substantial amounts

of cargo would be lost to those other terminal operators who did no

impose such limitation Now however when practically all or the cargo

will already be subject to the 10 working day limitation competitive

pressures shouldloom less large

Finally there is a type or consolidated shipment which will not b

appreciably affected by the allowance or a rew more working days

rree or demurrage This is the so called project shipment or projec

consolidation which is typically composed or materials intended to

be used ror roreign construction projects such as plants d3ims an

irrigation racilities It differs rrom the usual consolidated shipmen

in that it is larger made up or many more component parts and i

assembled overmuch longer periods or time generally occupying th

13 F M 0
FREE TIME AND DEMURRAGE CHARGES ON EXPORT CARGO 225

piers for months and Sometimes years The Examiner refused to make

any specia1 allowances for such shipments insofar as free use of the

piers is concerned and no exception to hisdetermination inthis regard

has been IDade We agree with the Examiner It is unreasonable to

permit the conversion ofpiers which are designed to be used as transit

areas into long term warehouses and then to deny the terminal opera

tor compensation for the use of such property The unreasonableness

ofthe free use ofthe piers by project shipments is magnified by the fact

that cargoes remaining on the piers for long periods of time are

already seriously aggravating the problem of pier congestion Ve

have however attempted to accommodate the desires ofthe exporters

of project consolidations for on pier storage space by prescribing reg

ulations under which suchspacemay be furnished to them 22

The forwarders suggest that the cargo which is to be allowed ex

tended time free of demurrage should be designated on the shipping

document as hold on dock for consolid3Jtion since the words hold

on dock are known in the terminal industry and will be sufficient to

prevent prem3Jture export while the word consolidated may not be

No objection has been voiced to this form of designation and since it

appears reasonable we will incorporate the hold on dock for consolida

tion designation into our rules 23

Although as we have indicated the exporters of consolidated ship

ments will not insofar as appears from the record in thisproceeding

substantially contribute to the problem of pier congestion by being

allowed a few extra days on the piers free of demurrage especially

since the terminal operUitors are free to deny the extra time ifin their

business judgment it appears necessary to do so such exporters should

in the public interest do everything possible to lessen the problems

of pier congestion To further this end exporters should explore at

length and attempt to utilize off pier consolidation inland contain

erization and partial shipments as alternatives to on pier consolida

tion To encourage exporters to explore and utilize these alternatives

and to prevent extensions from becoming automatic we will require

that those exporters desiring them or their agents request them as a

condition precedentto their grant

22 See p49 infra

23 The New York terminal operators fear that the extended time free of demurrage may

be obtained by exporters who stamp their shipments hold on dock for consolidation but do

not consol1date them The likelihood of this seems slim Car omust actually be consolidated

to allow exporters to avail themselves of the privilege and since the consolidations are

made on the terminals and terminal personnel might reasonably be expected to know the

status of cargo on the piers in their dally operations anyway it should not prove too

difficult to keep track of shipments received with the critical designation to ascertain if

they become parts of a legitimate consolidation If howe er the terminal operators feel

that this task is unduly burdensome or too difficult to administer the simple answer

is that they need not extend additional time to consolidated Shipments
226 FEDERAL MARITIME COMMISSION

To enable review ofthe problem ofextended time for consolidake

shipments if such appears necessary we will require as in the cas

of extensions to U S Government cargo that records be kept for 

2 year period of all grants of consolidation time made by the termina

operators in the exercise of their business judgment for the purpos

of on pier consolidation Such records should include the name ofth

export shipper as shown on the bill of lading the tonnage ofthe con

solidated shipment the consignee and the additional time used

In conclusion we find that the voluntary grant upon request o

up to 5 additional working days consolidation time for shipment

actually consolidated on the piers and exported under a single bi

of lading is on the basis of the present record a reasonable practice

at the Ports of New York and Philadelphia and will provide for 

in our rules promulgatedherein

O The Australian and African Trade Exception

Because of the infrequency of sailings the Examiner provided fo

up to 21 calendar days free time to cargo transported in the trade

served by the Australia Conference and the American West Africa

Freight Conference African Conference provided thrut such carg

is deposited on the piers within 21 calendar days of the first availabl

sailing and either moves on that sailing or is prevented from movin

thereon by a fault or design not imputable to theexpovter

Opposition to the exception for such cargoes is raised by several o

the port and terminal operating interests and Hearing Counsel wh

maintain that no reason has been shown why 10 days free time i

insufficient for the delivery and loading of cargo in these trade areas

and that the exception promotes congestion encourages inefficien

booking practices and wastes theterminals resources The real purpos

of the exception these parties maintain is to equalize the intraconfer

ence competition which might otherwise exist because of variation

of sailing frequencies as between the different members of the confer

ences This the opponents charge is not a legitimate function of fre

time rules

The conferences on the other hand contend that the charges o

increased congestion are based upon sheer conjecture The fact t a

equalizing intraconference competition illlay not be a normal functIO

offree time rules is irrelevant they maintain as long as the period o

21 calendar days has not been shown to be unreasonable Moreove

prior case law they contend supports their position that concession

based ontrade areas served are proper

13 F M C
REE TIME AND DE IURRAGE CHARGES ON EXPORT CARGO 227

The trade areas served by the

A

ustralia and African Conferences

and to which these conferences appear to provide virtually all of the

regularly scheduled liner service are among the most removed from

U S ports The membership of these conferences moreover is smaller

than is typical or conferences sailing in our foreign trades The Tesult

of this is that sailings tend to be infrequent in the African and Aus

tralia Conference areas

The Australia Conference servesAustralia and New Zealand From

the Port of New York it maintains only seven sailings a month to

Australia by the six member carriers calling there one carrier making

roughly two sailings a month and the other five carriers offering ap

roximately monthly sailing These lines have a total of only two

sailings monthly to New Zealand Sailings by the Australia Confer

ence out ofPhiladelphia are less frequent The African Conference

also has infrequent service Although some ofits 13 member lines may

have weekly sailings many of them sail only once in 3 or 4 weeks

it further appears that most of the member lines concentrate on cer

tain particular segments ofthe trade area it appearing that only one

actually serves all of it As in the case of the Austrialia Conference

sailings from Philadelphia are less frequent than from New York

Much of the cargo carried by the African Conference is shipped for

the account of the U S Government

The record tends to show that hile most of the cargoes in these

trade areas arrives witllin 10 working days on the piers in a condition

ready for loading a substantial amount of such cargo arrives about

15 working days before the loading of the ship on which it is to move

In Practices Etc of San Francisco Bay Area Terminals supra at

597 598 while the Commission prescribed a

general 7 working day

limitation on free tilne for foreign export cargo at San Francisco Bay

Area terminals it permitted such tel lninals in their discretion to al

low up to 21 calendar days free time on petroleum products destinecl to

trans Pacific ports where the evidence in the proceeding showed that

the limitations of the terminals facilities may have prevented han

dling of such cargo within the regular free time period Although ter

minals werenot obligatedto make such extension offree time they were

permitted to do so since the additional time was not shown to be de

structive of the efficiency and financial soundness of the terminals

operations

As has been indicated in InvestigoJtion of Free Time Practices Port

of San Diego supra at 531 2 and has been acknowledged in this pro

eeeding by the New York Terminal Conference and Hearing Coun

se1 the frequency or sailings from a certain port is a

transportation

13 F M C
228 FEDERAL MARITIME COMMISSION

condition which nlay be taken into consideration in establishing fre

time regulations and as we further noted in San Diego sailings t

certain trade are2 S may be considered

San Diego was forbidden to offer unlimited free time to attrac

cargo which vould otherwise have moved through other West Coas

ports merely on the basis that it had fewer sailings than the othe

ports Such competitive device is not a legitimate use of free time

vVhere however as in the Australian and African trades the infre

quency of service may have an impact upon the demurrage assesse

against shippers in these trades it is not improper to make allowancs

for such infrequency of service in free time regulations Ashipper who

for example exports products to a remote part of Africa to whic

sailings may be available only once a month or to New Zealand wher

there is a total of only two Conference sailings from New York in 

month may time his shipments to allow for a few days leeway so as no

to miss his sailing This may account for the fact that cargoes in thes

trades often occupy the docks for about 15 working days We canno

say it would be Ullreasonable in such circumstances for the termin

operators to allow these shippers a few extra days free time We wi

not require that they do so but merely allowthe extension as wasdon

in the San Francisco Bay case with respect to the petroleum product

There is no evidence that cargo carried by the Australia and Africa

Conferences constitutes anythingbut a

tiny fraction ofthe cargo mov

ing out of the Ports of New York and Philadelphia or that it ha

contributed in any appreciable way to the problem of port congestio

which this proceeding is designed to remedy or has damaged the f

nancial stability of terminal operations As we have noted the carg

which the record indicates has been the main irritant in the congestio

situation has been cargo which has occupied the piers for a month o

more hile there is evidence that cargo in the areas served by th

Conferences may be on the docks a few days beyond the 10 working

day period there is no evidence that it is held on dock for extende

time periods and testimony of record indicates that very little o

such cargo would be on the dock for 30 days Even if carg

moving in these trade areas had in the past contributed appreciably t

congestion however the limitation of a maximum 15 working day

free time which we shall apply to such cargo should help to preve

such results in the future and the port and terminal interests 

Philadelphia as well as the New York Port Authority do not oppo

the allowance of additional free time for such cargo If howeve

the terminal operators at New York who represent the major opp

sition to the exception feel that it is injurious to their interests 

grant additional time they need not and should not do so

13 F M C
FREE T E AND DEMURRAGE CHARGES ON EXPORT CARGO 229 

One of the main criticisms of the extension of free time for the

Conferences in these trade areas is that its real purpose is to equalize

intraconference competition which is not a legitimatefunction offree

time rules Since there is a

legitimate transportation justification for

the extension of free time the fact that it may have been motivated

in the first place by factors unrelated to such justification is irrelevant

Iowever the use of extended free time to equalize intraconference

competition is indeed not a legitimate function of free time rules To

prevent its use for this purpose and because the extension is intended

for the benefit ofthe exporters we will require that the discretionary

grant by the terminal operators be conditioned upon a prior request

by the exporters ortheir agents

The Examiner had conditioned the grant ofextended time upon the

depositing ofthe cargo onthe piers within 21 calendar days 15 work

ing days of the first available sailing The practice in these trades

however is to book cargoes to move on specific lines rather than to

follow the more usual procedure of booking for the next available

sailing In many cases at least in the African area where lines tend

to concentrate their services on particular segments of the trade area

booking by line may in fact amount to the same thing as booking for

next available sailing At any rate we are unable to find that the prac

tice of booking by line has had any unlawful effects and accordingly

will not require that it be modified We shall formulate a rule with

respect to cargo carried in trades served by theAfrican and Australia

Conferences which will allow a maximum of 15 working days free time

for such cargo if it is deposited on the piers within 15 working days

ofthe sailing for which it is booked Since however there appears no

reason ofrecord why shipments cannot be placed on the docks within

15 working days of the loading of the vessel for which it is booked

we will deny as did the Examiner extended free time to any shipper

who fails to have his cargo on the docks within such time period or

who holds his cargo beyond such period In such cases the usual 10

working day limitation will apply Exporters are further exhorted

to coordinate the movements oftheir cargoes to the dock as closely as

possible with vessel sailings and not to seek any more time than they

in good faith believe to be necessary

Finally to enable both the terminal operators and the Commission

to maintain adequate surveillance over the practice of extending free

time to cargo carried in the trade areas served by the Australia and

African Conferences andto provide information which may be utilized

as the basis for determining if action with respect to such practice

should be taken in the future to protect the economy and efficiency of

13 F M C

42S 264 71 16
230 FEDERAL MARITIME COMMISSION

terminal operations we will require that records be kept for 2 yea

of all grants of extended time to such cargo including the name 

the shipper as shown on the bill oflading the commodity its tonnag

theconsignee and the amount of additional freetime used

Ve therefore find that the voluntary grant to the exporter or h

agent upon request of up to 15 working days free time to cargoes ca

ried in the trades served by the Australia and African Conferenc

is a reasonable practice provided such cargo is deposited on the doc

within such time period and is not held through any fault or desig

ofthe shipper orhis agent beyond such period

Ve accordingly find the following to be a

just and reasonab

regulation prescribingthe free time and consolidation time periods 

export cargo at the Ports of New York and Philadelphia and w

order it enforced

a Free time on export cargo at the Ports of New York and Philadelph

shall not be more than 10 days exclusive of Saturdays Sundays and leg

holidays except

1 Upon request of the U S Government free time not to exceed 15 da

exclusive of Saturdays Sundays and legal holidays may be granted Th

exception shall apply only to commodities shipped for the account of the U 

Government

2

Upon the request of export shippers or their agents free time notto exce

15 days exclusive of Saturdays Sundays and legal holidays may be granted 

cargoes moving in the trades served by the U S Atlantic and Gulf Austral

New Zealand Conference and the American West African Freight Conferenc

provided that such cargoes are delivered to the terminal not more than 15 da

exclusive of Saturdays Sundays and legal hOlidays prior to the sailing f

whkh they are booked and provided further that they are not held beyo

such 15 day period through any fault or design of the export shipper or h

agent In either such case demurrage charges shall apply after the passage 

10 days exclusive of Saturdays Sundays and legal holidays following t

date of delivery to the terminal

b On consolidated shipments upon the request of export shippers or th

agents consolidation time notto exceed 5 days exclusive of Saturdays Sunda

and legal holidays may be granted inaddition to the 10 days free time provid

in subsection a Cargo upon which such consolidation time has been grant

shall be designated on dock receipts and on other appropriate shipping docume

as hold on dock for consolidation Cargo not so designated and cargo notactua

consolidated on thepiers will not be entitled to the grant of consolidation tim

As used herein consolidated shipments shaH mean shipments which are ma

up of commodities originating from two or more supply points and which mo

under a single bill of lading to overseas consignees

13 F M C
EE TIME AND DEMURRAGE ClIARGES ON EXPORT CARGO 231

3 Timing of Free Time

The Examiner formulated the following provision for computing

the free time period

0 Free time on export cargo shall commence at 12 01 a

m on the day after

the said cargo is received at the terminal facility and terminate at 11 59 pm

on the flnal day of free time

This provision reflects the traditional practice at many U S ports

and is not opposed by any party to this proceeding iV e find it to be

just and reasonable and will prescribe it and order it enforced 24 A

similar proyision will be promulgated with respect to consolidation

time

4 Level of Demurrage Oharges and General Pattern of Asse8sment

The Examiner formulated the following regulation with respect to

the level of demurrage charges and the general pattern of assessment

At the expiration of the free time period demurrage charges in successive

periods shall be assessed The first period of demurrage shall be assessed at a

compensatory level Penal demurrage shall be assessed duringsubsequent periods

No demurrage shall be assessed after the vessel has commenced to load except

as provided in connection with cargo on demurrage when an immobilizing factor

such as a strike prevents the continuance of loading into a

vessel after the

vessel already had commenced to load Except as otherwise provided in these

rules demurrage shall ibe forthe account of the cargo

Virginia excepts to this proyision urging that the parties be al

lowed an option to assess penal demurrage immediately upon expira

tion of free time rather than compensatory demurrage if they choose

1rIaryland and New Orleans also except maintaining that demurrage

should in all cases be assessed against the vessel rather than the cargo

asserting that once cargo is delivered to the pier any charges with

reference to it become the carrier s responsibility

The assessment of first period demurrage at compensatory rather

than at penal levels is traditional at the subject ports on import prop

erty 25 and is the practice followed by many otherports Although we

24 The NorthAtlantic Baltic Freight Conference the North Atlantic Continental Freight

Conference the North Atlantic French Atlantic Freight Conference the North Atlantic

Mediterranean Freight Conference and the North Atlantic United Kingdom Freight

Conference North Atlantic Conferences suggest an addition to this proviSion which Is

discussed In section7 infra

See eg

Free Til1 e and Demurrage Oharges New York 3 U S M C supra at 109

Free Time and Demurrage Practices at N Y Harbor supra at 241

13 F M C
232 FEDERAL MARITIME COMMISSION

cannot say that the assessment or penal level denlurrage immediate

upon the expiration or rree time must necessarily in all ca es be i

proper as amatter or law we see no necessity to provide ror it espe

ally where the port and terminal interests at New York and Phi

delphia have indicated their desires that their traditional practice 

retained

The assessment or demurrage we reel should generally be ma

against the cargo at the Ports or New York and Philadelphia T

assessment or demurrage against the vessel may well be appropria

at ports like New Orleans where the carrier in effect leases the p

rrom the terminal operator assumes responsibility to the port r

collection or demurrage and is permitted to pass the charge on to t

shipper under the port s tariff In such cases the vessel is ina re

sense responsible ror the demurrage and it does not appear inappr

priate ror the portto assess it against the vessel Where however 

is the case at the ports here under conideration as well as many oth

ports the vessel does not lease the wharr but rather contracts with 

terminal operator or pays established tariff charges ror servic

rendered to it and assumes no responsibility to the ports ror the c

lection or demurrage charges the contention that demurrage charg

should be assessed against the vessel is without roundation Wh

cargo is on the docks valuable services are being rendered ror its ben

fit and as a general proposition it is the cargo which should pay r

such services The agency and court decisions sanctioning the usu

assessment or charges against the cargo after the expiration or fr

time are nmnerous

26 and the practice is rollowed at many ports

The requirement that no demurrage be assessed arter the vessel h

commenced to load is unopposed and is just and reasonable since 

prevents the penalization or cargo ror the vessels

loading time Sin

no demurrage under the rules which we here promulgate or whi

the Examiner suggested is in any case assessable arter the vessel h

begun to load we will delete the proviso in the rule recomemnded 

the Examiner to avoid the impression that demurrage arter the com

mencement or vesselloading may be proper

The determination or the dollar mounts ofdemurrage to be assess

was beyond the scope or this proceeding e note that the curre

practice at the subject ports with respect to import cargo is to asse

26 See e g

Free Time and Demurrage Charges New York sllpm Free Time a

Denwrrage Practices at NY Harbor supm Invcstigation of Free TimePractices Port 

San Diego supra Practices Etc of San Francisco Ba1J Area Terminals sufJ1 a Americ

Prcsident Lines Ltel Y Federal lIfaritime Board SU1Jra 1 he Boston ShiP1Jing Assoc In

v Port of Boston 10 F M C 409 1967 Penna Motor Truck Ass nY Phila Piers In

supra afJ d sub nom Baltimore O R Co v United States 208 F 2d 734 3rd Clr 195

13 F M C
FREE TIME AND DEMURRAGE CHARGES ON EXPORT CARGO 233

demurrage at levels which remain constant for a

period of 5 days 7

Since such demurrage periods have worked reasonably well with re

spect to keeping the movement ofinbound cargo on the piers in a fluid

condition and since no objection was raised to our suggestion at oral

argument that the rules promulgated herein state that demurrage

periods shall consist of 5 days we shall incorporate such a provision

into our rules The advantage of such a

provision is that it willprevent

the employment by a terminal of an unreasonably long period of de

murrage at a compensatory or low level which competitive conditions

might force the other terminals to meet and which could result in

just the sort of congestion which this proceeding is designed to

alleviate

Finally we will adjust the wording of the rules to reflect the fact

that where consolidation time is granted demurrage does not begin

untilit has expired

Ve therefore find that the following is a

just and reasonable regu

lation with respect to the level of demurrage charges and the general

pattern of assessment and prescribe itand will order it enforced

d Atthe expiration of the free time period or if consolidation time has been

granted the consolida1tion time period demurrage charges in successive periods

of 5 days shall be assessed The first period of demurrage shall be assessed at a

compensatory level Penal demurrage shall be assessed during subsequent periods

No demurrage shall be assessed after the vessel has commenced to load Except

as otherwise provided demurrage shall be for the account of the cargo

5 Assessment of Dem 1rage in Oases of Vessel Oancellation orDelay

The Examiner suggested the following provision with respect to

the assessment ofdemurrage in cases of vessel cancellation or delay

Except as provided below when the vessel for any reason fail3 to meet

the announced date of sailing cargo on free time shall be granted additional free

time up to 5 days beyond the time it would normally expire Any demurrage ac

cruing after that time shall be for the account of the vessel at first period rates

Cargo on demurrage on the announced date of sailing shall continue on demurrage

after said date when demurrage shall be for the account of the vessel at first

period rates In no event shall demurrage be assessed on or after the day the

vessel has commenced to load except as provided

In the case of vessel cancellation cargo on free time on the announced date

of sailing shall be SUbject to first period demurrage assessed against the vessel

commencing on the day when the cargo was received at the terminal facility and

terminating on the said announced date of sailing unless the shipper on or be

fore that date nominates another vessel for loading removes the cargo from the

terminal or elects storage as provided by these rules provided further

that ifno storage facilities aremade available by the terminal to the shipper in

27 See Free Time and Dem urrage Practices at NY Harbor supra at 241 The applicable

tariffs at Philadelphia also provide for the assessment of demurrage at levels graduate d

by 5 day periods

13 F lrC
234 FEDERAL MARITIME COMMISSION

this instance demurrage shall be for the account of the vessel until the shipme

can be rebooked

Ifthe shipper takes none of the aforementioned actions and provided th

storage facilities weremade available by the terminal to the shipper demurra

at first period rates shall be assessed against the shipper after the vessels liab

ity fordemurrage has expired Such demurrage shall likewise terminate upon t

shipper s action as aforementioned For cargo on demurrage on the cance

date of sailing demurrage shall continue for the account of the shipper un

such time as he takes one of said actions In the event the shipper nominates a

other vessel the provisions of paragraphs a and 0 shall apply with t

free time forthe other vessel commencing on the date that the shipper nominat

this other vessel

The announced date of sailing shall be that date of sailing appearing in t

Journal of Commerce or the Shipping Digest or any other appropriate public

tion of general circulation as desigJllated in the applicable tariff

The purpose of this provision is to authorize the assessment of d

murrage against the vessel in instances of vessel cancellation ordela

Basically the rule as suggested by the Examiner provides that in ca

of vessel delay compensatory level demurrage will be assessed again

the vessel for cargo on free time at the announced date of the delaye

sailing after 5 additional days of free time Cargo on demurrage o

theannounced date ofthedelayed sailing would continue on compens

tory level demurrage to be assessed after such date against the vess

Incase ofvessel cancellation the vessel would be assessed compensato

level demurrage for cargo on free time at the announced date of th

canceled sailing from the time of receipt ofthe cargo at the terminal 

the announced date of the canceled sailing Cargo on demurrage 

the announced date of the canceled sailing would remain on demu

rage to be assessed after such date for the shipper s account Demu

rage against the vessel would terminate prior to the announced da

ofthe canceled sailing ifthe shipper nominates another vessel remov

the cargo from the terminal or places it in storage if the termin

provides storage

The provision is excepted to by the North Atlantic and Austral

Conferences which maintain that it is unnecessary and unfair The

contend that vessels calling at New York already bear the costs of d

la ed or canceled sailings either through the operation of their ow

terminals or more commonly throughthe contracts entered into wi

terminals for theoperation ofthe piers

The New York Terminal Conference l1aryland Virginia and Ne

Orleans while generally in agreement with the objective of this pro

vision would delete the 5 days additional free time in case of vess

delay and assess demurrage against the vessel as soon as it missed i

Now paragraph d

13 F M C
FREE TIME AND DEMURRAGE CHARGES ON EXPORT CARGO 235

announced sailing 28 These parties assert it is unfair to make the ter

minal operator bear the burden of canceled or delayed sailings for

which heis not responsible

Maryland New Orleans Virginia and the North Atlantic and Aus

tralia Conferences further suggest that the rule is confusing and bur

densome and difficultto enforce

The nlost extensive argument in support ofthe rule in the form sug

gested by the Examiner is made by Iearing Counsel29 They assert that

the rule merely imposes upon carriers the obligation to pay demurrage

admittedly due terminal operators when they are responsible for the

fact thatcargo remains onthe piers The fact thatcarriers may to some

extent bear the expenses for canceled or delayed sailings now through

their negotiated contracts with the terminal operators is not control

ling because such negotiations are imprecise whilethe rule would al

low carriers to know precisely what charges they would be required to

bear The 5 day grace period for delayed sailings may be sufficient to

cover most situations of vessel delay is extended only to cargo ot dili

gent shippers i e those whose cargo is still on free time when the ves

sel is delayed and is a part of a

compromise which allows terminal

operators at New York and Philadelphia to assess demurrage against

vessels directly for the first time West Coast ports customarily allow

10 days free time for vessel delay There is no undueburden on shippers

since it is incumbent they contend upon the diligent shipper to take

action in case of vessel delay orcancellation to rebook the cargo on an

other vessel remove it or store it elsewhere The rule is not confusing

ordifficult to administer they assert and they point out that it is sup

ported by the parties atPhiladelphiaand New York 30 who willdirectly

administer it

Itis clear that when cargo is brought to or remains on the piers be

cause of circumstances for which the water carrier is responsible the

water carrier must compensate the terminal operator for the use made

ofhis facility The case law is clear that the cargo may not lawfully be

assessed in such situations 31 and since the terminal is entitled to com

pensation for the use of its services and facilities 32 the inescapable

28 Marrland and New Orleans as noted above would assess all demurrage against the

essel

29 The rule in this form is also supported by the port and terminal operating interests

at Philadelphia the freight forwarders and the Port of New York Authority who urge

that weadopt it

so The New York Terminal Conference as noted excepts only to the 5 day extension of

free time on delayed sailings

31 See eg Penna Motor Truck Ass nY Phila Piers ItIC at a sub nom Baltimore

O R 00 v United States supra

82 Cf American President Lines Lta v Federal Maritime Board supra

13 F M C
236 FEDERAL MARITIME COMMISSION

conclusion is that the vessel which has caused the cargo to be brough

to or to remain on the facility must bear the dmnurrage charges As th

Examiner found the assessment of demurrage against the vessel i

cases of vessel cancellation or delay also accords with the practice a

many ports The fact that vessel cancellations or delays may not b

deliberate acts by the carrier but may be due to circumstances beyon

its control is irrelevant The carrier has the responsibility for the de

murrage because it wasits act intentional or not rather than anythin

that could in any way be imputed to the exporter that causes the carg

in such situations to remain onthepiers 33

The only problems with respect to the assessment of demurrag

against the vessel in the case of cancellation or delay relate to th

manner in which it should be assessed Ve do not feel that the me

fact that carriers may to some extent bear the terminals costs fo

delayed or canceled sailings through the contracts that they enter int

with the terminals for the operation of the piers is asufficient reaso

l10t to require that demurrage be assessed directly against the vess

in cases of cancellation or delay First of all it is doubtful that a

Philadelphia where the terminals charges for services performed fo

the ship are on a tariff basis the tariff charges take expenses due t

delay and cancellation into consideration To the extent that they do

moreover they would seem to be unfair All of the same type ship

using the same terminal facility would necessarily be assessed th

same rate for each service performed in spite ofthe fact that some o

these ships may be responsible for more delayed or canceled sailing

than others Secondly the admittedly imprecise nature of the con

tractual negotiations for the furnishing of terminal facilities at New

York may result on the one hand in the failure adequately to com

pensate terminal operators for expenses due to vessel cancellation o

delay or on the other hand the penalization of the vessel for can

cellations and delays for which another ship was responsible Lastly

it is not really clear that expenses due to cancellation and delay gen

eralIy in fact do enter into negotiations for terminal services Th

requirement which we will impose that the specific demurrage charge

contained in the terminal operators tariffs be assessed against th

vessel in situations for which it bears the responsibility to pay wi

benefit both the terminal operators and the ocean carriers The forme

will be assured of compensation for the use of their facilities and th

83 Cf The Boston Sh ipping Assoc Inc v Port oj Boston supra where we held tha

vesselu should pay storage charges during a longshoremen s strike for which they bo

no fault on cargo with respect to which time had not expired or stated another wa

cargo with respect to which they still had a transportation responslbtJity

13 F M C
FREE TIME AND DEMURRAGE CHARGES ON EXPORT CARGO 237

latter will be assessed only those charges which they should be made

to bear

The Conferences have expressed concern over the possibility that

the assessment ofdemurrage against the ship may upset existing busi

ness relationships at New York We sympathize with this concern

and wish to make it clear that our regulations will not alter or amend

existing contractual relationships between the ocean carriers and ter

minal operators It will merely enable the parties to such contracts

to renegotiate them when the time for renegotiation arrives without

reference to the nebulous charges for demurrage which might or

might not otherwise be included in such contracts

S4

Ve agree with those parties who except to the Examiner s allow

ance of the 5 day extension of free time on delayed sailings

Itis true that there is a distinction between vessel cancellation and

delay insofar as the obligation to extend time on the docks free of

demurrage is concerned In the case ofcancellation no demurrage can

be assessed for any of the time the cargo has been on the piers Since

the whole concept of time without demurrage is based upon the

assumption that there will be a vessel into which at the end of such

time the cargo can be loaded the cancellation ofthe vessel necessarily

renders meaningless any preceding period oftime without demurrage

Inthe case of vessel delay on the other hand the assumption remains

that the vessel will eventually call so that the prior use of the facility

by the cargo without payment of demurrage was proper lmtil thetime

when the vessel missed its sailing

The difficulty however is that this distinction indicates no reason

why demurrage should not be assessed against the vessel in the case

of vessel delay for the whole period of the use of the terminals

facility for which it bears the responsibility as is done in the case of

vessel cancellation The suggestion that 5 days may be sufficient to

cover most situations of vessel delay is without support in the record

herein Even if it could be shown to be true however that delayed

sailings usually are made within 5 days of the time for which they

were scheduled this appears to be immaterial insofar as the use of

the terminal operator s property in the interval is concerned e agree

with the New York Terminal Conference that any time its property

is used beyond the period of its obligation to extend time free of

demurrage charges it is entitled to compensa tion The fact thatVT est

34 Tbis seems to us to be tbe fairest and most reasonable metbod of bandIlng tbe matter

It is true tbat if we were to order tbe immediate rene otiatlon of terminal contracts

disruption and confusion In tbe business relatlonsblps between the carriers and terminal

operators might result On the other hand if we were to allow the present practIce to

remain In effect wewould be perpetuating its Inberent Inequities

13 F M C
238 FEDERAL MARITIME COMMISSION

Coast ports customarily allow a 10 day grace period before asses

ment of demurrage against the vessel in case of vessel delay does n

jndicate that such a grace period must be prescribed at New Yo

and Philadelphia The grace period is something which the We

Coast ports extend not because they are required to do so but mere

because they desire to do so There is no basis in law for the impos

tion of a

grace period in the case of vessel delay upon the termin

operators and Ilea ring Counsel themselves really appear to acknow

edge thiswhen they admit that the 5 day grace period is a compromis

between the Vest Coast s 10 days and the present situation at Ne

York and Philadelphia where no demurrage is assessed Althoug

compromise may be proper where both cargo and ship bear som

responsibility for the presence of cargo on the piers at a particula

time 35 and the question is one of who is to pay demurrage which 

admittedly due compromise has no place in a situation where th

demurrage is due and the responsibility for it is clear 36 Lastly th

contention that under the 5 day grace period time is extended on

with respect to cargo of diligent shippers is true but should have n

significance insofar as vessel liability is concerned It seems arbitra

to place the vessel in the position of the cargo so that it gains or 

denied free time depending upon the efficiency of the booking pra

tices ofthe exporters of the cargo

31

The limitation to first period levels of demurrage to be assess

against the ship in case of delayed sailings appears reasonable 

first glance but would not be so in certain circumstances Ifa vess

85 See e

g the distinction made infra with respect to cargo free of demurrage and ca

on demurrage In the case of vessel cancellation

3We recognize that it could be argued that since we have made allowances for t

voluntary extension of additional time free of demurrage for delays which exporters expe

ence with respect to the movements of their cargoes similar allowances should be mad

in the interests of fairness for delays which occur with respect to the movement of t

vessel We feel however that the situations are really not comparable The extension 

cargoes moving in the Australian and African trade areas was based Inter alia upon t

transportatlon conditions at the ports Ie

salling frequency and a showing that 

additlonal time would in most cases be sufficient to accomplish its purpose The extens

for consolidated shipments was also supported upon evidence of record that the 5 addltlo

days would be sufficient to allow for the movement of most consolidated shipments o

the piers 1 here has been no showing that vessel delays are in any way related to tra

portatlon conditions at the ports or that vessel delays generally involve any ascertaina

time periods Additionally although there is no hard evidence that vessel delays have be

a major problem at the Ports of New York and Philadelphia an extension of time 

such delays would appl to all of the ships carrying export cargo rather than to the ti

fractlon of export cargo to which the consolidated shipment and trade area exceptio

apply and its effect upon terminal efficiency and stabil1ty is potentially much grat

We therefore decline to provide for tbe voluntary extension of additional time free 

demurrage for cases of vessel delay

S7 It must be borne in mind that under the 5 days grace period in case of vessel del

free time would have been extended to tbe vessel not tbe cargo wbicb regardless of 

status with respect to demurrage would pay no demurrage in situations of vessel de

13 F M O
FREE TIME AND DEMURRAGE CHARGES ON EXPORT CARGO 239

is delayed for a short period of time and then calls at the facility and

the cargo on which demurrage was assessed is loaded into it it can be

said that the demurrage assessment against the ship has served its

purpose the terminal has been compensated and the cargo has been

removed Itmay happen however that the vessel will be delayed for

a

long period of time or having been delayed may not call at all If

a vessel which has been delayed cannot call or the vessel owner de

cides that it should not call the sailing should be canceled to avoid

hardships to the exporter who has left his cargo on the piers in

reliance that the vessel would call soon to remove it and to all him to

rebook it on another ship Additionally as we have observed with

respect to demurrage free time on canceled sailings demurrage is also

ameaningless concept with respect to cargo which is not to be loaded

into a ship The rational behind demurrage is that it encourages

removal of cargo from the docks Italso seems unfair to allow a vessel

to arrive months later and to pay only compensatory level demurrage

Some means should be available to the terminal operator to encour

age thevessel operator who can have his ship call and who intends to do

so to act with dispatch and the most appropriate means of doing so

appears to be the means that is traditionally used to encourage re

moval of cargo from the piers i e the imposition of penal level

demurrage

We will therefore modify the rule suggested by the Examiner to

provide that in case of delayed sailings demurrage in successive

periods shall be assessed against the ship beginning on the day after

the announced date ofthe delayed sailing and terminating on the day

the vessel begins to load

Insofar as demurrage in the case of vessel cancellation is concerned

a distinction is made between cargo on demurrage free time at the

time of cancellation and cargo on demurrage at time of cancellation

vVith respect to the former as has been seen demurrage is assessed

against the ship from the time of the cargo s arrival on the piers

whileas to the latter the respective interests are left as they are found

and the cargo continues to pay demurrage This distinction is the

result of the kind of compromise which we feel is appropriate 3S

Although a literal application of the principle behind the free time

regulations would dictate the assessment of demurrage against the

vessel with respect to cargo on demurrage from the time of its arrival

on the piers since the reason for that demurrage has ceased such

result is inequitable for two reasons First of all since the cargo has

3S See p

288 supra

13 F M C
240 FEDERAL MARITIME COMMISSION

already paid demurrage the terminal operator would be collect

twice for the same service Secondly it is proper to assess dem

rage against the cargo exporter because he should be made to be

some responsibility for the cargo s

presence on the piers at the tim

of the cancellation having improperly booked the cargo so that 

arrived at the piers too early and used valuable transit space wh

it did not need

rVe agree with Hearing Counsel and the other parties supporti

the Examiner that demurrage against the vessel in situations of ve

sel cancellation should be limited to first period levels It seemsunf

to nlake the vessel bear penal demurrage on cargo which some e

porter may have left on the piers for several months time

The Conferences attempt to give the impression that the provisi

suggested by theExaminer relating to the termination of demurra

against the vessel in the case of canceled sailings places them at som

one else s mercy This provision however far from being detrimen

to the cnrriers interests in fact extends a

privilege to them where

the time for which they are liable for demurrage may be cut sho

Insofar as cargo on demurrage at the time of a canceled sailing 

concerned the vessel is never liable for demurrage Ordinarily w

respect to cargo which was on free time v hen the vessel was cancel

the vessel would be liable for demurrage from the time of arrival 

the cargo at the pier facility to the announced date of the cance

sailing The period of vessel liability may be cut short ifthe expor

has his cargo rebooked for another vessel removes it from the term

nal facility or places it in storage on the facility if such is avai

ble Although these actions are within the exporter s control 

will probably wish to take them as soon as possible since if he fails 

take them until after the announced date of the canceled sailing 

will be assessed demurrage Even if the exporter fails to take su

actions however the carrier cannot be heard to complain since 

liability for demurrage could have been imposed through the a

nounced date of the canceled sailing because that was the date up

which the exporter could be said to have reasonably relied in send

his cargo to the piers

The Conferences are correct however in maintaining that the r

as formulated by the Examiner does appear to place an unreas

able condition upon their liability for demurrage It provides th

if no storage facilities are made available by the terminal to 

shipper demurrage shall be for the account of the vessel un

the shipment can be rebookcd Lnd that demurrage shall be asses

against the export shipper after the announced date of the cance

13 E M C
FREE TIME AND DEMURRAGE CHARGES ON EXPORrr CARGO 241

sailing provided that storage facilities were made available by the

terminal to the shippers The result of the condition above quoted

is that if no storage facilities are made available by the terminal

demurrage will continue to run against the vessel even though the

date marking the end of the ship s liability the announced date of

the canceled sailing has passed and even though the export shipper

should have terminated the demurrage by rebooking his cargo or

removing it from the facility 1he respective duties of the export

shipper and the vessel should not be made to depend upon the availa

bility of resources which the terminal is not obligated to offer and

in fact may not offer 39 vVe will omit the conditions imposed by

the Examiner on the availability of storage space with respect to the

tolling of demurrage against the vessel

Although the record herein does not indicate that it has been a

problem at the subject ports we recognize that as some parties indi

cate announced dates of sailing may be changed in later publications

and that an exporter may rely upon a publication other than the

original one in booking his cargo For this reason we villleave the

terminal operators free to specify in their tariffs that the announced

date shall be that date originally published in the particular journal

designated in the tariff or a later date published in such journal if an

exporter relied on such later date

Lastly the rule with respect to demurrage in cases of vessel delay or

cancellation is not confusing unfair or difficult to administer It ap

portions demurrage on the basis ofrelative responsibility for the pres

ence ofthe cargo on the piers The terminal operator is compensated

for the use ofhis property and the vessel operator is at most assessed

for demurrage only up until the time his vessel begins to loan delay

01 would have called cancellation Export shippers are relieved of

demurrage in cases of vessel delay because the continuing failulp to

call at the terminal in such cases is something for which the vssel

owner is responsible In cases of vessel cancell3Jtion cargo which has

been booked by the exporter so as to use the piers for more free tjme

than it needs is made to assume the responsibility for its presence on

the piers 8xport shippers are relieved of liability for demurrage in

case of ve 3sel cancellations as soon as they take one of three actions

which commercial judgment would seem to dictate anyway i

e have

the cargo rebooked on another vessel remove it from the facility or

store it on the terminal facility If however tlw exporters fail to take

39 This Is partlcularly true In New York where we are told by the attorney for the

New York Terminal Conference the llkellhood of storage facllitles on the piers being

made available Is almost nonexistent because of thelack of sufficient space

13 F M C
242 FEDERAL MARITIME COMMISSION

one of these actions and simply leave their cargo on the termina

transit space they cannot be heard to complain ifthey are assessed 

the use of that property and if such assessment is made at the

conlpensatory or penal which apply to other cargo which has be

on the piers for similar time periods

Although comments have been made by several parties to this p

ceeding that the rules respecting vessel cancellation and delay are co

fusing and will prove difficult to administer no such comme

significantly have been made by the parties at New York and Phi

delphi a who will be charged with administering theIn The termin

operators at both of these ports feel that a period ofeducation may 

necessary but that the rules can and will be properly administered 

Therefore for the reasons discussed labove we find the following

be a reasonable regulation with respect to the assessment of demurra

in cases of vessel cancellation or delay at the Ports of New York a

Philadelphia

e When the vessel forany reason fails to meet the announced date of saili

any demurrage accruing after such date shall be assessed in successive periO

for the account of the vessel until the vessel commences to load

In the case of vessel cancellation cargo on free time or if avessel has be

designated cargo on consolidation time on the announced date of sailing shal

subject to first period demurrage assessed against the vessel commencing on 

day when the cargo was received at the terminal facility and terminating on 

said announced date of sailing unless the export shipper on or before that d

has another vessel designated forloading removes the cargo from the terminal 

elects storage as provided inparagraph h

Ifthe export shipper takes none of the aforementioned actions demurra

charges in successive periOds shall be assessed against the export shipper af

the vessel s

liability for demurrage has expired Such demurrage shall likew

terminate upon the export shipper s action as aforesaid For cargo on demurra

on the cancelled rate of sailing demurrage shall continue for the account of 

export shipper until such time as he takes one of said actions In the event t

export shipper has another vessel designated the proviSions of paragraphs 

b and d shall apply with the free time for the other vessel commencing 

the date that the export shipper has this other vessel designated

The announced date of sailing shall be that date s appearing in the Jour

of Commerce or the Shipping Digest or any other appropriate publication 

general circulation as designated inthe applicable tariff

We note in this regard that regulations which are more detailed and Involye more c

tingencies have been in effect for some time with respect to import cargo at the P

of New York and have not proved to be implacticalln administration

13 F M O
FREE TIME AND DEMURRAGE CHARGES ON EXPORT CARGO 243 

6 Factor8 P1 eventing Loading of Vessel

The Examiner suggested the following regulation with respect to

free time and demurrage in case of factors preventing loading ofa

vessel

When the loading of cargo into a vessel is prevented by any factor immobiliz

ing the pier facility or facilities in all or in part such as weather conditionst

strike or work stoppage of longshoremen or personnel employed by the terminal

operator or water carrier cargo affected thereby shall be granted additional

free time to cover the delay if the cargo is on free time when such condition

arises If cargo is on demurrage first period demurrage charges shall be assessed

against such cargo

The purpose of this provision is to allow the extension of free time

to cargo on free time when factors arise whicll prevent the loading of

the vessel and to provide for the assessment of compensatory level

demurrage in such situations for cargo on demurrage

The provision is excepted to by Maryland and New Orleans which

vould grant free time to all cargo whenever vessel loading is

prevented 41

IIearing Counsel and the Port of N ew York Authority maintain

that the distinction between cargo on free time and cargo on demur

rage for the purpose of assessing demurrage during a period of term

inal immobilization is supported by F rC ICC and court decisions

that terminal operators provide a service to cargo during such a period

for which they are entitled to compensation and that less diligent

cargo i

e

cargo booked so that it is on demurrage at the time of im

nlobilization should be required to bear its share of the expense of

these services

We agree with Hearing Counsel and the Port of New York Au

thority The provision suggested by the Examiner is patterned after

the import rules at New York as well as free time and demurrage

regulations approved by the Commission at Boston 12 It is designed

to be an equitable way of dealing with situations in vhich a vessel

which is at a

pier facility cannot be loaded The fairest treatment

of the situation would seeln to be as ve have done at Boston and at

New York with respect to import cargo to require that the demurrage

expenses be borne by the shipper or the terminal operator depending

upon which one has a

responsibility with respect to the cargo at the

time of the factor immobilizing the pier facility None of the port or

H

Although not excepting to the Examiner s position the freight forwarders would

grant free time in all caseswhere vessel loading Is prevented and the Australia Conference

would allow free time to the extent required in case of work stoppages

See Free Time and Demtwrage Practices at N Y Harbor Sltpra The Boston Shipping

Assoc Inc v Port ojBoston supra

13 F lLC
244 FEDERAL MARITIME COMMISSION

terminal operating interests at New York and Philadelphia objec

to the Examiner s apportionment of free time and demurrage oblig

tions in this regard

The regulation suggested by the Examiner modified to allow dem

rage free time to cargo with respect to which the terminal facility h

exercised its option to allow consolidation time we find to be just a

reasonable and will prescribe it and order it enforced

7 Designation of Vessel

The Examiner suggested the following provision with respect 

the time and manner in which the vessel on which export cargo is 

move is to be designated

At the time the cargo is delivered to the pier facility the shipper shall des

nate the name of the vessel on which the cargo is to move this designation 

the llame of the vessel is made forthe purposes of determining the application 

paragraphs d and e

43 of these rules

The purpose of the provision is to provide a means of determinin

the cargoes affected by the paragraphs of the regulations relating 

vessel cancellation or delay and pier immobilization Itis opposed 

theAustralia andNorth AtlanticConferenceswhich indicate that sh

pers often neither know nor care the name of the vessel on which the

goods are to be transported The North Atlantic Conferences sugge

the deletion of this paragraph and the insertion of the following 

the end of section

At the time export cargo is received by the pier facility a dock receipt sh

be issued evidencing receipt of the cargo which shall show the date of rece

and shall identify the vessel on which the goods are to move

The forwarders contend that the rule should contain an excepti

for hold on dock shipments

Although we see no need to place the language in paragraph t

suggestion of the North Atlantic Conferences has merit and we w

adopt it

Insofar as the contention of the fowarders is concerned an excepti

will be made for cargos designated as hold on dock for consolidatio

since it may not be practical to identify the vessel on which such ca

goes are to nlove at the time of their receipt at the pier facility 

does not appear appropriate to us however to allow cargoes to 

designated as hold an dock as a general proposition Although t

forwarders may be correct in contendingthat the time free ofdemu

rage can be calculated whether or not the vessel is designated on t

dock receipt the designation of the vessel on the shipping documel 

43 Now paragraphs e and respectively

13 F M C
FREE TIME AND DEMURRAGE CHARGES ON EXPORT CARGO 245

should make such conlputation easier There furthermore appears to

be no reason why the name ofthe vessel could generally not be iden

tified on the shipping documents at the time of cargo receipt at the

terminal The indiscriminate use of the hold on dock designation has

been a lilajor cause ofpier congestion in the past and its use should not

be encouraged

v

re therefore find that the following is a

just and reasonable reg

ulation with respect to vessel designation and will prescribe it and

order it enforced

g

At the time export cargo is received by the pier facility a

dock receipt shall be issued evidencingreceipt ofthe cargo which shall

show the date of receipt and except for cargo designated on dock

receipts or other appropriate shipping documents as hold on dock

for consolidation shall identify the vessel on which the goods are to

lnove The identificrution ofthe vessel is made for thepurposes of deter

mining the application of paragraphs e and I

8 Storage Rule

The Examiner suggested a

regulation designed to accomnlodate

project orotherconsolidated shipments by providing long term storage

for theln on the piers away from valuable transit space at reasonable

cost The provision is permissive and would be applicable only where

suitable storage facilities are available and where storage will not

contribute to undue congestion Storage charges are required to be

assessed at reasonably compensatory levels so as to prevent detriment

to thefinancial soundness ofterminaloperations and shippers electing

to utilizethe storage facilities are required to have their cargo relnoved

to a separate storage area to prevent pier congestion The require

ment that election to use the storage facilities must be made at or prior

to receipt of cargo at the terminal or in the case of cancelled sailings

no later than the announced date ofthe canceled sailing will also help

to minimize pier congestion No party excepted to the Examiner s

suggestion

Although the provision would under present conditions appear not

to have much likelihood ofapplication at New York itmay be of some

use at Philadelphia in providing a reasonable means ofhandlingproj

ect shipments with which it has indicated some problems and may

provehelpful rut New Yorkin the future

r

e therefore find the following permissive storage rule just and

reasonable andwillprescribe itand order itenforced

h Nothing in these rules shall prevent the establishment ofreason

able storage provisions provided that the terminal has suitable facil

13 F M C

428 264 71 17
246 FEDERAL I

1ARITIME COMi lISSION

ities available that storage will not contribute to undue congestio

that storage charges will be assessed at reasonably conmpensato

levels and that export shippers elect to utilize the terminals

stora

services on or before the day the cargo is received at the terminal fac

ity except that in the event of vessel cancellation the time the expo

shipper must elect to exercise his option to utilize storage services 

no later than the date of sailing announced as per paragraph 

Vhen storage services are elected the cargo must be removed phy

cally from the pier transit area and placed in a separate storage are

and if cargo is not so removed demurrage harges must be applied T

provisions of the other paragraphs of these regulations shall to t

extent appropriate apply when cargo in storage is released by t

export shipper or his agent for loading on a particular vessel

9 Suggested Alternatime Rules

Three of the parties Maryland New Orleans and the Austra

Conference have suggested alternative rules to those formulated 

the Examiner Basically the 1alyland and New Orleans rules pro ri

for 10 working days free time with no exceptions and the assessme

of demurrage against the vessel44 The Australia Conference rul

provide for a basic maximum provision of 15 working days free tim

limited by vessel sailing frequency 15 working days free time witho

regard to vessel sailing frequency for the Government and charitab

cargo and consolidated shipment exceptions granted by the Examine

and the extension of free time in the case of vessel delay orwork sto

page to the extent required The freight forwarders while not endo

ing the specific provisions of the Australia Conference rules sugge

that the Commission consider the possibility of promulgating a si

plified rule designed to cover the general problems of free time 

export cargo rather than attempt to provide for extraordina

contingencies

lVe appreciate theefforts ofthe parties who have offered alternativ

rules to assist us However the suggested alternatives are unfair a

orten fail to come to grips with many of the problems involved wi

respect to the handling of export shipments More specifically th

Maryland and New Orleans rules by assessing demurrage against th

vessel merely transfer the practice at New Orleans to New York an

Philadelphia where as we have seen it is inappropriate Furthe

44 The New Orleans rule also provides for waiver of expenses at the terminals opt

during a longshoremen s strike and requires the terminal operator to bear the expens

of strikes of its own personnel Expenses of strikes of third parties are to be bor

by the vessel but may be passed on to the cargo

13 F M C
FREE TIME AND DEMURRAGE CHARGES ON EXPORT CARGO 247

these alterantive rules fail adequately to recognize the right of a

terminal0perator to be compensated foi the use of his property by con

signees whose booking practices result in their cargoes being on demur

rage at the time of pier immobilization In not allowing for more

than 10 working days free of demurrage in any situation the sug

gested rules improperly ignore the important transportation and

policy considerations which have prompted us to proyide herein for

additional time for certain cargoes

The suggested rules ofthe Australia Conference on the other hand

in providing generally for a maximum of 15 working days free time

would establish more free time than has been shown to be necessary

to accomplish its purpose The allowance of free time to the extent

required in case of vessel delay or work stoppage which these rules

would provide moreoY r fails to consider all oftheifactors that might

prevent vessel loading e

g

weather conditions vessel cancel lation

could lead to the granting of free time to unworthy recipients e

g

consignees in penal demurrage or vessel owners who should have can

celed their sailings because they are unable or do not intend to call

at the facility iand lends itself to administration in a discriminatory

fashionsince it furnishes no standard to aid in the determination ofthe

extent required Although the objective ofsimplified rules is certainly

a

proper one it cannot be allowed to control where its result would be

the imposition ofan inadequate andunfair regulation 411

There has been some dear on the part of the port and terminal oper

ating interests at Philadelphia that the rules promulgated herein may

not accomplish their purpose because of lack of enforcement These

interests acknowledge that our enforcement of regulations has in the

past given them no cause for concern and we assure them that as is

our duty under section 17 oftheShipping Act 1916 we intend to see

that our regulations promulgated in this proceeding are equitably

and yirogously enforced An appropriate order will be issued and the

free time and demurrage rules established herein wiU be published in

the Federal Register

JAMES V DAY COMlUSSIONER CONCURRING AND DISSENTING

Iconcur with the majority except that Ihold with the Examiner

for a rule which provides that when a vessel doesn t

depart on sched

ule it will be charged demurrage for all cargo onthe pier except that

the vessel should not be charged for cargo then enjoying free pier time

5

Any exceptions to the Initial Decision not specifically treated herein have been

considered and rejected as immaterial or otherwise without merit or on the basis that a

ruling upon them is unnecessary to the decision herein

13 F M C
248 FEDERAL MARITIME COMMISSION

until after an extra period ofgrace up to 5 days and the vessel w

not be charged after it commences loading The majority does n

provide the extragrace period

The main discourse of this proceeding has been in the determinatio

of just what extensions should be madein a basic lO day free time ru

In making such determination a balancing of interests has be

involved

Inote for example the allowances made for additional time fre

of demurrage charges by the terminals so that exporters to Afric

may enjoy 5 e tra days leeway for their cargo to be on the pier so 

not to miss because of third party fault for example an infreque

sailing In such situaJtions we have here decided that a balance m

be struck between the terminal operator and the shipper to achie

a fair and reasonable result

In the case of vessel delays Iwould adopt the rule allowing ext

days up to 5 free of demurrage charges by the terminals where e

porters cargo is not loaded due to failure of the vessel because 

another s ifault for example to meet the announced date of sailin

Tn this latter instance also to be fair Iwould strike a balance b

tween the terminal operator and the vessel as does the Examiner a

as would Hearing Counsel Here Iwould point out further the te

minal operator could absorb 5 eAira days of demurrage but in retur

he would get the rightfor the first time to assess den1urrage direct

and precisely againstthevessel after the e tra day period

IThis represents a moderate step really in support of stable a

efficient terminal operations The expectation that 5 days woutd po

sibly cover most cases of vessel delay has not been negated by t

record Certainly andin view oftheWestCoast practice of permitti

lO days additional free time for vessel delay the 5 day rule approach

a fair reasonable and practical balancing Itis supported additio

ally by the freight forwarders the Portof New York Authority a

by the parties at Philadelphia the Philadelphia 1arine Termin

Association and heDelaware River PortAuthority

JAMES F FANSEEN VICE CHAIRMAN CONCURRING AND DISSENTI

Vith exception to one issue pertaining to the assessment of dem

rage against the vessel Iconcur in the conclusions ofthe lnajority 

the free time and demurrage rules and regulations

13 F M C
FREE T E AND DEMURRAGE CHARGES ON EXPORT CARGO 249

In those instances where vessel delay is involved Iwould support

a rule which allowed for cargo on free time an additional free time of

5 days Ifeel this extension of free time would more equitably cover

most situations which create vessel delay Any demurrage accruing

after this time would be for the aCCOlult of the vessel at first period

rates

SEAL

13 F l1C

S FRANCIS C HURNEY

Secretary
FEDERAL l1ARITIl1E COl1l1ISS1 0N

DOCKET No 68 9

FREE TrUEAND DEMURRAGE CHARGES ON EXPORT CARGO

ORDER

This proceeding was instituted by order published in the Federal

Register and extensive hearings were held before an Examiner in

which all interests which are affected by the rules and regulations

herein promulgatedactively participated Following these hearings

briers were filed with and an Initial Decision was issued by the

Examiner Exceptions and replies to this In tial Decision have been

considered and we have heard oral argument The Commission has

this day issued its report in this proceeding which is hereby incorpo

rated herein by reference in which it determined that the present

practice or granting unlimited free time with respect to export cargo

at the Ports of New York and Philadelphra would if continued in

the future be unjust and unreasonable within the meaning or sec

tion 17 or the Shipping Act 1916 and that just and reasonable rules

and regulations as outlined herein should be prescribed and ordered

enrorced

Therefore itis ordered That Title 46 CFR is amended by adding

a new part 541 to read as follows

Part 541 Free Time andDemurrage Charges on Export Cargo

541 1 Free time consolidation time and demurrage at the Ports of New York

and Philadelphia

a Free time on export cargo at the Ports of New York and Philadelphia

shall not be more than 10 days excLusive of Saturdays Sundays and legal

holidays except

1 Upon the request of the U S Government free time not to exceed 15 days

exclusive of Saturdays Sundays and legal holidays may be granted This

exception shall apply only to commodities shipped for the account of the U S

Government

250
FREE TIME AND DEMURRAGE CHARGES ON EXPORT CARGO 251

2 Upon the request of export shippers or their agents free time not to exceed

15 days exclusive of Saturdays Sundays and legal holidays may be granted to

cargoes moving in the trades served by the U S Atlantic and Gulf Australia

New Zealand Conference Rnd the American West African Freight Conference

provided that such cargoes are delivered to the terminal not more than 15 days

exclusive of Saturdays Sundays and legal holidays prior to the sailing for

which they are booked and provided further that they are notheld beyond such

15 dayperiod through any fault or design of the export shipper or his agent

In either such case demurrage charges shall apply after the passage of 10 days

exclusive of Saturdays Sundays and legal holidays following the date of

delivery to the terminal

b On consolidated shipments upon the request of export shippers or their

agents consolidation time not to exceed 5 days exclusive of Saturdays Sun

days and legal holidays may be granted in addition to the 10 days free time

provided in subsection a Cargo upon which such consolidation time has been

granted shall be designated on dock receipts and on other appropriate shipping

documents as hold on dock for consolidation Cargo not so designated and

cargo notactually consolidated on the piers will notbe entitled to the grant of

consolidation time As used in this section consolidated shipments shall mean

shipments which are made up of commodities originating from two or more

supply points and which move under a

single biH of lading to overseas consignees

0 Free time on export cargo shall commence at 12 01 a m on the day after

the said cargo is received at the terminal facility and terminate at 11 59 pm

on thefinal day of free time Consolidation time on export cargo shall commence

at 12 01 a m on the day f

ollowing the last day of free time and terminate at

11 59p

m on the final day of consolidation time

d At the expiration of the free time period or if consolidation time has

been granted the consolidation time period demurrage charges in successive

periods of 5 days shall be assessed The first periOd Of demurrage shall be

assessed at a compensatory level Penal demurrage shall be assessed during sub

sequent periods No demurrage shall be assessed after the vessel has commenced

to load Except as otherwise provided inthis section demurrage shall be for the

account of the cargo

e When the vessel for any reason fails to meet the announced date of sail

ing any demurrage accruing after such date shall be assessed in successive

periods for the account of the vessel until the vessel commences to load

In the case of vessel cancellation cargo on free time or if a vessel has been

designated cargo on consolidation time on the announced date of sailing shall be

subject to first period demurrage assessed against the vessel commencing on the

day when the cargo was received at the terminal facility and terminating on

the said announced date of sailing unless the export shipper on or before that

date has another vessel designated for loading removes the cargo from the

terminal or elects storage as prOVided insubsection h

Ifthe export shipper takes none of the aforementioned actions demurrage

charges in successive periods shall be assessed against the export shipper after

the vessel s liability for demurrage has expired Such demurrage shall likewise

terminate upon the export shipper s action as aforesaid For cargo on demurrage

on the canceled date of sailing demurrage shall continue for the account of

the export shipper until such time as he takes one of said actions In the event

the export shipper has another veflsel designated the provisions of subsections

13 F M C
252 FEDERAL MARITIME COMMISSION

a b and d shall apply with the free time for the other vessel commen

on the date that the export shipper has this other vessel designated

The announced date of sailing shall be that date s appearing in the Jou

of Commerce or the Shipping Digest or any other appropriate publication 

general circulation as designated in the appropriate tariff

t

When the loading of cargo into a vessel is prevented by any fa

immobilizing the pier facility or facilities in all or in part such as wea

conditions strike or work stoppage of longshoremen or personnel employed 

theterminal operator or water carrier cargo affected thereby shall be gran

additional time free of demurrage to cover the delay if the cargo is on 

time or consolidation time when such condition arises Ifcargo is on demurra

first Deriod demurrage char es shall be assessed against such cargo

g

At the time export cargo is received by the pier facility a dock rec

shall be issued evidencing receipt of the cargo which shall show the dat

receipt and except for cargo designated on dock receipts or other appropr

shipping documents as hold on dock for consolidation shall identify the ve

on which the goods are to move The identification of thevessel is made fo

purpose of determining the application of subsections e and t

h Nothing in these rules and regulations shall prevent the establishm

of reasonable storage provisions provided that the terminal has suitable f

ities available that storage will notcontribute to undue congestion that sto

charges will be assessed at reasonably compensatory levels and that ex

Shippers elect to utilize the terminal s storage services on or before the day 

cargo is received at the terminal facility except that in the event of ve

cancellation the time the export shipper must elect to exercise his optio

utilize storage services is no later than the date of sailing announced as 

subsection e When storage services are elected the cargo must be remo

phYSically from the pier transit area and placed in a separate storage a

and if cargo is hot so removed demurrage charges must be applied The p

sions of the other subsections of this section shall to the extent appropr

apply when cargo in storage is released by the export shipper or his a

forloading on a particular vessel

i The rules and regulations promulgated herein shall be binding upo

common carriers by water in foreign commerce with respect to regulat

and practices affecting free time consolidation time and demurrage on ex

property at thePorts of New York and Philadelphia and

On or before and from the effective date of this order all tariff

such carriers shall contain provisions with respect to such cargo which con

to the regulations and practices prescribed in these rules and regulations 

k Records shall be l ept for 2 years of all grants of extended free 

and consolidation time authorized by these rules and regulations in the 

and manner required herein and

It is further ordered That the rules and regulations promulga

herein shall become effective on the 90th day following their 

ofpublication in the Federal Register

By the Commission

SEAL FRANCIS C HURNEY

Se oreta

13 F M 
FEDERAL MARITIl1E COl1l1ISSION

No 6944 

GHEZZI TRUCKING INC CANCELLATION OF INACTIVE TARIFF

Adopted 11ay 19 1970

Tariff of Ghezzi Trucking Inc for the transportation of cargo between Pacific

Icoast ports of the United States and Alaska shall be canceled forlackof per

formance thereunder without prejudice to the filing of a new tariffshould

Conditions warraut

Richard J Howard for respondent

Paul J KaZZer andDonald J Brurl ne as Hearing Counsel

INITIAL DECISION OF C V ROBINSON PRESIDING

EXA11INER 1

By order served August 21 1969 the Commission directed Ghezzi

Trucking Inc Ghezzi or respondent to show cause why its inactive

tariff covering transportation between Pacific coast ports of the

United States and Alaska should not be canceled 2

Ghezzi thereafter

requested an evidentiary hearing which was granted by order served

October 2 1969

BASIC FACTS

1 Ghezzi s initial tariff FNIB No 1 was issued in 1962 After

proddingby the Commission s staff a new tariff FMC No 2 wasfiled

on November 12 1969 but at the hearing on the following day

Mr Ghezzi president of respondent was advised that this tariff had

been rejected by the Commission A third tariff Fl1CF No 3 was

filed on January 16 1970 effective February 18 1970 3

2 Respondent has sought to obtain cargo by various means but has

not had a sailing since April 1962 Annually a large number of ship

pers in Seattle and in Alaska have been contacted and proposed sail

1This decision became the decision of the Commission May 19 1970

IIAtug and barge operation

3

Although subsequent to the hearing official notice is taken of this tiling

253

13 F M C
254 FEDERAL MARITIME COl1l1ISSION

ings have been posted in local newspapers the last of which was 

August 1968 A great deal of reliance has been placed upon word o

mouth dissemination among possible shippers of Ghezzi s servic

1ilitary Sea Transportation Service authorizes Ghezzi to transpo

cargo for theNavy but none has been carried

3 Ghezzi is a wholly owned subsidiary of Vestern Barge In

Vestern Barge organized in 1965 both having the sanle office

and directors Mr Ghezzi is president of both companies VVeste

Barge recently received authority from the Interstate Commerc

Commission to operate between the Gulf of Mexico and Portland a

Seattle A director of vYestern Barge was salaried by Ghezzi for th

year 1966 to solicit cargo forthe latter in theSeattle area

4 The tariff under consideration has aprescribed mininlum of 2

pounds per shipment In the early years ofits operation Ghezzi wou

have been willing to perform with as little as 500 tons of cargo p

sailing but lllcreased costs have raised this Inininlum to 1 500 ton

The inability to secure this minimum has been Ghezzi s Inain problem

Even hen there has been a possibility ofobtaining less than 1 500 ton

from one shipper Ghezzi has been unable to secure additional carg

to justify acceptance ofthe base offer As an example ofthe company

predicament a

sailing on September 7 1968 from Portland to A

chorage was advertised on the anticipation that an Anchorage hU

bel company could furnish a block ofhunberaround which addition

cargo could be secured to form a barge load Although the addition

cargo was obtained and a preliminary arrangement fora tug an

barge was made the deal was canceled because the estimate for th

base lumber turned out to be lUlwalTanted

5 Throughout the years Mr Ghezzi has contacted the tug an

barge market to keep informed of the availability of such equipme

and the cost thereof Vithout assistance from Western Barge how

ever Ghezzi would be lUlable financially to complete any arrange

ments for equipment

6 In spite of his inability to secure cargo 1r Ghezzi is optimist

about the future in view of the recent oil strikeand the expanding o

industry in Alaska As of the time of the hearing in November 196

he saw the possibility of a barge load by 1arch 1970 the Examine

does not know the outcome of this prophecy but there are no reliab

assurances of participation by Ghezzi in the Alaska trade in the nea

future

7 For some time there has been no Seattle telephone listing fo

Mr Ghezzi himself Ghezzi Trucking or vYestern Barge An accoun

ing firm acts as Ghezzi s answering service and supplies office spac

for r Ghezzi The COll1lnission is kept advised of Mr Ghezz

13 F M C
GHEZZI TRUCKING CO 255

whereabouts by the return addresses on his communications to the

agency but since 1962 three letters from theCommission to Mr Ghezzi

and or Ghezzi Trucking have been returned as undeliverable this

may be accounted for by the fact that Ghezzi has moved six times in

that period

DISCUSSION AND CONCLUSIONS

Ghezzi s position is that its tariff should p

ot be canceled inasmuch

as it is willing and able to perform when and ifsufficient need arises It

also argues that cancellation of the tariff would be prejudicial to the

company flearing Counsel maintains that Ghezzi s operations have

in effect been discontinued and that its tariff should be canceled

There can be little doubt that Ghezzi is willing to perform butthat

is not here the determining factor The opportunity afforded Ghezzi

to perform the service advertised in its tariff has been to no avail and

continued correspondence between Ghezzi and the Commission s staff

has produced nothing more than

physical changes in the company s

tariff The shipping public in general possibly unknowingly has

been and continues to be misled by a meaningless offer of service The

end result is the same as if Ghezzi had formally suspended its service

as a common carrier Under the circumstances the tariff should be

canceled See generally Sugar from Vi J gin Islands to United States

1 US MC 695 1938 Inte J coastal OlUt J ten 2 U S Th1 C 154 1939

Inte J coastal Schedules of Hamnwnd Shipping 00 Ltd 1 D S S B B

606 1936

There would be no prejudice to Ghezzi if its tariff is canceled

Should the company hereafter be able to secure bookings in thevolume

deemed necessary by it for a profitable venture the tariff filing pro

visions ofthe Intercoastal Shipping Act 1933 and the Commission s

rules pertainingthereto are sufficiently viable to permit prompt filing

of a new tariff

ULTIlIATE CONCLUSIONS

Ghezzi is not performing a service advertised in its tariff and as it

has not carried any cargo since 1962 its tariff shouldbe canceled within

30 days ofthe service of this decision in the mannerprovided in rule

18 gof the Commission s Tariff Circular No 3 as amended This

action shall be without prejudice to the filing of a new tariff should

conditions warrant

S C V ROBINSON

Presiding Exa Jniner

13 F M C
256 FEDERAL MARITIME COMMISSION

No 6944

GH ZZI TRUCKING INC CANCELLATION OF INACTIVE TARIFF

N OT ICE OF AnOPT ION OF INITIAL DECISION

No exceptions having been filed to the initial decision of the Ex

aminer in this proceeding and the Commission having determined no

to review same notice is hereby given in accordance with rule 13 g

of the Commission s Rules of Practice and Procedure 46 CFR

502 227 that the initial decision became the decision of the Commis

sion on May 19 1970

It is ordered That Ghezzi Trucking Inc cancel its tariff in ac

cordance with rule 18 g

of the Commission Tariff Circular No 

onor beforeJune 22 1970

Itis further ordered That this proceeding is discontinued

By the Commission

8 FRANCIS C HURNEY

Secretary

13 F MO
FEDERAL 1ARITIlVIE COMl1ISSION

SPECIAL DOCKET No 418

CARLTON J SIEGLER

1

MICRONESIA INTEROCEAN LINE INC

NOTICE OF ADOPTION OF INITIAL DECISION AND

ORDER GRANTING REFUND

May 28 1970

In his initial decision of October 15 1969 in this proceeding the

EXall1iner recol1unended that the application of Iicronesia Interocean

Line Inc for permission to refund be granted in the sum of48 79 in

respect to two ofthethree shipments in question By order ofDecember

22 1969 the Commission remanded theproceeding to theExaminer ror

reconsideration of the application In hjs initial decision on remand

served May 4 1970 the examiner endorsed hisprevious findings in re

spect to two shipments stating that the issues have been resolved

The Examiner recommended that refund in the amount or 54 50 be

permitted as to thethird shipment

No exceptions having been taken to the 1ay 4 1970 decision on re

mand and the Commission having determined not to review same

notice is hereby given in accordance with rule 13 g

or the Conunis

sion s Rules or Practice and Procedure thatthe initialdecision became

the decision ofthe Commission on May 28 1970

Itis ordered That Micronesia Interocean Line Inc is authorized to

refund to Carlton J Siegler the sum or 103 29 48 79 plus 54 50

Itis further ordered Thuit applicant publish promptly in its ap

propriatetariff the rollowing notice

Notice is hereby given as required by the decision of the Federal Maritime

Commission in Special Docket 418 that effective September 2 1968 and during

the period of September 2 1968 until March 13 1969 1 the rate on cabinets

N O S from San Francisco California to Ponape East Oaroline Islands is

257

13 F M C
258 FEDERAL MARITIME COMMISSION

75 25 W M 2 the rate on plastic ware from San Francisco California to Yap

Western Caroline Islands is 8275 WjM 3 the rate on brooms mops and

parts from San Francisco California to Majuro Marshall Islands is 6500

W M and 4 the rate on toys and games from San Francisco California to

Ponape East Caroline Islands and Majuro Marshall Islands is 80 25 W1M The

above rates areforpurposes of refunds or waiver of freight charges on any ship

ments which may have been shipped on vessels of Micronesia Interocean Line

and are subject to all applicable rules regulations terms and conditions of the

said rates and this tariff

Itis further ordered That refund shall be made within 30 days of

this notice and Micronesia Interocean Line shall within 5 days there

after notify the Commission ofthe date ofthe refund and of the man

ner in which payment has beenmac1e

Bythe Commission

SEAL S FRNCIS C HURNEY

Secretary

ORDER OF REMAND

By application filed on May 8 1969 pursuant to rule 6 b of the

Commission s rules of practice and procedure 46 C F R 509 92

lVIicronesia Interocean Line Inc Micronesia requested permission

to refund to Carlton J Siegler the sum of 339 42 in connection

with three shipments of toys plastic ware cabinets and mops parts

from San Francisco Calif to various ports in the trust territory of

the Pacific island

Inhis initialdecision served October 15 1969 Examiner C V Rob

inson granted Micronesia s application as to two ofthe three shipments

in question and permitted refunds in the amount of 48 79 Micro

nesia s

request to refund certain charges assessed and collected on a

shipment oftoys made November 1968 on the vessellVI V Golden Swan

wasdenied on the grounds that the application as to this shipment was

time barred under Public Law 90 298 since it wasnot filedwithin180

days from the date of shipment This conclusion was based on the

examiner s determination that an application is filed within the

meaning ofPublic Law 90 298 only when itis actually received by the

Commission in its offices in Vashington D C within 180 days of the

date ofshipment

No exceptions to the Initial Decision were filed but since the Initial

Decision raised issues ofstatutory interpretation the Commission on

November 6 1969 served its Notice of Determination to Review its

Initial Decision

Subsequent to the Initial Decision and the Notice of Determination

to Review the Corrunission in Ghiselli Bros Inc v Micronesia Inter

ooean Line Ino 13 F IC 179 December 1 1969 had occasion to

13 F M C
CARLTON J SIEGLER V MICRONESIA INTEROCEAN LINE INC 259

interpretthe word filed as used in Public Law 90 298 The Commis

sion determined therein that an application is to be considered filed

within the meaning of Public Law 90 298 if it is deposited in the

United States mails for delivery to the Commission in Yashington

within the time specified by statute 180 days Enlphasis added

This interpretation renders the application here in question timely

filed We will remand it to the Examiner for consideration on the

merits

Therefore it is ordered That this proceeding be remanded to the

examiner for consideration of the application in light of our recent

decision in Ghiselli Bros Inc v Micronesia supra

Bythe Commissioll

SEAL S FRANOIS C HURNEY

Secretary

13 F M C
FEDERAL l1ARITIME COMMISSION

SPECIAL DOCKET No 418

CARLTON J SIEGLER

V

iICRONESIA INTEROCEAN LINE INC

May 8 1970

Respondent permitted to refund to complainant the sum of 54 50 as part of th

freight charges assessed and collected for the transportation of toys from

San Francisco California to places in the Trust Territory of the Pacifi

Islands inNovember 1968

aiAnger1nann for applicant respondent

OarltonJ Siegler for himself as complainant

INITIAL DECISION ON REMAND OF C VV ROBINSON

PRESIDING EXAMINER 1

This proceeding originally involved shipments on three vessels Th

issues as to two vessels have been resolved leaving only those pertain

ing to the M V Golden Swan Inhis initial decision served October 15

1969 the examiner stated

M V Golden Swan Two bills of lading covering 13 cases and cartons of toy

were issued to complainant on November 8 1968 for carriage to Ponape Easter

Caroline Islands and Majuro Marshall Islands respectively consigned to orde

of shipper at the rate of 94 50 per ton weight or measurement The rate sough

to be applied is 8025 weight or measurement Itis not possible to determine

from the application the total charges collected or sought to be refunded sinc

other commodities moved under the same bills of lading plus the fact that claim

other than the present ones areincluded in the application and the supportin

documents therefor aremissing In view of the conclusions hereinafter howeve

the indefiniteness of theamounts of the claims is immaterial

The examinerconcluded thatthe foregoing claims were time barred

The Commission disagreed with this finding and remanded the matte

to the examiner for a decision on the merits of the claims Applican

wasthen requested to furnish further information which it has done

1

This decision will become the decision of the Commission May 28 1970

13 F M C

OL
CARLTON J SIEGLER V MICRONESIA INTEROCEAN LINE INC 261

CONCLUSIONS

By agreement between applicant and the Trust Territory or the

Pacific islands the former s rates are to be no higher than those in

effect ror shipments nloving via Pacific Far East Line to the Trust

Territory by way ofGuam ormoving on vessels of other carriers serv

ing the Trust Territory via Japan vVhen its tariff was issued in Sep

tember 1968 applicant chose to use thesame commodity items as shown

in TrustTerritory orthe PacificAgreement Tariff Freight Tariff No

2 applicable to the TrustTerritory viaJapan In constructing its tariff

applicant had attempted to obtain statistics showing commodities

etc moving in the trade but wasunable to do so partly because or the

destruction or records in Saipan as the result or Typhoon Jean Appli

cant thereafter learned that comnlodities other than those for which

there wererates in its tariff weremovingto the TrustTerritory where

upon new rates were established as applicant became aware or such

shipments

At the time or the shipments here involved there was no specific

rate thereon hence the rate or 94 50 applicable to nonhazardous

cargo NOS was applied Uponascertaining thatthe commodity could

move via another carrier at a lower rate applicant amended its tariff

to publish the rate here sought to be applied 80 25 The railure to

have on file the lower rate was under the circumstances an adminis

trative error

Applicant has complied with all the preliminary requirements or

Public Law 90 298 as to the particular shipments Permission to re

rund to complainant the sum or 54 50 1745 plus 37 05 hereby is

given and applicant shall publish in its tariff the appropriate notice

rererred to in thestatute Rerund shall be made within30 days or such

notice Within five days therearter applicant shall notiry the Com

mission orthe date or the rerund and or the manner in which payment

has been made

Sf C V ROBINSON

PresidingExaminer

13 F M C

428 264 71 1R
FEDERAL IARITIME CO 1MISSION

DOCKET No 6665

BALLlULL LmfBER SALES CORPORATION

v

THE PORT OF NEW YORK AUTHORITY VEYERHAEUSER COMPA

ATLANTIC TERMINALS INC AND MAHER LUMBER TERMINAL CORP

RULING ON COMPLIANCE

June 9 1970

In our report in this proceeding we found that the Port of N

York Authority had violated sections 16 First and 17 of the Ac

connection with its leasingarrangements at PortNewark with Wey

haeuser Co and Ballmill Lumber Sales Corp both wholesale d

ers of lumber It was found that Weyerhaeuser had been prefer

and that Bal lmil and other lumber lessees at Port Newark had b

prejudiced as a result of the Port Authority s

leasing arrangeme

inasmuch as Weyerhaeuser was pernlittecl to perform its own ba

handling of lumber and to operate a public terminal while all ot

lessees were required to use the backhanclling services of the P

Authority sindependent contractor

In a subsequent report on reconsideration we ruled that if theP

Authority chooses to remove the preference by affording Ballmill 

same privileges as Weyerhaeuser the Port Authority is required 

do more than to permit Balhnill to perform such services under 

confines ofits present leasehold vVe emphasized that thePortAuth

ity must place Ballmill in a position comparable to Weyerhaeu

in respect to the operation of a public lumber terminal and the ba

handling oflumber

262 13 F M 
BALLMILL LUMBER V PORT OF NEW YORK AUTHORITY 263

Subsequent to this order the Port Authority advised the Commis

sion of an offer it had l11 ade to Ballmill in respect to the leasing of

berth and transit areas and additional inland areas to be used for

these purposes

We ruled on the adequacy of tIlls offer concluding that the offer

met the requirements of our prior order in certain respects vVe

also stated certain additional requirements vhich should be contained

in the Port Authority s offer Finally we urged the parties to reach

agreement on the remaining points of contention and failing to do

so to submit statements of justification for their respective claims

The parties had not agreed on and had failed to submit justification

regarding their respective positions on the amount of inland area

needed by Ballmill to perfornl its own backhandling and to operate

a public terminal There also was disagreement as to how the rate of

compensation forthe lease would the affectedby improvements Ballmill

desired to construct

In spite of our urging the parties apparently were still unable to

agree and accordingly each submitted a statement purporting to jus

tify its position on the remaining points of contention Each party

has replied to the other party s statements The Port Authority has

moved to dismiss and Ballmill has opposedthis motion

As a result ofthe various papers submitted further accord has been

reached by the parties Inrespect toamount ofinland area tobeleased

by Ballmill the Port Authority offered 442 acres in addition to the

premises embodied by Ballmill s present basic lease BallmiU stated

it needs 3 t6 acres in addition to the 42 acres offered by the Port

Authority The Port Authority has now indicated it is willing to offer

the additional space to Ballmill Accordingly no dispute remains as

to amount of space to be offered and we find the total agreed upon

to be satisfactory and reasonable

The only area of controversy remaining then is the consideration

to be given improvements in determining a level of compensation for

the premises tobeleased to Ballmill

In our 13Jtest ruling we stated that the Port Authority s offer to

lease the premises at 17 cents per square foot was a fair and reasonable

offer as judged by prevailing rate standards and that Ballmill s

demands for 1953 rate levels were unjustified iVe further stated how

ever that Ballmill should be permitted to make necessary improve

mentson the leased premises and thalt the amount of improvements

should be a factor in finally determining the rental just as it was in

the Weyerhaeuser lease

13 F M C
264 FEDERAL 1ARITIME COMMISSION

In its most recent statements the Port Authority agrees to pe

Ballmill to make improvements but suggests that any requirem

for adjustment in compensation as a result ofimprovements is unj

fied The Port Authority suggests that while Veyerhaeuser wa

quired to make improvements there is no evidence in the record 

iVeyerhaeuser s rental was adjusted as a result The Port Auth

feels therefore that the iVeyerhaeuser lease provides no basis 

reducing the compensation required of Ballmill if improvements 

made The Port Authority states that it will not benefit frOlll 

improvements and as a standard condition in its leases the rem

of improvements upon termination ofthe lease at the lessee s exp

is required Finally the Port Authority states that it does not req

any improvements by Ballmill and that it has not followed and 

not follow a policy of reducing rentals to amortize improvem

desired only by the lessee

Inits motion to dismiss the PortAuthority has included an affid

of the Director of Marine Terminals Department ofthe Port of

York Authority to the effect that no concession or reduction in re

was made because of improvements required by the Port Auth

when it executed the iVeyerhaeuser lease in 1953

Ballmill claims it needs to improve the proposed leased are

installing fencing and lighting workmen s facilities a superv

personnel office and additional warehouse space Ballmill estim

these improvements will amount to at least 100 000

Ballmill seeks to amortize this investment over the 6 year pe

of the lease which would run to 1976 Ballmill seeks to amortize 

straight mathematical basis which would reduce the 17 cent 

square foot figure to 1195 cents per square foot Ballmill alternat

seeks a 20 year lease which it states would result in a 1549 cent 

square foot rental withimprovements amortized overthelonger pe

Ballmill claims that lessees normally are obligated by a prov

in their lease to make improvements where improvements are n

sary to conduct a business and that those improvements becom

property ofthe lessor at thetermination ofthelease with theimpr

ments being amortized overthe lease period

Bal lmil disputes the statement that as a standard clause in 

Port Authority s leases it requires removal of improvements a

termination of a lease Rather Ballmill points out that the stan

clause included in the Weyerhaeuser lease gives the Port Auth

a choice of keeping the improvements or having them removed 

in any event the fact that the Port Authority has such a choice 

not bear on the question

13 F M 
BALLMILL LUMBER V PORT OF NEW YORK AUTHORITY 265

Ballmill concludes that the Commission has already decided that

improvements should be taken into consideration in fixing the rental

that the PortAuthority has not offered a valid reason for alteringthis

ruling and that therefore the motion to dismiss should be denied and

the Port Authority be required to determine the rental on the basis

ofamount ofimprovements made by Ballmill

The president of Ballmill has submitted an affidavit purporting to

counter the position of the Port Authority regarding consideration

givenfor improvements in negotiatinglumberleases

Our previous statement to the effect that the Port Authority must

take into consideration improvements in determining a fair rental

was predicated on the belief that the same had been taken into con

sideration in the execution of the HTeyerhaeuser lease Upon consid

eration of the various subsequent submissions of the parties we con

clude that our earlier assumption regarding improvements in the

Weyerhaeuser leaseis not su pported by the record The PortAuthority

has denied that the level of rental in the T

eyerhaeuser lease was

adjusted for improvements Indeed the Port Director has stated in

affidavit that no concession or reduction in rental wasmade because of

improvements required by the Port Authority Ballmill s argwnents

to the contrary do not specifically refute thePort Authoritys position

For instance the affidavit of the president of Ballmill speaks of the

general policy of the Port Authority that improvements are a factor

in determining level of rent and specifically refers to a previous lease

of its own a lease of Dreifus Lumber Co and a lease of Blanchard

Lumber Co but no speCIfic mention is made of the vVeyerhaeuser

lease The Port Authority s position therefore is not contradicted In

reaching thisconclusion we are also mindful of the fact that the Port

Authority as a paTty to the Veyerhaeuser Port Authority lease is

in a better position than Ballmill to lmow whether the rental was

adjusted for improvements

It nlay be noted that the Dreifus and Blanchard leases cited by

Ballmill seem to have involved required improvements as is true of

the Veyerhaeuser lease In the case of Ballmill however the lessor

is not requiring the improvements Teare ordering equality of treat

met for Ballmill vis a vis Teyerhaeuser but this can be accomplished

only to the extent the conditions of the two leases are comparable

vVhere different circumstances obtain it is not possible nor would

it be just to compel the lessor to accept lease terms not related to

creating the parity requiredin this case

Inasmuch as we are requiring equality of treatment for Ballmill

we conclude th tthe Port Authoritys offer to Ballmill need not con

13 F lLC
266 FEDERAL MARITIME COMMISSION 

sider improvements in determining rental Ballmill however is n

to be denied theright to make improvements

In view ofthe resolution ofthe remaining areas of controversy

Itis ordered Thalt thePortAuthority will now be required to effe

compliance in this proceeding by tendering within 30 days of servic

ofthis order and leaving open for a period of 30 days an offer to Ba

mill for the lease ofpremises with such offer embodying all the term

and conditions either agreed upon by the parties or ordered by th

Commission

By the Commission

SEAL FRANCIS C HURNEY

Secretary
FEDERAL l1ARITIl1E COl1MISSION

DOCKET 69 59

INDEPENDENT OCEAN FREIGHT FORWARDER LICENSE

ApPLICATION LTC AIR CARGO INC

NOTICE OFADOPTION OF INITIAL DECISION

June 15 1970

By order served December 29 1969 the Comulission instituted this

proceeding Ito determine 1 whether LT C Air Cargo Inc had

violated section 44 a oftheShipping Act 1916 in connectionwith the

unauthorized performance of independent ocean freight forwarding

services without a license 2 to determine whether in view of the

past activities ofits principal LT C AirCargo Inc is fit to carry

on the business of forwarding and to conform to the provisions of

the Shipping Act 1916 within the meaning of that statute and 3

whetherits application shouldbe grantedord ied

Examiner Richard M Hartsock in an initial decision served

March 23 1970 found on the evidence presented that LT C Air

Cargo Inc is fit to carryon the business of forwarding and to

conformto the provisions oftheShipping Act 1916 withinthe mean

ing ofthestatute and that the application should be granted Hearing

Counsel filed exceptions to the examiner s conclusions Applicant

excepted on a contingent basis Ito certain findings and conclusions

of the examiner Both parties have replied to exceptions Applicant

requested oral argument with respect to matters raised by the excep

tions of Hearing Counsel but later withdrew its request for oral

argument

Hearing Counsel in their exceptions argued that the examiner over

looked Federal 1aritime Commission decisions and misinterpreted its

13 F M C 267
268 FEDERAL MARITIME COMMISSION

regulations elating to freight forwarder licensing and that in c

sidering the evidence of record the examiner placed undue empha

on unreliable testimony Hearing Counsel urged the Commission 

reverse the initial decision of the examiner and find that the lice

application of LTC AirOargo Inc should be denied

Uponreviewing Hearing Counsels exceptions we conclude that th

are but a restatement ofthe contentions already advanced before 

examiner and that the examiner s

findings and conclusions on th

contentions were proper and weB founded Accordingly we here

adopt theinitial decision

BytheCommission

S FRANOIS C HURNEY

Secretary

13 F M 
FEDERAL MARITIME COMMISSION

No 69 59

INDEPENDENT OCEAN FREIGHT FORWARDER LICENSE ApPLICATION

LT C AIR CARGO INC

Adopted June 15 1970

Respondent found on two occasions to have performed unauthorized independent

ocean freight forwarder services without a license in violation of section

44 a Shipping Act 1916 butis fit to carryon the business of forwarding

and to conform to the provisions of the Shipping Act 1916 within the mean

ing of that statute Application granted

Louis IHaffer and Robert N Meiser for respondent

Donald J Brunne and Paul J IaZZer as Hearing Counsel

INITIAL DECISION OF RICHARD M HARTSOClr

PRESIDING EXAMINER 1

By letter dated November 24 1969 LT C Air Cargo Inc South

Ozone Park N Y was notified ofthe Federal Maritime Commission s

intent to deny its application for an independent ocean freight for

warding license Applicant in reply requested a hearing to show that

denial of a licenseis unwarranted

By order served December 29 1969 the Commission instituted this

proceeding to determine 1 whether LT C Air Cargo Inc had

violated section 44 a of the Shipping Act 1916 in connection with

the unauthorized performance of independent ocean freight forward

ing services without a license 2 to determine whetherin view ofthe

past activities of its principrul 2

LT C Cargo Inc is fit to carry

1This decision became the decision of the Commission June 15 1970

IIThe Commission s Notice of Hearing alleges that a

principal of L T C Air Cargo Inc

may willfully have given incorrect information to a Commission representative on at least

two occasions in connection with the license application of LT C Air Cargo Inc

13 F M C 269
270 FEDERAL MARITIME COMMISSION

on the business of forwarding and to conform to the provisions 

the Shipping Act 1916 withinthe meaning of that statute and 3

whether its application should begrantedor denied

Hearings were held on February 5 and 6 1970 at New York N Y

Briefs were filed on behalf of the respondent and the Bureau o

Hearing Counsel on 1arch 5 1970

BACKGROUND

Thomas D Murray Valley Stream N Y is a principal owner an

president of LT C Air Oargo Inc and at present is oper3lting 

a domestic and intern3ltional air freight forwarder lieensed by th

Civil Aeronautics Board since September 1969 1r Albert C Gripp

is vice president of the company has been engaged in ocean freig

forwarding for a number of years and is presently employed b

applicant company

Upon discharge from the military service in 1957 Mr 1urra

attended Wright Junior College in Ohicago Ill Upon graduatio

from there in 1959 he attended the College of Advanced Traffic 

Chicago Ill where he studied the whole realm of traffic manag

ment and distribution During the day he was employed by Tran

VVorld Airlines and went to school at night graduating from th

College of Advanced Traffic in 1960 Terminating his employme

with TWA after graduation from the college he went to work fu

time for Imperial Air Freight an air freight forwarder at 1idwa

Airport in Ohicago There he worked for approximately a

year an

a half when he was requested to move to Los Angeles to Inanage a

office for them there He remained with Imperial Air Freight for 

year and a half when in 1963 he began his own business with tw

companies MurrayAir Freight and WorldWide Messenger Service

He operated these companies from 1963 to 1969 when he merg

Murray Air Freight with Eagle General Corp a public company 

that time This venture apparently was unsuccessful and a settleme

was arranged whereby 1r 1Iurray cashed in his stock and went ba

into business uIder the name LTC Air Cargo Inc Itis under th

name th3lt it was licensed as a domestic and international air freig

forwarder by the Civil Aeronautics Board

At the present time LT C has recently opened a Los Angele

Calif and Chicago Ill office and is collectively grossing sonle 35 0

per month although in past months it has operated in the re

Throughout its past air freight forwarder operations it has foun

that without consolidation of traffic one cannot make money nor ser

13 F M C
INDEPENDENT OCEAN FREIGHT FORWARDER LICENSE APPLICATION 271

its Customers Approximately 99 percent ofits current dOll1estic opera

tions involve consolidated shipments and some 95 percent of its inter

national operations involve such shipments Some 5 to 10 percent of

its international air shiptlnentsareas agent for the Internrutional

Transport Association in which case freight is either consol idated or

sent directly and the company cuts the waybill Or draws the dacuments

in praper order and the airline pays back a 5 percent commission In

air freight forwarding aperatians tariffs are filed with the Civ11 Aero

nautics Board and 111 11urray is required ta charge the published

rrutes therein 3

Throughaut his air fr ight forwarding career Mr 11ur

ray has been investigated periadically by the enfarcement staff Of

the Civil Aeronautics Board and has had no problems with that

agency Vjth respect to the competjtive siturution in the air freight

forwarding industry insofar as a Federal 11aritime Commission

license is concerned 111 J1urray believes it essential that to stay com

petitive and sell their freight forwarding service he must be able to

provide Ocean freight forwarding as a necessary companion service

Since filing the application 1fr Murray has been studying 11he Ship

ping Act himself has retained counsel with respect to its application

as to LT C operrutions proposes to seek the counsel of the Commis

sion s Atlantic Division in New York as to any questions which may

arise and prapases ta present any questians about operations to the

Atlantic Division in wr1ting Legal caunsel has been arranged for

employing the services of counsel whose appearances have been noted

THE INVESTIGATIaN

While 111 11urray was operating Murray Freight Service Inc

at Los Angeles Calif he filed an application with the Federal Mari

time COlnmission for an independent ocean freight forwarder license

In correspondence datedFebruary 25 1966 the Commission informed

111 Murray of its intention to deny the application because among

other reasons applicant lnay have knowingly and willfully operated

as an ndependent ocean freight forwarder without a license or other

lawful authorization in violation of section 44 a of the Shipping

Act 1916 thus apprising 111 Murray of the faot th3Jt to knowingly

and willfully Operate as an independent Ocean freight forwarder with

out a license constitutes a violation of section 44 a

4

The Oommission s

letter alsa advised 111 l1urray that within twenty days Of receipt

3

There was acolloquy on the subject of Commission versus compensation developed

on the record however it is clear from the exhibits that a fee for the services rendered

was included on each invoice discussed later

4

Whether Mr Murray did so operate was not developed on this record and no inferences

to this effeet may be drawn

13 F M C
272 FEDERAL MARITIME COlVIMISSION

thereof Murray Freight Service Inc could request the opportun

to show at a formal hearing that the intended deni al of its licen

is unwarranted By correspondence dated Iarch 1966 the Commissio

advisedthat inasmuch as the firm had tailed to request a hearing with

the time allotted or Otherwise respond to the Commission s letter 

February 25 1966 its application was denied Atthe time Of the Com

mission s first letter Mr urrayhad left Los Angeles and had open

an office in Chicago He had moved his family from the vVest Coa

to Chicag Owith him With respeot to the Commission s propos

hearing onthe subject Mr Murray wasadvised that the hearing wou

beheld in San Francisco

On July 8 1969 Mr rurray for LT C Air Cargo Inc at th

current address filed an application with the Commission for a licen

as an independent ocean freight forwarder starting the reason 

being to enable it to supply a cOlnplete forwarding service includin

air freight ocean freight pickup and delivery packing etc whi

will accord customers a better and more efficient service The Com

mission on July 28 1969 acknowledged receipt ofthe application a

recited thatsection 44 ofthe Shipping Act 1916 provides

No person shall engage in carrying on the business of forwarding unle

such person holds a license issued by the Federal Maritime Commission 

engageinsuch a business

It further advised tha were applicant to engage in the business 

forwarding before receiving a license jt

would be subject to penalti

and that such activities may also prejudice the issuance ofa licens

On June 6 1969 at the request of Mr David Eskin Operator 

David Eskin International Sales an exporter of phonograph record

respondent handled nine cartons of long playing records weighin

some 371 pounds frOln New York N Y to Sao Paulo Brazil on t

58 1 ormaccape under Oore McCormack Lines Inc bill of ladin

No 75 By invoice dated June 30 1969 respondent billed David Esk

98 55 for the handling of this shipment which included charges f

consular fees ocean freight chamber of commerce certificate insu

ance export declar3Jtion and messenger service shipping handlin

a forwarding charge of 20 and banking fees On August 1 196

again at therequest ofMr Eskin respondent handled some 13 carto

of long playing records weighing sonle 436 pounds from New Yor

N Y to Sao Paulo Brazil an the S5 Mm rnacoak under oo

McCormack Lines bill oflading No 119 On August 11 1969 respon

ent sent Mr David Eskin an invoice for a total of 118 64 for handli

this shipment which invoice included charges for consular fees oce

freight charges pier delivery chamber of com1merce fees insuranc

13 F M C
INDEPENDENT OCEAN FREIGHT FORWARDER LICENSE APPLICATION 273

a forwarding fee of 20 documentation and banking fees Subse

quently Mr Eskin had a third shipment whioh he handledhimself

David Eskin International Sales is located at 400 Riverside Drive

at approximately 112th Street on the West Side of fanhattan The

neighborhood is considered less than desirable and as to security of

the vehicle one would have Ito lock itand turn on the alUlrm in making

a pickup 1r Eskin sbusiness is located on the third floor and pickups

would have to bemadeon the passenger elevator Despite this respond

ent considered Mr Eskin to have been a good customer and because

ofthisgood customer Telationship in airfreight forwarding respond

ent took itupon himself to serve in the two instances in the transporta

tion of ocean f

reight Respondent believes rthat no other carrier would

serve 1r Eskin The first time respondent was requested by Mr Eskin

to serve him he was told that respondent used Crane Overseas Ship

ping Inc an F MC forwarder but when Mr Murray called Crane

Overseas Shipping and asked them tomake the pickup for Ml Eskin

respondent wasadvised that Crane couldnot get it

With respeot to 11he forwarding fees of 20 for handling the ship

ments Mr I1

urray referred the matter to Mr AI Grippo who based

upon his experience told 111 Murray that 20 for handling the ship

ment would be a reasonable charge and that was the charge assessed

At a cost of 10 an hour for a truck and aman on the street Mr Mur

ray considers that for the services provided in handling rthese two

shipments and tlhe rtime involved he did not make tany money on the

transactions Mr Murray stated Idid this as a favor for Mr Eskin

but Iwasntin the soliciting business Had he been solioiting busi

ness there wasmore lucrative business available At thetime he under

took to handle these shipments he did not really think that he was

doing anythingunIawful

In the normal course of processing the LT C Air Cargo applica

tion the application was routJinely investigated by one of the Com

mission s

investigators The investigator contaoted Mr Murray on

August 19 1969 for iohe purpose of clarifying certain portions of the

application fOIm The application had left a bIank the answer to the

question Approximately how many shipper clients did applicant

serve during the period Mr Murray responded that he had ffiade

no shipments because he wasnot licensed rto make any shipments The

investigator then routinely questioned Mr Murray with respect to

his air freight forwarding oper3 ltionsand who some of his olients

were Mr 1urray named several among whom was Mr Eskin At

the investigator s

request that he be permitted to examine the com

pany s files 111 11urray referred him over to Mr Al Grippo who

13 F M C
274 FEDERAL MARITIME COMMISSION

showed the investigator a file drawer half full of documents Th

investigator made acursory inspection of them and found variou

and sundry documents however none reating to ocean shipmen

in general or with respect to the bills of lading and the invoices di

cussed here

On September 8 1969 the Commission s

investigator contacted M

Eskin and learned for the first time of the two shipments handled b

applicant Uponlearning this the investigator telephoned Mr Murra

and advised him ofthe facts discovered Upon this confrontation M

lV urray explained that he had told the investigator that he had n

made any ocean shipments because LTC had only charged the ocea

freight and messenger service to Mr Eskin and had made no prof

on the shipment Further he stated that he had supplied all copie

ofthe bills oflading that he had to Mr Eskin Atthispoint the inves

tigator asked 111 11urray if he had any files regarding the shipmen

and Murray replied that he did and would bring them in to the invest

gator s office These files contained the information with respect to th

two ocean shipments handled During that conversation the investiga

tor asked 11r 11urray why he had told him that he had not made an

ocean freight forwarding shipments To this he replied that he ha

only charged ocean freight and Jnessenger service and wanted to min

mize the situation because he did not want the Commjssion to loo

into it

In conjunction with these discussions the investigator prepared 

statement which summarized the facts recited herein This stateme

was offered to 111 11urray for his signature At that time 111 Murra

was asked whether the statement was correct and he stated that it wa

substantially correct When Mr Murray was asked to sign the state

ment he declined stating that he did not wantto open himself up to 

fine or expose himself to a fine for a violation of the law in makin

shipments wirthout being licensed With respect to the substance o

the statement prepared by the investigator Mr Murray has state

that it wastrue to uhe best of his knowledge thusadmitting makin

theshipments anddeceiving theinvestigator

PROPOSED FINDINGS

On the basis of the foregoing facts Hearing Counsel argues tha

111 Murray knew that itwasillegal rtoact as freightforwarder withou

a license knew that penalties could result therefrom but performe

ocean forwarding services for Mr Eskin nonetheless Asa resu

thereof LT C knowing1y and willfully performed ocean freight fo

warding services without authority to do so in violation of sectio

13 F M C
INDEPENDENT OCEAN FREIGHT FORWARDER LICENSE APPLICATION 275

44 a Shipping Act 1916 46 U S C 841 b and General Order 4 46

CFR S 510 3 a Additionally Hearing Counsel proposes th3it 1ur

ray concealed information rel3itive to these shipments and willfully

misrepresented facts in an wttempt to l1itigate the effect ofhis unlaw

ful conduct Further he argues th3it a license which has already been

issued may be revoked 1 because of violations of any provisions of

theShipping Act or any other st3itute relating to carrying on the busi

ness of forwarding 2 because of the making of willful false state

ments to the Commission in connection with an application for a li

cense or its continuance in effect 46 CFR 510 9 a and c Since

such conduct would constitute a basis for revocation of an existing

license itis argued itcertainly warrants denial of a license application

since this directly relates to applicant s fitness to properly carryon

the businessof forwarding and its willingness to conformto the provi

sions of Ibhe Shipping Act and the rules and regulations promulgated

thereunder

Vith respect to the Presiding Examiner s disposition of the case

Hearing Counsel adlllonishes that statutes rules regulations by which

freight forwarders are regulated were not intended to be ignored

merely hecause obeying them may have inconvenienced the forwarder

or his company that the Commission recently has indicated its dis

favor with over lenient tre3itment of applicants for freight forwarder

licenses and th3it the issue before tlhe examiner is whether these stat

utes rules and regulations are going to be effectuated or whether in

thealtern3itive they will be rendered meaningless

Respondent contends that LT C is fit willing andwble to carry

on thebusiness offorwarding that there wasno unlawful forwarding

that rthe two shipments that LT C handled were not substantial

enough to constitute carrying on the business of forwarding and that

in any event there was no intention to violate the act And furtJher

that the two isolated instances woulda tmost be de minimis insofar

as the fitness standard is concerned Respondent contends further that

the acts complained of provided a needed public service and that in

fact there werenomisrepresentations willful or otherwise

DISCUSSION AND CONCLUSIONS

By the Commission s order in this proceeding dated December 29

1969 the proceeding was instituted to determine whether in view of

the past activities of its principal LT C Air Cargo Inc is fit to

carryon the business of forwarding and to conform to the provisions

of the Shipping Act 1916 within themeaning ofdrat statute

13 F M C
276 FEDERAL MARITIME COMMISSION

Itis suggested to the examiner that this record does not support 

ffirmative finding that applicant is fit to carryon the business 

ocean freight forwarding and willing to conform to the Comm

sion s rules and regulations This proposed conclusion is substantia

at odds with the stated purpose of the proceeding A finding wi

respect to conformance with the Commission s rules and regualtio

wasnot called for

One ofthestwted reasons for the intended denial is c that a pri

cipal of LT C Air Cargo may willfully have givenincorrect inform

tion to a Commission representative on at least two occasions in co

nection with the license application of LT C Air Cargo Inc and 

apparent violation of 46 CFR 510 9 c This section of the Comm

sion s

regullations provides

A license may be revoked suspended or modified after notice and bearing f

any of tbe following reasons c making any willful false statement in c

nection witb an application for a license or its continuation in effect

Itis observed that this proceeding is neither a revocation suspensi

or modification proceeding but one for an application and accor

ingly the respondent cannot be found to have violated this secti

of the Commission s

regulations Further the Commission referre

to incorrect information not false statements as referred rto in t

regulation

Another of the several reasons for intended denial of tlheapplic

tion is thatapplicant had recently forwarded ocean shipments witho

a license also in apparent violation of section 44 a Witlh respe

to this allegation the record is abundantly clear that on rtwo occasio

LT C Air Cargo did handle two shipments for Mr Eskin one 

June 6 1969 and the other on August 1 1969 and in so doing it d

operate as an independent ocean freight forwarder without a licen

in violation of section 44 la That these violations were done kno

ingly land willfully is apparent Knowledge and willfulness embra

acts conscious and intentional deliberate and voluntary rather th

those merely negligent United States v Eastern Airlines Inc 192 

Supp 187 1961

During theinterview with the Commission sinvestigator onAugu

19 1969 applicant s principal when asked approximately how ma

shipper clients he served during a period responded that hehad ma

no shipments because he wasnot licensed to make shipments This sta

ment was untrue at the time and was known to be untrue by L1 C 

principal While theinstance ofgiving false information to an inves

gator may not he considered a violation of the Commission sregu

13 F MC
INDEPENDENT OCEAN FREIGHT FORWARDER LICENSEAPPLICATION 277

tions 46 OFR 510 9 c the inspan nuty be considered to go to the

fitness Of pplicant rus matter Of character integrity and veracity

During the interview the investigatar requested to he permitted ito

examine the company s files and LT C s principal referred him aver

to Mr Al Grippo who shOved the inv stigator a file drawer half full

of doquments The investigator made a cursory inspection of them

and round various dOcum ents but none relating to ocean shIpments Or

to the bills oflading and invaices discussed herein When the investiga

tor subsequently asked why he the investigator had not located the

folders on these shipments when he went thraugh the drawet an

August 19 applicant principal s nswer was that they were in a dif

ferent drawer when he had to go laok far them himself to find them

to bring them in with him an that day The examiner doeS not con

ceive thatthisconsti1tutes the giving Of incorrect infarmation Itsug

gests at most thatthe dacum nts we emislaid

In this connection it has been held by a sister agency that

There is no inflexible rule by which an applicant s fitnes3 can be determined

Consideration sbou ld be given to the nature and extent of past viol tions of our

safety rules and regulat onsand of the state and city laws and regulations

the effect of such violations upon uniform regulation Uie mitigating circum

stances shown to exist or to have existed whether the carrier s past conduct

represents a

flagrant and persistent dis egard of the provisions of theAct and our

Rules and Regulations thereunder and the extent to which the carrier is attempt

ing to take corrective measures to bring its operations into compiian e with the

law and regulations Ris8 and Company Inc Emtcnsion Emplosive8 64 M O C 299

350

Here the circumstances show that although on notice that to do so

would violate theShipping Act respondent s principal took it upan

himself to handle two shipments providing the services Of an inde

pendent Ocean freight forwarder These transactions were conduoted

as a favor Respondent states that he wasnot in the soliciting business

and had he been soliciting business there weremore lucrative accounts

ava ilable Mr Eskin lived ina less than desirable neighborhaod HIS

business was located on the third floor and pickups would have to be

made by passenger elevator Respondent believed that no ather carrier

would serve Mr Eskin and even so when Mr Eskin first appraached

him applicant contacted another freight forwarder which declined

to handle the shipment These are mitigating circumstances Ihe two

instances involved do not represent to the examiner conduct shawing

a flagrant and persistent disregard ofthe provisians Of the act Neither

do they seem to have hradany effect upon uniform regulation when

viewed overall Mr furray s conduct seems nat ta have had as i

ts

intent the willful disobedience to law lasrouch asto help out a client

13 F M C

428264 71 19
278 FEDERAL MARITIME COMMISSION

With respect tohaying givenincorrect information to the Comm

sion s

investigaJtor thesurrounding circumstances suggest thaJt LT C 

principal aoted r8lther ludicrously As seen from the evidence t

Commission s

investigator inquired whether applicant had serv

shippers during a

period of time and the respondent stated th8lt 

had made no shipments because it was not licensed Shortly thereaft

the investigator asked Mr Murray to name several ofhis air freig

forwarder clients in order that they might be contacted To th

respondent sprincipal gave the name of the very person from who

it could he established that he had in f8iCt handled shipments as 

ocean freight forwarder While unquestionably the giving of fal

information orthe 81ttempt to deceive the Commission s

investig8lt

is a serious m8ltter and reflects adversely on the character integrit

and veracity of respondent s principal the examiner does not belie

thaJt itshould be the basis for a denial of the instant application A

an isolated instance it is not sufficiently important that it should f

all timesprecludeapplicant from theeconomic opportunity whioh m

flowfrom a granting ofthe application

Since filingthe application Mr Murray has heen studying the sh

ping act has retained counsel with respect to its application and 

the LT C operations lIe proposes to seek counsel of the Comm

sion s Auantic division in New York as to any questions which m

arise and proposes to present questions about operations to the divisi

in writing Hehas retained legal counsel to further advise him The

actions show an attempt on the part of applicant to take correcti

measures to assure compliance with the statute and for that matte

with the rules and regulations of the Commission issued thereunde

FINDINGS

Upon consideration ofall evidence ofrecord the examiner conclud

that LT C Air Cargo Inc is fit to oarry on the business of fo

warding and to conform to the provisions of the Shipping Act 19

withinthe meaning of that statute and that its application should 

granted

RICHARDM HARTSOCK

Presiding Ewaminer

13 F M C
FEDERAL MARITIME COMMISSION

SPECIAL DOCKET No 422

DAVIES TURNER CO AS AGENTS

FOR ROBERT S SHLESINGER OWNER

v

ATLANTIC LINES LTD

Adopted June 18 1970

Application forpermission to refund portion of charges on shipment of household

effectsfrom New York to St Croix Virgin Islands denied

INITIAL DECISION OF JOHN MARSHALL

PRESIDING EXAMINER 1

This is an application pursuant to rule 6 b of the Commission s

Rules of Practice and Procedure filed by respondent Atlantic Lines

Ltd for an order authorizing it to refund to complainant Davies

Turner Co the sum of 61114 in connection with a

shipment of

used household goods from New York to St Croix Virgin Island

THE FACTS

On September 16 1969 Fred Sherman manager of Davies Turner

Co of Philadelphia Pa telephoned Rice Dnrah Co Philadel

phia agents for respondent carrier to inquire as to the freight rate and

other charges that would be applicable to the above shipment After

checking the tariff one Joe Torak of Rice Dnrah Co s export de

partment advised that the total including the tariff commodity rate

for household effects of 4 50 per hundred pounds plus landing

charges tonnage dues wharfage and handling and a 10 percent sur

charge would be 22121 Relying on this question the cargo was

moved under bill of lading dated October 17 19 69 IIowever the

aggregate charges actually billed and collected October 20 1969 were

832 35 or 61114 more than quoted This was immediately called to

the attention of Torak who called the carrier s New York office only

1This decision became the decision of the Commission June 18 1970

2

Special DocketApplications 46 CFR 502 92 b

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279
280 FEDERAL MARITIME COMMISSION

to be advised that the household effects rate hequoted hadheen delete

from the tariff the preceding July Notice had been mailed to but no

received by Rice Unrah Co

DISCUSSION AND CONCLUSIONS

The facts as is always true in these nonadversary Special Dock

proceedings are undisputed The conclusions therefore are necessa

ily controlled by dictates oflaw InL tdwig Mueller 00 Inc v Peralt

Shipping 001p Agents of Torrn Lines et al 8 F M C 361 36

1965 a case grounded on a tariff deviation in a foreign trade th

Commission citing overwhelming authOlity reaffirmed the firml

established principle that the rate of the carrier as duly filed is th

only lawful charge Silent Sioux Oorp v Ohicago No th TVeste

Ry00 262 F 2d 474 1959 The Commission pointed out that Ju

tice Hughes in Louisville N R R 00 v Maxwell 237 U S 94 wrote

Ignorance or a misquotation of rates is not an excuse for paying or chargin

either less or more than the rate filed This rule is undeniably strict and 

obviously may work hardship in some cases but it embodies the policy whic

has been adopted by Congress in the regulation of interstate commerce in ord

to prevent unjust discrimination S

But then the Commission proceeded to draw a distinction bet vee

the foreign trades and the so called noncontigous domestic o

domestic offshore trades Itnoted that whileit had no power to s

a reasonable rate in a

foreign trade section 4 of the Intercoasta

Shipping Act 1933 4

authorizes it to prescribe and enforce reasonab

maximum and minimum rates and section 18 a ofthe Shipping Ac

1916 5authorizes it to prescribe and enforce reasonable maximum rates

both having regard to domestic offshore trades

In The East Asiatic 00 Inc Application for Perl1 Jission to TVaiv

Collection of Undercha ges 9 F MC 169 172 1965 a case involvin

a domestic offshore trade the Commission stated

f

it is evident that our special docket technique requires that all consider

tions of intention error misunderstandings and the like be discounted as irrele

vant The question is not one of inequity or injustice but rather one of fac

namely the reasonableness or unreasonableness of the rates inquestion

The application in this instance like that in East Asiatic supr

does not even allege that the rate duly applied was unreasonable no

does the record contain facts upon which such a finding can be made

There being no alternative the application is hereby denied

S JOIIN IARSILL

P esiding Examine

3Thifi case related to section 6 of the Interstate Commerce Act which is sImilar 

section 18 b 3 of theShipping Act 1916

446 U S C 84in

646V S C 817

13 F M C

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INDEX DIGEST 299 

when there were two rather specific descriptions under which the commodity

might be carried Johns Manville Products Corp Petition for Declaratory

Order 192 194195

Rejection of reduced rates of a conference member on wines and spirits moving

from Grangemouth Scotland to east coast ports was improper and the tariffs were

valid and properly filed The Oommission does not decide whether a rejection

under section 18 b of the 1916 Act may be supported by a violation of another

section of the Act but is well aware of the difficulties and dangers in such a

course The Oommission s Bureau of Compliance had rejected the rates as con

trary to the terms of the basic conference agreement and to the terms of the

basic conference agreement and to the terms of the conference s wine and spirits

dual rate agreement Difficulties inhered in the position that the Commission

must have the inherent power under section 18 b whiCh provides for rejection

of any tariff not in conformity with the section and rules prescribed thereunder

The carrier pointed to an article of the basic agreement itself as authorizing its

reduced rates but several questions of fact were posed under the cited article and

the provisions thereof were difficult to reconcile with the language of a provision

of the wine and spirits dual rate contract which the carrier contended disposed

of the assertion that its reduced rates violated section 14 b and opponents con

tended to the contrary An investigation would be instituted to resolve the issues

raised Rejection of Tariff Filings of Sea Land Service Inc 200 202203

Where a carrier had not performed a service advertised in its tariff land had

not carried any cargo since 1962 although willing to so do the tariff should be

cancelled The carrier could promptly file a new tariff if conditions changed

Ghezzi Trucking InC Cancellation of Inactive Tariff 253 255

TERMINAL LEASES

Lease of pUblic containership terminal was approved The lease was a non

cancellable ten year lease which was admittedly compensatory over the ten year

period on the basis of the total of minimum yearly rentals However some limit

must be placed on the number of years that the minimum rental may be less than

fully compensatory There was ample justification for the lack of a minimum

rental for the first year particularly because of the substantial investment in

terminal equipment to be made by the lessee The second year s rental and any

succeeding year s rental must be not less than compensatory Agreement No

T 2214 Between the City of Long Beach California and Transocean Gateway

Corp 70 74 75

In requiring equality of treatment by a port authority as between two lessees

of space the Oommission will not require the port to take into consideration im

provements to be made by one of the lessees in determining a level of compensation

for the premises to be leased Earlier assumption that the other lessee s lease was

adjusted for improvements was not supported by the record Also the Port

Authority was not requiring the improvements Ballmill Lumber Sales Corp

v Port of New York Authority 262 265

TERMINAL OPERATORS See also Free Time Jurisdiction Terminal Leases

Truck Loading and Unloading

The language of section 16 forbidding any undue or uilreasonable prejudice or

disadvantage in any respect whatsoever is specifically directed againat every

form of unjust discrimination against the shipping public The principle of equal

ity forbids ny difference in charge which is not based on a dif1er nce in servi
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