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FEDERAL MARITIME COMMISSION

WASHINGTON DC

June 30 1969

JOHN HARLLEE Chairman

JAMES V DAY Vice Chairman

ASHTON C BARRETT Member

JAMES F FANSEEN Member

GEORGE H HEARN Member

THOMAS LISI Secretary

President Richard M Nixon appointed Mrs Helen Delich Bentley of

Maryland to succeed Chairman Harllee who resigned effective September 1

1969 Mrs Bentley sappointment was confirmed by the United States Senate

on October 3 1969
LETTER OF TRANSMITTAL

Office of the tahaieman

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TO TFF SENATE AND HOUSE OF REPRESENTATIVES

November 3 1969

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Helen Deih Bentley

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TABLE OF CONTENTS

Page

HIGHLIGHTS OF THE YEAR 1

SCOPE OF AUTHORITY AND BASIC FUNCTIONS 10

INTERNATIONAL COMMERCE 12

Carrier Agreements 12

Shippers Requests and Complaints 15

Exclusive Patronage Dual Rate Contracts 15

ADP Application to Carrier Agreements 17

Freight Rates 17

Computer Processing of Freight Rates 21

Other Data Processing Activity 22

International Relations 22

DOMESTIC OFFSHORE COMMERCE 25

Freight Rates 25

Special Permission Applications 26

Carrier Agreements 26

TERMINAL OPERATORS 28

FREIGHT FORWARDING 32

FINANCIAL ANALYSIS 34

PASSENGER INDEMNITY 35

ECONOMIC ANALYSIS 38

Puerto Rico Virgin Islands Trade Study 38

Special Projects 39

ENFORCEMENT AND COMPLIANCE 40

Informal Complaints Foreign 40

Informal Complaints Other 41

Other Compliance Action 41

Field Investigations 42

Formal Proceedings 43

PROCEEDINGS BEFORE HEARING EXAMINERS AND FEDERAL

MARITIME COMMISSION 45

Decisions of Hearing Examiners 46

Pending Proceedings 49

Final Decisions of the Commission 49

RULEMAKING 53

ACTION IN THE COURTS 54

LEGISLATIVE DEVELOPMENT 56

ADMINISTRATION 58

Organization Chart 61

Statement of Appropriation and Obligation 62

HIGHLIGHTS OF THE YEAR

The Federal Maritime Commission continued during fiscal year

1969 to administer programs and discharge its responsibilities for

the regulation of the waterborne foreign and domestic offshore com

merce of the United States These programs and responsibilities

were executed pursuant to certain provisions of the Shipping Act

1916 Merchant Marine Act 1920 Intercoastal Shipping Act 1933

Merchant Marine Act 1936 and Public Law 89777 of Novem

ber 6 1966 Highlights of Commission activities in the regulation

of ocean transportation for the fiscal year ending June 30 1969

are as follows

Containerization

Containerization continues to be one of the most dramatic develop

ments in ocean shipping of this century The speed and inherent

economies now possible through the use of this method of product

distribution are rapidly interesting even those elements of the ship

ping industry who earlier expressed skepticism Over the last few

years containerization has become the most dominant factor influenc

ing changes in trade patterns and services to Europe and the United

Kingdom from US North Atlantic ports Its impact in the US

PacificFar East trades is growing with the introduction of an ever

increasing number of containerships in that trade Shippers and some

carriers are pressing for more container services and more favorable

rules in the USAtlantic and GulfFar East trades

The Commission has kept abreast of the development of this inno

vation in order to discharge properly its regulatory obligations and

at the same time promote this step forward in our foreign trade The

Commission recently released the results of its study of container
rules as published in 27 conference tariffs The tariffs studied cover

trades in which the container is now or has potential to become a

major consideration The chart on page 3 depicts the ranking of those

conferences in their container activities as of June 1 1969 depicting

graphically the status of the conference rules as they relate to the

promotion of this new mode Containerization represents an effective

means of integrating the various transportation modes into a single

intermodal system

Such a system permits the free and uninterrupted flow of cargo

among the various transportation modes and offers substantial

economies to both carriers and shippers by greatly reducing the need

to handle goods Insofar as the ocean carriers are concerned con

tainerization offers other substantial economies through the use of

highspeed containerships and inland transport facilities permitting

faster vessel turnaround and reductions in ports of call

The Commission will continue to study the practices of carriers

subject to this regulation with respect to this important development

and will keep all avenues of information open in order that all pos

sible advantages of intermodal container transportation may accrue to

shippers in our foreign commerce

International Longshoremen sAssociation ILA

Pier Strike

From December 20 1968 to February 14 1969 the International

Longshoremen sAssociation was on strike atUSeast and gulf coast

docks Hundreds of ships were idle at their piers or at anchorage

in harbors during this period

After the strike was settled steamship companies operating to

Puerto Rico filed amendments to their tariffs increasing rates in an

effort to recoup purported past losses due to expenses incurred dur

ing the strike period This action raised both legal and policy issues

as to whether a common carrier should be allowed to recoup such

Titled Graphic Analysis of Rules Affecting Container Traffic in TwentySeven

Conference Tariffs The study may be obtained from the Federal Maritime Commission

1405 I Street NW Washington DC 20573 price1 per copy

Other ports reached agreement at various subsequent dates with the last ports in the

west gulf area returning to work on Apr 13969
aA Point System

B Percentage System

Poo C Dollar System

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Scandinavia BalticUS

North Atlantic Westbound

Freight Conference

North Atlantic Baltic

Freight Conference

North Atlantic Mediterranean

Freight Conference

North Atlantic Continental

Freight Conference

Continental North Atlantic

Westbound Freight Conference

North Atlantic French

Atlantic Freight Conference

W

Freed North Atlantic

rtbeund Freight Conference

Nor Atlantic United

Kingdom Freight Conference

US Atlantic Gulf Australia

New Zealand Conference

North Atlantic Westbound

Freight Association

United KingdomUS Gulf

Ports Rate Agreement

GulfUnited Kingdom

Conference

Trans Pacific Freight

Conference of Japan

Pacific Westbound Conference

Japan traffic

Japan Atlantic Gulf

Freight Conference

Far East Conference

Na York Freight Bureau

Hong Kong

Trans Pacific Freight

Conference Hong Kong

Outward Continental North

Pacific Freight Conference

Pacific Coast European

Conference

Australia New Zealand

South Sea IslandsPacific

Coast Conference

GulfMediterranean Ports

Conference

Pacific Westbound Conference

other then Japan traffic

Philippine North America

Conference

Italy South France South

SpainUS Gulf Conference

West Coast of Italy Sicilian

Adriatic Ports North

Atlantic Range Conference

Pacific Coast Australasian

Tariff Bureau

AustraliaUS Atlantic

Gulf Conference
losses incurred during a strike no longer in effect by imposing sur

charges or rate increases upon future users of its service

The Commission suspended proposed rate increases andor strike

surcharges filed by SeaLand Service Inc Seatrain Lines Inc and

Transamerican Trailer Transport Inc for the full statutory period

of 4 months and ordered an investigation to determine both the law

fulness of such increases in principle and the reasonableness of the

specific increases proposed by each common carrier involved Cases

involving the issues were pending further action by the Commission

at yearend

Commission Decisions

The Commission sdecisions in formal cases are covered else

where in this report However the following are of particular

significance

Docket No 6445Investigation of Ocean Rate Structures in the Trade

Between United States North Atlantic Ports and Ports in the United Kingdom

and EireNorth Atlantic United Kingdom Freight Conference Agreement

7100 and North Atlantic Westbound Freight Association Agreement 5850

On August 20 1968 the Commission served its report in this case finding

that the North Atlantic United Kingdom Conference had established rates

on general cargo and certain other rates on specified cargo items which were

so unreasonably high as to be detrimental to the commerce of the United

States contrary to section 18b5 of the Shipping Act 1916 These rates

were disapproved and the conference was ordered to file lower rates on these

items along with a justification of the level of the new rates Under the stand

ards set forth by the Commission in its report in this ease an adverse party

may show that a rate appears to be unreasonable by reference to a lower

rate in a reciprocal or competitive trade and upon a showing of detriment

the burden shifts to the carrier to come forward and prove that its rate or

rates are reasonable

Following the service of the Commission sreport in docket No 654the

Conference filed in the US Court of Appeals for the District of Columbia

Circuit a petition to review the Commission sreport and order in the pro

ceeding The Court of Appeals affirmed the Commission sorder by decision

dated June 27 1969 The formula thus provided by the Commission has

become a useful regulatory tool in the informal handling of similar situa

tions in other trades

Docket No 688Disposition of Container Marine Lines Through Inter

modal Container Freight Tariffs Nos 1 and 2 FMC Nos 10 and 11 On

w
April 23 1968 the Commission concluded that the tariffs of Container

Marine Lines CML providing for a through transportation service between

the United States and the United Kingdom comprised of inland transporta

tion in the United Kingdom in addition to porttoport transportation were

acceptable for filing under section 18b1 Shipping Act 1916 if such

tariffs clearly indicated the charges for each part of the movement and

showed CML s assumption of common carrier Liability for the through

movement It was further determined that the alleged conflict between the

port tport portion of through rates and ocean rates in tariffs of conferences

of which CML is a member was nonexistent inasmuch as through intermodal

service was not within the scope of the then approved conference agreements

On June 18 1969 the Commission approved amendments to the agree

ment and dual rate contracts of the North Atlantic Westbound Freight

Association authorizing the conference to offer a through intermodal serv

ice The case remanded by the Court of Appeals for the District of Columbia

Circuit on the Commission sown motion has been reopened to permit a full

exploration of the interplay between conferences and lines operating outside

the conference framework in providing new techniques in the developing

area of intermodal transportation

Commission Rules

On June 7 1969 the Commission published final rules amending

General Orders 7 and 18 self policing and minutes requirements

respectively to exempt twoparty ratefixing agreements from the

requirements of the rules On the same date final rules changing

reporting requirements pertaining to Shippers Requests and Com

plaints General Order 14 from quarterly to annually were also

published These changes will significantly reduce the paperwork of

both the carriers concerned and the Commission sstaff without

adverse effect on the regulatory functions of the agency

On June 18 1969 the Commission entered into a rulemaking

proceeding to amend General Order 7 regarding self policing sys

tems in conference and ratemaking agreements The proposed modi

fication of the present General Order 7 rules is required to implement

the 1967 decision of the US Court of Appeals for the District of

Columbia Circuit in the States Marine Line case The proposed rules

will insure the establishment of adequate procedures for self policing

of the agreements so as to provide specific guarantees against arbi

trary action and reasonable assurance that an accused member will

be treated fairly
On August 16 1968 the Commission published final rules gov

erning the filing of agreements between common carriers of freight

by water in the foreign commerce of the United States These rules

promulgated as General Order 24 became effective September 15

1968 Use of the uniform agreements provided in the rules while

permissive and not mandatory will greatly expedite the processing

of agreements and also result in considerable savings of time and

expense to the Commission as well as to conferences and the carriers

Staff Investigation of

Non Vessel Operating Common Carriers NVOCC s

predecessor

In its decision

agency

in docket

established

No 815

a class

6 FMB

of nonvessel

245 the

operating

Commission s

com

mon carriers TheBoard found that any person or business associa

tion may be classified as a common carrier by water who holds

himself out by the estblishment and maintenance of tariffs by adver

tisement and solicitation and otherwise to provide transportation

for hire by water in interstate or foreign commerce as defined in

the Shipping Act 1916 assumes responsibility or has liability

imposed by law for the safe transportation of the shipments and

arranges in his own name with underlying water carriers for the

performance of such transportation whether or not owning or con

trolling the means by which such transportation is effected is a

common carrier by water as defined in the Shipping Act 1916

The carriers involved in that proceeding were mainly van lines

engaged in the transportation of household goods in through door

todoor service However with the advent of fast containerships

designed for the through intermodal carriage of general cargo seri

ous and perplexing problems have arisen In his daily operations the

NVOCC is a carrier to the shipper and is a shipper to the under

lying vessel operator Because of this dual identity carriers and

conferences are following different practices in the treatment of

NVOCC s

Generally NVOCC sconsolidate small shipments into containers

and make their profit by charging the shipper the rate for individual

shipments and by paying the underlying carriers the lower rates

and charges available for full containers
However the NVOCC is not defined in the Shipping Act and ves

sel operators are reluctant to establish lower rates for NVOCC sas

this may be considered to be unjust discrimination between shippers

By Federal Register publications of February 12 1969 and

April 3 1969 the Federal Maritime Commission instituted a review

of the operations of Non Vessel Operating Common Carriers

NVOCC sin the foreign and domestic offshore commerce of the

United States to be undertaken by its staff The purpose of this

review is to obtain background data on the operations and problems

surrounding NVOCC activities and to ascertain whether there exists

a need to establish guidelines and rules and whether amendatory

legislation affecting the regulation of the NVOCC should be recom

mended to the Congress

Initial comments were solicited and received from NVOCC s

steamship lines steamship conferences and shippers Informal hear

ings were held in Washington New York and San Francisco Any

interested party was permitted to testify or furnish written state

ments To date these various segments have exhibited keen interest

Documents are now being reviewed by a special committee a report

of recommendations will be prepared early in fiscal 1970

Conciliation Service

It is the Commission spolicy to offer its good offices and expertise

to parties to disputes involving matters within its jurisdiction so as

to effect resolution of such disputes with dispatch and without resort

to costly and time consuming formal proceedings It also desires to

facilitate and promote resolution of problems and disputes by en

couraging affected parties to resolve differences through their own

resources and to create a forum in which grievances interpretations

problems and questions involving the waterborne commerce of the

United States may be aired discussed and hopefully resolved to

the mutual satisfaction of all parties concerned To this end the

Commission established a conciliation service effective August 3

1968 to provide a further informal method for settling disputes

between persons or companies involved in the shipping receiving

handling or movement of merchandise in commerce of the United

States in foreign and domestic offshore trades
In other activities the Commission in fiscal year 1969 a Insti

tuted on its own motion 35 formal proceedings under statutory provi

sions of the Shipping Act 1916 and the Intercoastal Shipping Act

1933 b issued 29 final decisions involving 30 formal proceedings

c approved under provisions of section 15 of the 1916 Act 178

carrier agreements and 46 terminal agreements d licensed 47

freight forwarders e issued nine certificates to passenger ship

owners and charterers attesting to financial responsibility for in

demnification of passengers in event of nonperformance of contracted

transportation issued nine certificates attesting to financial

responsibility to meet liability incurred for death or injury to pas

sengers or other persons g processed over 128 000 pages of tariff

filings h granted 304 and denied 34 special permission requests

to effect new or increased freight rates in advance of the statutory

notice time i initiated actions to resolve over 450 informal com

plaints and concluded its action with respect to such complaints j

participated in 23 cases in litigation before the courts involving the

decisions and orders of the Commission k initiated one legislative

proposal and 1 continued an aggressive management improve

ment program with emphasis on improving its service to the public

These and other activities of the fiscal year are set forth in detail

in subsequent sections of this report

0

The conciliation service is available to any merchant carrier

conference of carriers freight forwarder terminal operator govern

ment agency or other person involved in the transportation of goods

in such trades The parties are free to determine the best procedure

to be used Participation is purely voluntary at all stages and the

parties involved may withdraw at any time without prejudice Only

if unanimity is reached will the informal advisory opinion although

not binding be sent to all interested parties and made available to

the public Use of the conciliation service does not prevent a party

from pursuing any further course of action that it deems advisable

The Commission is confident that this service will prove to be of

benefit to both the shipping industry and the shipping public

Other Significant Activities
Special Activities of the Commissioners

During fiscal year 1969 the Chairman and the Commissioners

engaged in a number of special activities which included presenting

the Commission sviews on pending legislation to various congres

sional committees addressing legal trade and shipping associa

tions and making television appearances and radio broadcasts

Visits were made to major port areas to obtain current and factual

information on local shipping conditions from the industry and

interested public officials The Commissioners made 19 speeches

during the year explaining the Commission spolicies programs and

objectives to prominent organizations throughout the United States

Examples of special activities follow

Chairman John Harllee outlined for the House Merchant Marine and

Fisheries Committee the responsibilities which would be imposed on the

Federal Maritime Commission by section 5 of HR 6495 a bill to amend

the Oil Pollution Act of 1924 for the purpose of controlling oil pollution

from vessels and for other purposes He also suggested in a speech before

the Federal Bar Association on June 17 1969 that the Federal Government

take steps to institute an internship program for transportation attorneys

Vice Chairman James V Day discussed the prime examples of progress

in the maritime field with the Maritime Committee of the Seattle Chamber

of Commerce and explained to the members of the Second International

Container Service and Equipment Exposition the implications of containeriza

tion on the transportation regulatory policies of the United States

Commissioner Ashton C Barrett traveled to Europe to attend meetings

with representatives of the West Coast of Italy Sicilian and Adriatic Ports

North Atlantic Range Conference WINAC

Commissioner James F Fanseen explained the role of the Federal Maritime

Commission regarding shipping and shippers problems to the delegates to

the Twentieth Annual Institute on Foreign Transportation and Port Opera

tions at Tulane University and discussed rate conferences and national

interests before the American Merchant Marine Conference

Commissioner George H Hearn outlined the policies and programs of the

agency as they relate to containerization to the delegates to the Ninth Annual

Conference on Containerization and explained to the Annual Meeting of

the Freight Forwarders Institute this country sneed for waterborne regula

tion today to prevent unlawful detriment to the commerce of the United

States
SCOPE OF AUTHORITY AND BASIC

FUNCTIONS

The Federal Maritime Commission was established as an inde

pendent agency by Reorganization Plan No 7 effective August 12

1961 Its basic regulatory authorities are derived from the Shipping

Act 1916 Merchant Marine Act 1920 Intercoastal Shipping Act

1933 Merchant Marine Act 1936 and Public Law 89777 of

November61966

The Commission is composed of five Commissioners appointed

by the President with the advice and consent of the Senate The

Commissioners are appointed for 5year terms with not more than

three of the Commissioners being appointed from the same political

party The President designates one of the Commissioners to be the

Chairman who also serves as the chief executive and administrative

officer of the agency

The statutory authorities and functions of the Commission em

brace the following principal areas 1 Regulation of services prac

tices and agreements of common carriers by water and certain other

persons engaged in the foreign commerce of the United States 2

acceptance rejection or disapproval of tariff filings of common car

riers engaged in the foreign commerce 3 regulation of rates

fares charges classifications tariffs regulations and practices of

common carriers by water in the domestic offshore trades of the

United States 4 investigation of discriminatory rates charges

classifications and practices in the waterborne foreign and domestic

offshore commerce 5 issuance of certificates evidencing financial

responsibility of vessel owners or charterers to pay judgments for

personal injury or death or to repay fares in the event of nonper

formance of voyages or cruises and 6 rendering decisions issuing
orders and making rules and regulations governing and affecting

common carriers by water terminal operators and freight

forwarders

The Commission sheadquarters is located at 1405 I Street NW

Washington DC 20573 There are three district offices located as

follows

Atlantic Coast District Office 26 Federal Plaza room 4012

New York NY 10007

Pacific Coast District Office 450 Golden Gate Ave Box 36067

San Francisco Calif 94102

Gulf Coast District Office Post Office Box 30550 room 946

600 South St New Orleans La

70130

11
1 9

INTERNATIONAL COMMERCE

Carrier Agreements

Section 15 of the Shipping Act 1916 authorizes the Commission

to grant exemptions from the provisions of the antitrust statutes to

common carriers by water in the commerce of the United States and

to other persons subject to the act in instances in which such car

riers or persons enter into arrangements undertakings or agree

ments regarding anticompetitive activities enumerated in that section

Such activities include fixing rates controlling competition pooling

or apportioning earnings or traffic allotting ports or regulating sail

ings limiting or regulating the volume or character of traffic to be

carried and providing for exclusive preferential or cooperative

working arrangements The agreements are required to be filed and

may not be implemented prior to approval by the Commission

Agreements may be disapproved if the Commission finds after notice

and hearing the the agreement 1 Is unjustly discriminatory

2 operates to the detriment of the commerce of the United States

3 is contrary to the public interest or 4 is otherwise in violation

of the Shipping Act 1916

Activity in Processing Section 15 Agreements

The Commission is current in the processing of foreign carrier

agreements The average processing time is 57 days from the date of

filing This is considered minimum as it includes a usual 20day

Federal Register notice period during which interested parties are

given the opportunity to file comments or protests

At the beginning of fiscal year 1969 there were 35 agreements

pending Commission approval under section 15 These consisted of

18 new agreements and 17 modifications to existing approved agree
ments During the year 209 agreements were filed 76 new agree

ments and 133 modifications The Commission approved 156

agreements 30 were withdrawn by the parties as a result of infor

mal discussions concerning clarification or revision of the agree

ments 15 were pending in formal proceedings and 43 were in

process of staff analysis

At the close of fiscal year 1969 there were 769 active approved

agreements on file consisting of 131 conference and rate agreements

12 joint conference agreements 49 joint service agreements 19

pooling agreements 33 sailing agreements 413 transship

ment agreements and 112 miscellaneous cooperative working

arrangements

Rules Governing the Filing of Section 15 Agreements

On August 16 1968 the Commission published final rules gov

erning the uniform filing of agreements between common carriers

of freight by water in the foreign commerce of the United States

Utilization of the forms of agreements set forth in these rules al

though permissive rather than mandatory will insure expeditious

processing of agreements and in many instances can result in ap

proval under section 15 of agreements that otherwise would have re

quired formal hearings The use of the suggested agreement formats

will result in considerable savings of time and expense to the Com

mission the conferences and the carriers

Exemption of Nonexclusive Transshipment Agreements From

Section 15 Approval

Final rules exempting nonexclusive transshipment agreements

from section 15 approval requirements were published in the Fed

eral Register 46 CFR 524 on May 14 1968 and became effective

immediately These new rules were made possible by the exemption

authority granted by the 89th Congress in the enactment of Public

Law 89778 on November 6 1966 The Commission under appro

priate safeguards through the requirement of filing for information

but not for approval and by implementation of tariff filing require

ments under section 18bof the act is able to exercise its authority

to exempt nonexclusive transshipment agreements from formal con

1O
sideration and processing under section 15 The best interests of

both carriers and shippers are now being served by implementation

of these rules permitting transshipment arrangements with little

anticompetitive effect to be more readily negotiated and expedi

tiously put into operation

During fiscal year 1969 42 nonexclusive transshipment agree

ments were filed with the Commission pursuant to the new exemption

rules Most of these became effective within a week or two upon

compliance with the tariff filing requirements

Self Policing of Section 15 Agreements

Section 15 of the Shipping Act 1916 provides that the Commis

sion shall disapprove an agreement if after notice and hearing it

finds inadequate policing of the obligations of the agreement It is

necessary therefore that provision for self policing be included in

certain section 15 agreements and that the Commission be informed

of the manner in which such provision is being carried out

The US Court of Appeals for the District of Columbia Circuit in

States Marine Lines Inc v Federal Maritime Commission 376

F 2d 230 in its 1967 decision took issue with the manner in which

the Commission administered the statutory requirement for self

policing and expressly required that this kind of self

regulatory process must provide specific realistic guarantees against

arbitrary and injurious action The court further stated that

given the special characteristics of the shipping industry and

the conference system the broad discretion granted a neutral body

must be subject to some form of continuing internal review That

review must provide reasonable assurance that a member will be

penalized only on the basis of evidence it has an adequate oppor

tunity to rebut or explainin other words that the accused will in

fact be treated fairly

There are approximately 70 conference and ratemaking agree

ments presently in effect which will require substantial modification

in order to comply with the statutory objectives and decisions of the

To conform to the selfpolicing systems presently contained in approved conference

and ratefixing agreements and to establish requirements for future agreements which

comport with the decisions of the Commission and the court the Commission entered

into a proposed rule making proceeding docket No 6938 issued Aug 7 1969 which

sets forth minimum requirements to be provided in every selfpolicing system
Commission and the courts regarding self policing of agreements The

proposed new rule would establish a high degree of uniformity in

submissions of modifications to agreements containing selfpolicing

provisions thereby eliminating time consuming procedures for

evaluation by the Commission of self policing provisions on an in

dividual basis Specific definitions of offenses permissible penalties

impartial adjudication and procedural guarantees to be provided an

accused member of a conference or ratemaking agreement minimum

requirements for self policing etc are clearly set forth in the pro

posed rule

Shippers Requests and Complaints

Section 15 of the Shipping Act 1916 requires that conferences of

carriers serving the foreign commerce of the United States establish

procedures for promptly and fairly considering shippers requests

and complaints Pursuant to this section the Commission issued

General Order 14 46 CFR 527 requiring the reporting of such

requests and complaints to the Commission as well as reporting the

disposition thereof Reports submitted to the Commission by con

ferences during fiscal year 1969 indicate that approximately 68

percent of all complaints and requests submitted to them were han

dled to conclusion in a manner favorable to the shipper This favor

able action on the part of conferences is attributable largely to the

recognition by the conferences that it is in their selfinterest to resolve

disputes with shippers through normal business channels without

reference to the Federal Government Shippers are being encouraged

constantly by the Commission to refer their complaints directly to

the conferences Shippers are free to seek Commission assistance

if necessary

Reports received by the Commission from steamship conferences

during the past year show that they acted upon a total of 3538 re

quests and complaints granting 2404 in whole or in part and

denying 134

Exclusive Patronage Dual Rate Contracts

Section 14bof the Shipping Act 1916 enacted by Public Law

87346 effective October 3 1961 authorizes the Commission to

1C
permit with certain specified statutory safeguards the institution

by carriers or conferences of carriers of a contract system available

to all shippers and consignees equally which provides lower rates

to a shipper or consignee who agrees to give all or a fixed portion

of his patronage to such carriers or conferences of carriers The Com

mission may approve such dualrate contract systems unless it finds

that the contract amendment or modification thereof will be detri

mental to the commerce of the United States contrary to the public

interest or unjustly discriminatory or unfair as between shippers

exporters importers or ports or between exporters from the United

States and their foreign competitors

The following table shows the action taken by the Commission

with respect to exclusive patronage contracts during the fiscal year

FISCAL YEAR 1969 ACTION WITH RESPECT TO EXCLUSIVE

PATRONAGE DUAL RATE CONTRACT SYSTEMS

a Approved dualrate contract systems

As of July 1 1968 68

Approved during fiscal year 1969 1

Canceled during fiscal year 1969 0

Approved systems as of July 1 1969 69

b Dual rate contracts filed for approval pursuant to section 14bPublic

Law 87346 during fiscal year 1969

New Modifications to

systems existing systems

Pending July 1 1968 3 29

Filed during fiscal year 1969 5 22

Approved during fiscal year 1969 1 48

Applications withdrawn before ap

proval 3 3

Pending approval July 1 1969 4 0

Of the five applications filed in fiscal year 1969 to institute new

dual rate systems four were received near the end of the fiscal year

and are still pending approval Two of these were filed by the

Instituto de Foment Nacional INFONAC of Managua Nica

ragua and cover northbound and southbound movement of general

cargo in the trade between specified ports on the USPacific coast

and ports in Central America and Mexico
The US Atlantic and GulfSanto Domingo Conference has

applied for permission to institute a new dual rate system for the

carriage of coffee cocoa and or tobacco in the trade from ports in

the Dominican Republic to USAtlantic and gulf ports The Marine

Express Line an independent carrier has applied for permission to

institute a dual rate system in the trade from USAtlantic and gulf

ports to ports on the east coast of Central America including El Sal

vador and Caribbean ports

In 1969 22 modifications to existing dual rate systems were filed

Most of these modifications provided for amendment to approved

dual rate contracts to permit upward adjustment in freight rates on

less than the statutory 90daynotice period in cases of currency

devaluation by governmental action

ADP Application to Carrier Agreements

The Commission prepares by use of automatic data processing

techniques a semiannual publication entitled Approved Confer

ence Rate and Interconference Agreements of Steamship Lines in

the Foreign Commerce of the United States The compilation in

cludes conference rate and interconference agreements showing

agreement numbers current membership trade areas representa

tives with addresses and other pertinent information pertaining to

the agreements listed Publication is made semiannually and pro

vides uptodate listings as of January 1 and July 1 of each year

The application of computer methodology has facilitated prepara

tion of the document making it possible to provide carriers con

ferences shippers and the interested public with a current publi

cation at a modest price

Freight Rates

Common carriers by water and conferences of such carriers are

required by section 18b of the Shipping Act 1916 to publish

and file with the Commission tariffs setting forth the rules regula

For sale by the Superintendent of Documents US Government Printing Office

Washington DC 20402Subscription Price 1450 per year 1125 additional for

foreign mailing
tions and rates applicable to the transportation of goods in the

foreign commerce of the United States General Order 13 46 CFR

536 prescribes the form and manner in which ocean freight tariffs

must be published and filed These filing requirements implementing

the statutory standards are designed to insure that adequate public

notice is provided and that the tariffs are reasonably uniform and

may be interpreted and applied without difficulty Substantial modi

fications of the general order are now being considered to improve

further the clarity of the tariffs and to standardize certain essential

rules resulting in more simplified documentation and a reduction in

disputes on interpretation

During fiscal year 1969 249 new ocean freight tariffs were re

ceived and a total of 2582 tariffs are now on file and currently in

effect A total of 109 863 tariff pages representing new tariffs re

issued tariffs and changes in currently effective tariffs were re

ceived These pages represent approximately 220 00 new and

initial rates and 275 000 rate changes During the year 420 rejec

tions were issued for failure to conform to the statutory filing

requirements

In the processing of these filings programs have been established

to place particular emphasis on those commodities the rate level of

which is known to have a significant economic effect upon the market

ing capabilities of shippers In addition shippers are advised and

assisted in processing requests for rate adjustments with carriers

and conferences thereby permitting mutually satisfactory adjust

ments on an informal basis All rules and regulations governing

the application of rates and charges are subjected to close and de

tailed examination Due to the expanding use of containerization

and unitization the concept of intermodal services has become in

creasingly important in international commerce For this reason in

examining tariff rules applicable thereto the Commission seeks to

insure that the rates and practices adopted by carriers and con

ferences do not hinder the development of either unitization or con

tainerization and the economies inherent in both forms benefit both

shippers and carriers Since containerization offers our international

trade a greatly improved and more effective system of transporting

goods particular significance is given to the examination of tariff

rates and practices as they relate to this new technology Container

movement gives economic advantages to the ocean carriers Substan
tial savings are afforded by the fact that they are not required to han

dle cargoes directly into and out of their vessels as opposed to the

handling of a packaged unit of freight Highspeed containerships

permit the carriers a much faster turnaround and intermodal trans

portation allows reduction in the number of vessel calls

Our examination and analysis programs are also designed to

make certain to the extent possible that tariff rates and regulations

do not result in unjustly discriminatory or unduly preferential treat

ment of shippers

Special Permission Applications

Under section 18bof the Shipping Act 1916 the Commission is

authorized in its discretion and for good cause to waive the 30day

filing notice provisions set forth in the act During fiscal year 1969

147 special permission applications for waiver of the filing notice

were received Of this number 122 were approved 19 were denied

and six were withdrawn by the applicants

Freight Rate Surcharges

A common practice of conferences and carriers is to establish a

surcharge as compensation for the extraordinary expenses resulting

from port congestion labor shortages or work stoppage that impede

normal vessel operations Since surcharges increase the cost of ocean

services and might adversely affect the marketing capabilities of

shippers the Commission maintains continual surveillance over these

additional costs

Under this program steps are immediately taken upon the filing

of a surcharge to obtain information from the carriers and confer

ences concerning the conditions which were the basis for the sur

charge The Department of State has been helpful in furnishing

background data concerning foreign ports Exchanges of corre

spondence take place between the Commission and carriers and

conferences relatives to surcharges The Commission slast annual

report discussed the favorable results of the cancellation and reduc

tion of many port and area surcharges during fiscal year 1968

Cancellation of surcharges at the following ports was achieved

during fiscal year 1969 on the dates shown Warri Nigeria15

367019 0 7os 19
percent canceled October 7 1968 Conakry Guinea25 percent

canceled February 28 1969 Santos Brazil25 percent canceled

August 19 1968 and Brazil1per ton canceled March 1 1969

As a result of the longshoremen sstrike which began in December

1968 on the USeast and gulf coasts most steamship conferences

and independent carriers serving the US foreign commerce from

those coasts imposed strike surcharges on cargoes in order to recoup

losses The amount of the strike surcharges in most instances was

set at 10 percent of the freight charges

While the Commission did not question the right of carriers to

receive adequate compensation for their services it did take issue

with inequitable apportionment of strike related expenses to US

export trades The Commission sstaff contacted the conferences and

carriers which filed strike surcharges in an effort to reach a solution

which would afford some relief to our exporters and to determine

whether strike surcharges were warranted As a result some confer

ences and carriers voluntarily postponed reduced or announced ex

piration dates of surcharges In the trade between US North Atlantic

ports and certain European ports conference carriers instituted a

strike surcharge on outbound cargoes but not on inbound thereby

raising a question as to equitable apportionment of their strike related

expenses Since the appeals of the Commission to the conferences and

carriers did not achieve the desired results on April 23 1969 the

Commission ordered the inbound and outbound conferences in the

trade to show cause why they were not in violation of section 15 of

the Shipping Act 1916 and why the Commission should not order

elimination of the inequity On May 5 1969 before replying to the

order the outbound conference canceled its 10percent surcharge

Additionally three leading nonconference lines serving the trade

took similar action Three other US North AtlanticEuropean con

ferences terminated their strike surcharges 5 weeks early as a result

of Commission intervention and negotiation Again nonconference

lines followed the lead of the conferences and terminated strike

surcharges The termination of strike surcharges saved USexporters

very significant amounts in freight charges This has not ended the

matter however because some of the conferences and carriers con

verted their strike surcharges into general rate increases The Com

mission is investigating these rate increases to determine whether

20
there remain any inequities unlawfully prejudicial to the commerce

of the United States

General Freight Rate Increases

To fulfill the Commission sobligations under the statute and to

insure that ocean rates are not fixed at levels which may impede the

ability of shippers to compete effectively in foreign markets the

Commission maintains a program of surveillance over general freight

rate increases published by conferences or nonconference carriers in

the USforeign trade Whenever a conference or carrier publishes a

general rate increase inquiry is made promptly into the specific fac

tors which were taken into consideration in reaching their decision

In the great majority of cases a satisfactory result is achieved by an

informal review with the carriers concerned of all facts bearing

upon the matter frequently resulting in reductions in the proposed

rate increases

The Commission sprogram has for example produced the fol

lowing results MarseillesNorth AtlanticUSAFreight Conference

postponed a 10percent general rate increase from January 15 1969

to March 3 1969 West Coast of Italy Sicilian and Adriatic Ports

North Atlantic Range Conference reduced a 15percent general rate

increase to 8 percent between November 1 1968 and February 1

1969 the India Pakistan Ceylon and Burma Outward Freight

Conference reduced a 10percent general rate increase to 712 per

cent and the Far East Conference reduced their 10percent general

rate increase to 7 percent

Computer Processing of Freight Rates

After a thorough review of its data processing system for tariffs

the Commission solicited an evaluation from other Government

agencies carriers and conferences of carriers shippers and other

elements of the transportation industry to determine the applicabil

ity of its systems and programs to the needs of industry It was

determined that due to absence of uniformity in commodity nomen

clature and the concomitant lack of a unique numerical identifier

for each commodity our rate retrieval system lacked the degree of

91
specificity essential to the automated rating of transportation bills

and charges While our tariff automation processing was discon

tinued during the fiscal year we are participating with other Gov

ernment agencies and with shipper and carrier groups in the

development of uniform commodity descriptions standardization of

format for shipping documentation and elimination of nonessential

documents all necessary steps in the application of data processing

systems to transportation paperwork Faster ships and the rapid

turnaround of vessels resulting from containerization and unitiza

tion of cargoes make cargo delays for lack of documentation more

and more prevalent Prompt and effective solution of these problems

is essential to continued expansion of our trade through more effi

cient handling of shipping documents and reduction in overhead

administrative costs

Other Data Processing Activity

The staff is presently engaged in the development of a data proc

essing system to list all ocean carriers the tariffs in which they par

ticipate the related agreement if any and the geographical scope

covered by each tariff It is believed that this listing which we expect

to be revised semiannually will be of interest and benefit not only

within the Commission but to the ocean transportation industry gen

erally as a guide to the ocean services available and as an index to

the carriers competing in a given trade either individually or as a

member of a conference

International Relations

The Federal Maritime Commission has throughout the year kept

in close touch with the Department of State and the shipping repre

sentatives of foreign nations to reduce or if possible eliminate

points of disagreement which arise through the Commission sad

ministration of its various regulations

During the period under review Chairman John Harllee made

two trips to Europe to attend meetings of the Organization for Eco

nomic Cooperation and Development OECD and to meet with
government shipping representatives and representatives of foreign

shipping lines and conferences to discuss the regulatory activities of

the Commission Commissioner Ashton C Barrett traveled to the

Mediterranean and European areas to meet with the West Coast of

Italy Sicilian and Adriatic PortsNorth Atlantic Range Conference

WINAC representatives in Genoa Italy to discuss regulatory

problems with the carriers and conferences and attended an OECD

meeting in Paris France Commissioner James F Fanseen made an

orientation trip to Europe in the fall of 1968 to discuss regulatory

problems and containerization with various government shipping

officials and representatives of industry

The staff of the Federal Maritime Commission held a series of

meetings with European and Japanese shipping attaches to discuss

present and potential regulatory problems The Chairman and staff

members of the Commission attended a meeting of shipping officials

of the United States and Brazilian Governments This meeting was

to discuss explain and explore the international shipping policies of

the two governments During the period under review meetings

were also held with the Ambassador of Korea the Ambassador of

Ceylon and the Representative of the Export Development Commis

sion of the Organization of American States OAS

The Commission furnished information to American Embassies

abroad on a variety of freight rate and other matters and secured

from them information on conditions at various ports around the

world to assist in the reduction or elimination of surcharges

The substantive problems with the European and Japanese Gov

ernments and shipping lines created in the early days of the Federal

Maritime Commission by its implementing amendments to the 1916

Shipping Act have abated considerably However problems still

exist as the Federal Maritime Commission issues regulations to mod

ernize and refine its regulatory activities These problems now are

largely jurisdictional in that European and Japanese Governments

continue to maintain the position that any regulatory activity which

affects an agreement of conference in their area is an infringement

on their jurisdiction

In the current fiscal year the Government of France joined the

majority of European governments in enacting laws which could be

used to prohibit its shipping lines or conferences from furnishing
information to the Federal Maritime Commission French Law No

651 April 1968 The law became effective in August 1968

Foreign Discrimination

The prospect of foreign shipping discriminations continued dur

ing fiscal year 1969 The staff of the Commission has maintained

continual surveillance of foreign shipping activities and various laws

and regulations in order to keep the Commission advised fully

There is a growing tendency toward shipping legislation in various

Latin American countries directing cargoes to national shipping

lines This is brought about by enlarging the kinds of commerce

within the governmental sphere and issuing regulations requiring

that a given percentage of such government generated cargoes move

on national shipping lines This pattern of regulation is developing

in Argentina Brazil Chile and Ecuador Colombia and Peru appear

to be moving toward extending their regulations to include the con

trol of purely commercial cargoes

The Federal Maritime Commission is continuing its active con

sideration and surveillance of the problem

Public Information

The Commission makes available to the public information and

records consistent with the requirements of Public Law 89487

effective July 4 1967 amending section 3 of the Administrative

Procedure Act Further the Commission expends every effort to pro

vide expedited service to the public with respect to the obtaining of

information and records to assure full access to rates agreements

rules and decisions A close relationship is maintained with inter

ested representatives of news media
DOMESTIC OFFSHORE COMMERCE

The Federal Maritime Commission regulates rates and practices

of domestic offshore common carriers in the trade areas comprising

Alaska Hawaii Puerto Rico Guam American Samoa and the

United States Virgin Islands pursuant to the statutory provisions

of the Shipping Act 1916 and the Intercoastal Shipping Act 1933

These two statutes provide a comprehensive scheme of regulation

over common carrier freight rates and practices Domestic offshore

water carriers are required by the Commission srules to file freight

rates with the Commission at least 30 days in advance of the effective

date of the rate The Commission is empowered to suspend for a

period of 4 months the effective date of any such rate or tariff of

rates pending a hearing and decision on the lawfulness of the rate or

tariff in question If the Commission should determine after hearings

that any rate fare charge classification tariff regulation or practice

is unjust or unreasonable it may determine prescribe and order

enforced a just and reasonable alternative

Freight Rates

The Intercoastal Shipping Act 1933 requires domestic offshore

water carriers to file with the Commission and keep open for public

inspection tariffs of rates fares and charges for or in connection

with transportation between ports served The Commission accepts

or rejects these tariffs in accordance with the requirements of the

statutes and the Commission srules

In fiscal year 1969 13348 new pages to existing freight and

passenger tariffs were examined Of these 528 pages were rejected

and letters sent to persons filing as to the corrective action to be

taken

25
Action was taken by the Commission concerning 43 protested or

questionable tariff provisions Seven formal proceedings were insti

tuted upon the Commission sown motion and eight were instituted

upon receipt of protests

During and after the International Longshoremen sstrike Decem

ber 1968April 1969 the Commission received several complaints

about the shortage of vessel space to Puerto Rico On a number of

occasions it was successful in helping to resolve shipper space

problems

The Commission spolicy of meeting with domestic offshore water

carriers shippers and representatives of the governments of the

domestic offshore areas to discuss negotiate conciliate or otherwise

resolve potential disputes on an informal basis resulted in eliminating

approximately 28 formal proceedings during fiscal year 1969 This

resulted in a substantial saving in both time and money to the Com

mission benefiting the carriers the shippers and the public

Special Permission Applications

Section 2 of the Intercoastal Shipping Act 1933 provides that

no change may be made in tariff rates fares charges classifications

rules or regulations except by publication filing and posting of

new tariff schedules Such changes cannot become effective earlier

than 30 days after the date of filing with the Commission Upon

application of the carrier the Commission may in its discretion and

for good cause allow the changes to become effective on less than

30 days notice During fiscal year 1969 the Commission approved

182 special permission applications and denied 15 and two were

withdrawn by the applicants

Carrier Agreements

Agreements between carriers in the domestic offshore trades are

subject to section 15 of the Shipping Act 1916 which requires that

such agreements be filed for approval before effectuation Each

agreement or modification is examined to determine whether it rep

resents the true and complete understanding of the parties would

be unjust discriminatory or unfair as between carriers shippers
exporters importers or ports operates to the detriment of the

commerce of the United States otherwise violates the Shipping

Act or is contrary to the public interest

During fiscal year 1969 two original agreements and 16 modifica

tions to approved agreements were filed with the Commission Four

original agreements were pending at the end of fiscal year 1968

Thus 22 carrier agreements or modifications to agreements were

processed during fiscal year 1969 Two original agreements were

withdrawn and 20 were approvediP3 ltsAt the close of fis

cal year 1969 there were no agreements or modifications to agree

ments between carriers in the domestic offshore trades pending action

by the Commission
TERMINAL OPERATORS

The activities of marine terminal operators are regulated by the

Commission pursuant to the provisions of the Shipping Act 1916

This entails the processing of terminal agreements review of ter

minal tariffs and policing and regulating terminal practices In

carrying out this responsibility the actions described below were

taken by the Commission during fiscal year 1969

1 An informational terminal tariff circular designed to assist

terminal operators in the construction publication and filing of

marine terminal tariffs was issued at the beginning of fiscal year

1969 Enthusiastic interest was expressed Over 700 copies of the

circular had been issued by the end of the year

2 The Commission implemented vehicle detention rules appli

cable at marine terminals of members of the New York Terminal

Conference in the Port of New York The rules entitle motor vehicle

operators loading or unloading waterborne freight at these facilities

to receive detention charges for undue delays at piers resulting

through no disability fault or negligence on the part of the motor

vehicle operator The rules became effective April 7 1969 pur

suant to the order of the US Court of Appeals for the District of

Columbia Circuit The court directed the Commission to establish

and administer an escrow fund wherein all claimed detention

charges are to be deposited by the terminal operators pending the

outcome of litigation involving the legality of the detention rules

3 In connection with the vehicle detention rules the Commission

instituted an investigation docket No 6928 Truck Detention at the

Port of New York to review certain provisions of the rule in order

to determine whether such provisions are just and reasonable within

the meaning of section 17 of the Shipping Act 1916 and whether

they should be modified or amended
4 The Commission sstaff began a study concerning valuation

of leased terminal property at Pacific coast ports The study will

determine whether criteria should be set for minimum and maximum

compensation for leasing terminal property

5 The Commission instituted an investigation docket No 694

In the Matter of Agreement T2214 Between the City of Long Beach

California and Transocean Gateway Corporation to determine

whether a terminal lease agreement between the city of Long Beach

and Transocean Gateway Corp should be approved disapproved

or modified pursuant to section 15 of the Shipping Act 1916 The

issues in the proceeding are confined to whether the rental rate agreed

upon is compensatory and if not compensatory whether it results

in prejudice to other ports or terminals

6 The Commission instituted an investigation docket No 695

In the Matter of Agreement T2227 Between the San Francisco Port

Authority and States Steamship Company to determine whether the

agreement should be approved disapproved or modified pursuant

to section 15 of the Shipping Act 1916 The issues involved in this

proceeding are similar to those in agreement T2214 ie whether

the rental rate to be charged by the San Francisco Port Authority

is compensatory and if not whether it results in prejudice to other

ports or terminals

7 On April 7 1969 the Commission approved two agreements

T2271 between the city of New York and the Port of New York

Authority and T2272 between the city of New York the Port of

New York Authority and passenger vessel operators serving the Port

of New York providing for construction of a new consolidated

steamship passenger terminal in New York to be used by all major

passenger vessels serving that city Two protests to the agreements

by Marine Space Enclosures Inc and American Dock Cowere

received The Commission approved the agreements over these ob

jections on the grounds that sufficient transportation need and public

interest were demonstrated to warrant approval of the agreements

without a hearing and that the particular interests represented by

protestants were indirect and remote Subsequently protestants

appealed the Commission sapproval of the agreements to the US

Court of Appeals for the District of Columbia Circuit

On July 30 1969 the court issued its decision remanding the matter to the Com

mission for futher proceedings
8 Two interconference agreements relating to terminal opera

tions were filed with the Commission for section 15 approval during

the fiscal year This is the first time that terminal agreements of this

nature have been presented to the Commission

a Agreement No T2206 between the members of the Cali

fornia Association of Port Authorities and the Northwest Marine

Terminal Association was approved by the Commission on Janu

ary15969

b Agreement No T2229 between the South Atlantic Terminal

Conference and the Norfolk Marine Terminal Association was filed

on May 5 1969

The agreements are similar in nature and provide for a coopera

tive arrangement whereby the members may confer discuss and

make recommendations on rates charges practices and matters of

mutual concern The agreements do not grant ratemaking authority

to the groups and actions taken pursuant to the agreements are not

binding upon the members The Commission limited its approval

of both agreements to 3 years and intends to police closely the func

tioning of the agreements to determine whether continued approval

should be granted

9 Several informal complaints were received concerning terminal

tariff practices at Norfolk and Baltimore which provided for progres

sive

strike

increases

The Commission

in demurrage

contacted

rates during

the operators

the recent

and

longshoremen s

expressed its

position that penalty demurrage during a strike period was unrea

sonable since cargo could not be removed from the terminal As a

result of Commission intervention the terminal operators voluntarily

amended their tariffs to remove penalty demurrage during strike

periods thus precluding the need for a formal proceeding in this

matter

10 The staff processed 140 terminal agreements filed pursuant

to section 15 of the Shipping Act 1916 Fiftyfour agreements were

determined not to be subject to the act 46 were processed for Com

mission approval and 11 were voluntarily withdrawn by the parties

Twentynine were pending final Commission action at the end of

the year

11 Ninetyfour quarterly reports covering shippers requests and

complaints submitted by ratemaking terminal conferences in ac

Approved by the Commission on July 11 1969
cordance with the Commission sGeneral Order 14 were reviewed

12 The staff examined 599 terminal tariff filings to determine

whether they were in conformity with the provisions of the Commis

sion General Order 15 the Shipping Act 1916 or an approved

conference agreement to which the terminal may have been a party

13 The minutes of 152 terminal conference meetings were re

viewed to determine whether any action reflected therein was viola

tive of the Shipping Act

O
32

FREIGHT FORWARDING

Licensing

Section 44 of the Shipping Act 1916 provides for the licensing

and regulation of independent ocean freight forwarders by the Com

mission All applicants for Licenses are investigated and informa

tion developed to determine if the applicant is fit willing and able

to function as an independent ocean freight forwarder The follow

ing depicts the licensing activity of the Commission during the year

At the close of fiscal year 1968 there were 1018 licensed freight

forwarders with 31 applications pending completion of review

During fiscal year 1969 61 new applications were received 47

licenses were issued 18 applications were denied or withdrawn

and 27 were pending at the end of the fiscal year Fortyone licenses

issued previously were revoked or withdrawn during fiscal 1969

As of the end of the year there were 1024 ocean freight forwarders

licensed by the Commission

Formal Proceedings

The Commission instituted a proceeding docket No 6922 Inde

pendent Ocean Freight Forwarder License ApplicationViolet A

Wilson dba Transmares to determine whether Violet A Wilson

doing business as Transmares was qualified under the standards of

section 44bShipping Act 1916 to be licensed as an independent

ocean freight forwarder

In docket No 684 Independent Ocean Freight Forwarder Li

cense No 790 the Commission instituted an investigation and hear

By order of July 24 1969 the Commission adopted the initial decision of the hearing

examiner wherein respondent was found qualified for licensing provided an apparently

unqualified individual played no part in respondent socean freight forwarding business
ing to determine whether North American Van Lines continues to

qualify for a license and whether its license should remain in effect

or be revoked The issues in this proceeding stem from the acquisi

tion of North American Van Lines by Pepsi Co Inc an exporter in

the foreign commerce of the United States At respondent srequest

the proceeding was postponed indefinitely on February 26 1969

Respondent slicense was suspended pending final decision

Other Significant Activity

Because of the large number of amendments to part 510 of chap

rules

ter IV

regarding

title 46 of

licensing

the Code

of

of Federal

independent

Regulations

ocean freight

the Commission s

forwarders

were republished in their entirety 33 FR 12654 No substantive

changes were made

During the past year the Commission became aware of a trend

toward mergers in the independent ocean freight forwarder indus

try Because proposed merger agreements among freight forwarders

must be submitted to the Commission for consideration pursuant to

section 15 Shipping Act 1916 there would appear to be sufficient

statutory safeguards to prevent port area monopolies or other situa

tions which might prove detrimental to the commerce of the United

States However surveillance of the situation will be continued with

a view toward determining the longrange impact of the trend on the

freight forwarder industry and US foreign commerce
FINANCIAL ANALYSIS

During fiscal year 1969 the Commission received financial state

ments from 40 carriers submitted in accordance with the provisions

of General Order 5 These reports reflect the financial condition of

the reporting carrier as a corporate entity In addition 39 reports

were submitted under the requirements of General Order 11 which

identifies categories of data to be submitted by carriers in reporting

results of their operations for each regulated common carrier trade

Information derived as the result of audit and analysis of these data

at headquarters and on the site of the carrier soperations is of mate

rial assistance in expediting action on rate cases

The Commission sstaff conducts a continuing program of audits

of these financial statements During the year 11 of the reports were

verified by audits of the carrier srecords conducted generally by

field auditors of the Commission located in New York San Fran

cisco and Seattle To obtain uniformity and thoroughness a specific

audit program has been prescribed

On December 1 1967 the Commission published in the Federal

Register notice of a proposed rulemaking requiring selected carriers

those with gross revenues of more than 1 million earned in the

service of the domestic offshore trades to submit more detailed

financial reports revealing costs of carriage of various categories of

commodities These data will enable the Commission to expedite

the discharge of its duties under the Shipping Act 1916 and the

Intercoastal Shipping Act 1933 Hearings have been held in Wash

ington and will be resumed on the Pacific coast and concluded in

Washington in the fall We estimate that the new accounting report

when published will be applicable to between 15 and 20 of the car

riers reporting currently under General Order 11 Those carriers

which meet the financial criterion contemplated by the proposed rule

will no longer be required to report under General Order 11
PASSENGER INDEMNITY

The Commission is charged with the administration of sections 2

and 3 of Public Law 89777 the ship passenger safety statute

enacted November 6 1966

Section 2 of the statute which became effective August 7 1967

requires owners and charterers of vessels having berth or stateroom

accommodations for 50 or more passengers and embarking pas

sengers at US ports to establish financial responsibility to meet

any liability incurred for death or injury to passengers or other

persons on voyages to or from USports Section 3 effective May 5

1967 requires persons arranging offering advertising or providing

passage on such vessels to establish financial responsibility for in

demnification of passengers for nonperformance of transportation

The rules implementing sections 2 and 3 of Public Law 89777

are contained in Commission General Order 20 which requires inter

alia that assets or securities acceptable to the Commission of ap

plicants insurers guarantors escrow agents or others as evidence

of financial responsibility must be physically located in the United

States This requirement results from a finding by the Commission

that in enacting the statute Congress intended that assets must be

readily available in the United States to pay any judgment obtained

from UScourts

During fiscal year 1969 the Commission approved nine applica

tions for the issuance of performance certificates and nine applica

tions for the issuance of casualty certificates Also approved were 24

amendments requested by qualified holders of the Commission sper

formance and casualty certificates reflecting additions to existing

fleets changes of ownership charter arrangements and evidence of

financial responsibility

25
9L

KNOW ALL MEN BY THESE PRESENTS THAT

Effective

liberal Maritime Commission

Workington O C 20573

CERTIFICATE OF FINANCIAL RESPONSIBILITY

FOR INDEMNIFICATION OF PASSENGERS FOR

NONPERFORMANCE OF TRANSPORTATION

Secretary

No

has evidenced financial responsibility for indemnification of passengers for nonperformance of

transportation and as the holder of this Certificate is duly authorind to arrange offer advertise

or provide passage on vessels having berth or stateroom accommodations for fifty or more pas

sengers and which are to embark passengers at United States ports

This Certificate to cover the is issued pursuant to the authority con

tained in Section 3 of Public Law 89777 and is subject to the punisrons of said law Part 540

Chapter IV of isle 46 of the Code of Peder d Regulations as n 0 or may be amended she perti

nent provisions of other applicable regulations promulgated under the foregoing section of said

Law and any tenn and conditions set forth below

By Order of die Federal Maritime Commission

Jeberat Maritime Commision

Workington 3B C 20573

CERTIFICATE OF FINANCIAL RESPONSIBILITY TO MEET

LIABILITY INCURRED FOR DEATH OR INJURY TO

PASSENGERS OR OTHER PERSONS

KNOW ALI MEN BY THESE PRESENTS THAT

has evidenced financial responsibility to meet any lubdny incurred for death or injury to pas

sengers or other persons on voyages to or from United States ports

This Certificate to cover the is issued pursuant to the authority con

tained in Section 2 of Public Law 89777 and is subject to the provisions of said Las Parr 540

Chapter IV of Tide 46 of the Code of Federal Regulations as it is or may be amended the perti

nent provisions of other applicable regulations promulgated under the foregoing section of said

Law and any terms and conditions set forth below

By Order of the Federal 8 laritimc Commission

Effective Secretary

Na
At the close of the fiscal year one application for performance

and casualty certification and seven amendments to existing per

formance and casualty certificate applications were pending comple

tion of processing

During the year six performance certificates and four casualty

certificates were revoked as charter arrangements were completed or

certificants ceased to operate subject to sections 2 and 3 of Public

Law 89777

Nineteen informal complaints involving passenger vessel opera

tions were received The Commission lacks broad statutory authority

over passenger vessel operations especially in the foreign trades

However in an effort to assist the passenger and to correct any condi

tions detrimental to passengers or the industry vessel owners and

operators are contacted concerning all such complaints received by

the Commission

new
Economic analysis by the Commission involves the gathering

collation and evaluation of data regarding ocean transportation

services in both the domestic offshore and foreign trades of the United

States Studies cover the broad gamut of economic implication

including possible rate inequities and discriminatory and other un

fair practices Also included is analysis of the level of carriers

general rate structures to determine whether individual rates bear a

fair relationship to each other considering such factors as cost of

transportation nonregulated competition rate levels at which cargo

stops moving and the public need for low rates on particular

commodities

Exhibits and oral testimony of the Commission sstaff of econo

mists played an important role in the decision in docket No 654

in which certain rates of the North Atlantic United Kingdom Con

ference were found to be so unreasonably high as to be detrimental

to the commerce of the United States

Puerto RicoVirgin Islands Trade Study

A study of the Puerto Rico and Virgin Islands trades was initiated

by the Commission during fiscal year 1968 Now in final phases of

review by the staff the study will be ready for publication before

the end of calendar year 1969 The major objective of the study is

to evaluate the effect of ocean transportation on economic conditions

in these trades

This study will provide the Federal Maritime Commission with

background information needed to supplement data obtained in

formal proceedings and will be used in the development of more

efficient administrative and regulatory techniques The study also

22

ECONOMIC ANALYSIS
evaluates the operations of ocean terminals pickup and delivery

services adequacy and efficiency of shipping services developmental

rates and special regulatory problems which may retard the flow

of commerce between the US mainland and ports in Puerto Rico and

the Virgin Islands

Special Projects

Special studies conducted by the Commission during fiscal year

1969 included preparation of statistical data and exhibit material

for general revenue investigations in the Puerto Rico and the Virgin

Islands trades an analysis of the domestic offshore carriers tariff

credit rules a study to determine the necessity for investigation of

rates on household goods an analysis of demurrage and detention

rules applicable at New York NYa study of the feasibility of

regulating contract carriers in the domestic offshore trades and a

study of the necessity for certification of carriers in the domestic

offshore trades

Other areas of economic activity during the year involved studies

of the flow of major moving commodities containerization studies

a review of conglomerate mergers in the shipping industry and a

study of the effects of strike related surcharges some of which

resulted in eliminations deferment or adjustments
ENFORCEMENT AND COMPLIANCE

Informal Complaints Foreign

The Commission is responsible for administering the regulatory

statutes which affect relationships among common carriers by water

engaged in transportation in the foreign commerce of the United

States as well as relationships between those carriers and the ship

ping public

To this end the Commission has 1 Implemented rules requir

ing carriers to establish procedures for prompt disposition of ship

pers complaints and for filing reports of actions taken 2

published in conjunction with the Department of Commerce a booklet

titled Ocean Freight Guidelines for Shippers to assist exporters

and importers in presenting their complaints and requests for rate

reductions to carriers and conferences and 3 stressed mediation

procedures in resolving cases presented to the Commission

Through cooperative negotiation with the parties concerned these

policy and procedural devices are proving to be effective in resolving

shippers complaints During fiscal year 1969 the Commission proc

essed under its program for handling informal complaints and pro

tests a total of 221 matters relating to the activities of carriers or

conferences of such carriers in the foreign commerce of the United

States Areas covered included level of ocean rates unsettled claims

alleged discriminatory practices disputed classification of cargo

under carriers tariffs untariffed common carriage and other com

plaints In 73 instances resolution favorable to the shipper was

achieved after intervention or inquiry by the staff Nine cases were

referred to the Department of Justice for prosecution of violations of

the Shipping Act 1916 Other matters resolved by the parties and

matters in which no violation of law was involved totaled 139 There

were 95 cases pending resolution at the end of the fiscal year
Informal Complaints Other

Domestic Offshore CarriersDuring fiscal year 1969 the Com

mission received 142 informal complaints involving freight rates

tariffs agreements and other practices of domestic offshore carriers

In addition there were 17 pending informal complaints at the end

of fiscal 1968 Of the total of 159 new and pending informal com

plaints 125 cases were resolved by determination of no violation

or by adjustment satisfactory to the complainant Eleven complaints

were withdrawn and one case involving violations of the shipping

statutes was referred to the Department of Justice for appropriate

action At the end of fiscal year 1969 22 complaints were pending

additional investigation

Freight ForwardersThere were six informal complaints relating

to freight forwarders on hand at the close of fiscal year 1968 34

additional complaints were received this year making a total work

load of 40 cases Seven complaints were resolved by settlement or

withdrawal no violation was found in nine instances and 18 cases

were closed by other corrective actions At the end of fiscal 1969

there were six complaints pending final resolution

Terminal OperatorsAt the beginning of the year 52 informal

complaints against operators of terminal facilities were pending staff

action An additional 128 cases were received during fiscal year

1969 Sixtysix cases were handled to completion with 114 com

plaints pending final actions at the close of fiscal 1969 Of the pend

ing complaints 63 are the subject of docket No 6546Truck

Loading and Unloading Rates at New York Harbor 13 are the sub

ject of docket No 689Free Time and Demurrage Charges on

Export Cargo two are in other formal proceedings with the re

mainder awaiting further action by the staff

Other Compliance Action

The Commission continued its compliance program in the domes

tic offshore trades during fiscal year 1969 The program is divided

into two parts Part I relates to general activities of water carriers

subject to the shipping statutes and is intended to 1 Acquaint the

shipping public as well as the carriers with the provisions of the ship

ping statutes and rules and regulations of the Commission and 2
provide for surveys designed to detect and investigate instances of

failure to comply with the statutes and rules and regulations of the

Commission Part II of the program is a container inspection pro

gram instituted to prevent or inhibit unlawful practices in weighing

measuring and describing cargo transported in containers

At the close of fiscal year 1968 there were three compliance sur

veys pending additional investigation by the Commission Twelve

additional surveys were initiated during fiscal 1969 Of the total

of 15 new and pending compliance surveys eight were closed and

seven were pending completion of additional investigation at the

close of fiscal year 1969

During the fiscal year Commission investigative personnel iden

tified 47 containers containing either mismeasured or misdescribed

cargo moving in the domestic offshore trades Letters were sent to

21 shippers relating to minor or firsttime violations of the shipping

statutes The remaining violative cases involving more serious in

fractions are being reviewed by the Commission sstaff for possible

referral to the Department of Justice for appropriate action

Field Investigations

Commission investigators inspected 178 containers in the domes

tic offshore trades during fiscal 1969 to determine whether shippers

andor carriers were in violation of the governing statutes or rules

and

inspection

regulations

program

of the

two

Commission

major carriers

As a result

have

of

reported

the Commission s

a total of

825 000 in additional revenue from shippers which would not

have been collected otherwise Shippers by properly declaring their

cargo pay the required tariff rates and secure no rate advantage

over competitors

During 1969 the investigative staff of the Commission in coop

eration with and at the request of a foreign steamship conference

conducted a survey to determine the need for the problems and

the feasibility of inspection programs on heavily containerized for

eign trade routes Results of the survey were not evaluated fully at

yearend However it is apparent that an inspection program is de

sirable and that the most feasible methods of carrier self policing

have still to be developed
During the fiscal year 341 new investigative cases were opened

and 365 were completed These encompassed suspected violations

of sections 14 15 16 17 18 and 44 of the Shipping Act 1916 and

section 2 of the Intercoastal Shipping Act 1933 as well as investi

gations of applicants for independent ocean freight forwarder li

censes compliance checks of licensed freight forwarders and

financial responsibility inquiries under Public Law 89777

Of the investigative cases referred to the Department of Justice

for prosecutive action eight cases were finalized by pleas of guilty

award of judgment or by compromise settlement in the total amount

of77000

Formal Proceedings

The Commission on its own motion instituted 35 proceedings and

remanded for additional evidence three proceedings previously

submitted to it Furthermore 10 formal complaints were filed and

eight complaints were filed pursuant to the Commission sProcedure

for Adjudication of Small Claims One hundred and sixteen cases

were concluded either through Commission decision satisfaction

of complaint or discontinuance of proceeding This figure represents

a substantial increase over that in fiscal 1968 owing to the settle

ment dismissal or withdrawal of a large number of complaints

processed under the Commission ssmall claims procedure

The number of formal proceedings instituted by the Commission

has remained at a relatively stable level in keeping with the Com

mission scontinuing efforts to regulate the steamship industry

wherever possible through rules of general application rather than

by means of ad hoc proceedings

Among the formal proceedings initiated by the Commission are

several of more than usual import such as an investigation into the

general revenue needs of seven vessel operating common carriers

serving the Puerto Rico trade and four unprecedented investigations

of revenues of nonvessel operating carriers serving in the same trade

During the course of the year the Commission served several note

worthy decisions In this category of proceedings were the dis

approval of seven export rates in the North Atlantic United Kingdom

trade where the rates were found to be higher than corresponding
import rates and to be exerting adverse effects on exports the finding

that certain west coast conferences could continue to promote the

flow of commerce through west coast ports by means of the socalled

overlandOCP rate system the issuance of rules instituting the pay

ment by terminal operators at the Port of New York for truck deten

tion and the disapproval of conference arrangements in the Latin

AmericanWest Coast trades tying shippers to conference service in

trade areas beyond those in which the shippers normally participated

In the latter case however the Commission has reopened the pro

ceeding for consideration of further evidence concerning the need

for such arrangements in these trades

The status of the Commission docket in formal proceedings is

indicated below

Investigations

Sec 15 10 10 13 7

Secs 14 16 17 5 3 3 5

Sec 18b5 1 1 1 1

Complaints 10 18 12

Small clims 53 8 56 5

Dual rate contracts 1 0 1 0

Freight forwarder

licensing 2 2 2 2

Rate proceeding 7 14 9 12

Rulemaking 10 8 13 5

44

Pending New dockets Concluded Pending beginning and remanded fiscal beginning

fiscal 1969 cases 1969 fiscal 1970

Total 109 56 116 49
PROCEEDINGS BEFORE HEARING

EXAMINERS AND FEDERAL

MARITIME COMMISSION

Hearing examiners preside at hearings held after receipt of a

formal

own motion

complaint

Examiners

or institution

have the

of a

authority

proceeding

inter

on

alia

the Commission s

to administer

oaths and affirmations issue subpenas authorized by law rule upon

motions and offers of proof and receive relevant evidence take or

cause depositions to be taken whenever the ends of justice would be

served thereby regulate the course of hearings and hold conferences

for the settlement or simplification of the issues by consent of the

parties dispose of procedural requests issue decisions and take

any other action authorized by agency rule and the Administrative

Procedure Act

At the beginning of the fiscal year 98 proceedings were pending

before hearing examiners During the fiscal year 50 cases were

added which included four cases remanded to the examiners by

the Commission for further proceedings The examiners conducted

hearings in 15 cases held prehearing conferences in 25 cases and

issued 25 initial decision during the fiscal year Eightyseven cases

were otherwise disposed of by the examiners Thirty oneof the latter

group were formal proceedings while 56 were handled in accordance

with the Commission ssmall claims procedure Under this procedure

claims against common carriers subject to the Shipping Act 1916

as amended and the Intercoastal Shipping Act 1933 as amended

in the amount of1000 or less for the recovery of damages not

including claims for loss of or damage to property or for the re

covery of overcharges are with the written consent of parties deter

mined by the Commission shearing examiners without the necessity

for formal proceedings under other rules of the Commission

45
Decisions of Hearing Examiners in Proceedings

Not Yet Decided by Commission

Docket No 664Henry Gillen sSons Lighterage Inc et al v American

Stevedores Inc et alDocket No 66 Henry Gillen sSons Lighterage

Inc et al v Columbia Stevedoring Co et al The Commission is without

jurisdiction to direct payment of reparation pursuant to section 22 of the

Shipping Act 1916 by a stevedoring contractor who does not furnish

wharfage dock warehouse or other such terminal facilities and is neither

a carrier nor a forwarder and therefore is not a common carrier by water

or other person subject to this act Where the Commission in prior decision

and order directed respondents to discontinue charges for shipside lighter

service in the future without an express finding of past unlawfulness of such

charges complainant in reparation proceeding cannot rely upon such prior

decision and order to establish that past charges were unlawful since deter

mination of future unlawfulness does not necessarily mean that past acts

were found to be unlawful at the time thereof In a reparation proceeding

parties who were not parties to a prior adjudicatory proceeding are not

bound under theory of collateral estoppel by the Commission sfindings in

the prior proceeding In reparation proceeding to recover charges for ship

side loading and unloading of lighters where complainant lightermen relied

upon Commission decision and order in an investigation proceeding for

proof of unlawfulness of the charges held as to charges prior to effective

date of that decision that unlawfulness thereof was not established either

by findings in the investigation proceeding or upon record in the reparation

proceeding and that in any event lightermen could not recover without proof

of actual injury where Commission had expressly found charges to be au

thorized by approved section 15 agreement and therefore not unlawful

per se As to charges assessed by parties to investigative proceeding subse

quent to effective date of order therein forbidding such charges for the future

complainants found entitled to reparation without proof of injury

Docket No 6756Pittston Stevedoring Corporation v New Haven Ter

minal Inc A terminal operator may impose a usage charge on persons com

ing 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 per 1000 board feet of lumber imposed on

stevedores doing business at a terminal in competition with terminal opera

tor s stevedoring operation found not reasonably related to the services

furnished and its imposition by respondent constitutes an unjust and un

reasonable practice which violates section 17 of the act Cease and desist

order entered

Docket No 689Free Time and Demurrage Charges on Export Cargo

Free time and demurrage rules and regulations on export cargo prescribed

for future application at the ports of New York and Philadelphia It is con

cluded and found that the ocean carriers and marine terminal operators at

46
the ports of New York and Philadelphia insofar as they permit unlimited

free time with no demurrage charges on export cargo on the piers docks or

wharves at these two ports have not established observed and enforced just

and reasonable regulations and practices relating to the receiving handling

or storing of property contrary to the requirements of section 17 of the Ship

ping Act 1916 That the granting of unlimited free time with no demurrage

charges on export cargo at the port of New York and Philadelphia is an

unjust and unreasonable practice and in the circumstances section 17 of the

act requires that this Commission determine prescribe and order enforced

just and reasonable regulations and practices with respect to free time and

demurrage at these two ports That for the future just and reasonable free

time and demurrage rules regulations and practices for export cargo at the

ports of New York and Philadelphia hereby are determined prescribed and

ordered enforced Specific rules found just and reasonable and prescribed

Docket No 6810InterAmerican Freight ConferenceCargo Pooling

Agreements Numbered 9682 9683 and 9684 Agreements 9683 and 9684

setting up pooling arrangements for the carriage of coffee and cocoa re

spectively from Brazil to Atlantic ports of the United States have not been

shown to be of need in the trade and do not represent the full understanding

of the parties thereto The agreements would be unjustly discriminatory and

unfair as between carriers would operate to the detriment of the commerce

of the United States and would be contrary to the public interest The agree

ments are disapproved

Docket No 6813Assembly TimePort of San Diego A tariff rule pro

viding an additional 10 days assembly time at San Diego for Government

owned or sponsored cargo or for charitable purposes found not to offend

the proscriptions of section 16 First or 17 of the Shipping Act 1916 or to

be otherwise unreasonable

Docket No 6811 C H Leavell Company v Hellenic Lines Limited

Where complainant shipped cargo on two of respondent svessels scheduled

for Red Sea port via Suez Canal which was closed after commencement of

voyages following outbreak of ArabIsraeli War of 1967 requiring both

voyages to be diverted via Cape of Good Hope the first after backtracking

from Alexandria a 65percent surcharge imposed on the voyage which was

extended 164 percent in time and 193 percent in mileage and a 25percent

surcharge imposed on the voyage which was extended 71 percent in time

and 94 percent in mileage found authorized by filed tariff rule and bill of

lading clauses providing for additional compensation in unspecified amount

in the event of such contingency and not in violation of section 18bof the

Shipping Act 1916 Incorporation by reference of definitely ascertainable

matter in bill of lading terms comprising transportation agreement follows

established maritime custom which is not invalidated by section 18b of

Shipping Act 1916 Complaint dismissed

Docket No 6829US Pacific CoastAustralia New Zealand South

Sea Islands Trade Unapproved Agreements Respondent sfailure to file
for approval their agreement of June 4 1965 authorizing the payment of

brokerage in the Pacific CoastAustralia New Zealand 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 Respondent sagree

ment of December 9 1965 prohibiting the payment of brokerage and the

tariff rules pursuant thereto not having been filed for approval were in viola

tion of section 15 Respondent sagreement of February 1 1966 to cancel all

tariff references to brokerage and the tariff rules pursuant thereto not having

been filed for approval were in violation of section 15 Respondents did not

operate under an unfiled agreement or understanding not to pay brokerage

between February and May 1966 The payment of brokerage by respondents

between May 1966 and February 28 1968 was not pursuant to an unfiled

agreement or understanding Respondents did not agree by direct action or

implication not to pay brokerage to New Zealand and the lesser islands

between June 1965 and August 15 1968 The Commission is not estopped

from making findings with respect to respondent stariff rules which were

to have become effective February 15 1966 prohibiting the payment of

brokerage

Docket No 692AP St Philip Inc v The Atlantic Land and Improve

ment Company and Seaboard Coast Line Railroad Company Atlantic Land

Improvement Co owner of a terminal facility found to have divested itself

of all functions in connection with the operation of the terminal under a

lease to Seaboard Coast Line Railroad Co and not be a person subject to

the Shipping Act 1916 Seaboard Coast Line Railroad operating a terminal

facility in connection with common carriers by water found subject to the

act The giving or granting of an exclusive right to furnish tugboat services

to vessels docking and undocking at a terminal when not justified by a trans

portation need the public interest or furtherance of a valid regulatory pur

pose violates section 16 First of the act Seaboard Coast Line Railroad

although not having prevented tugboat companies other than Tampa Bay

Towing Co from serving vessels docking and undocking at its terminal has

evidenced its intent to do so contingent upon the final outcome of an action

in a State court against Atlantic Land Improvement Co A cease and desist

order cannot be issued in the absence of proof of violation of the act by a per

son subject to the act Complaint dismissed without prejudice to reinstitu

tion of a proceeding under section 22 of the act should Seaboard Coast Line

Railroad carry out its declared intent to grant Tampa Towing Co the ex

clusive right to furnish tugboat services to vessels docking and undocking

at the phosphate elevator terminal

Docket No 694Agreement No T2214 Between the City of Long

Beach California and Transocean Gateway Corporation Rental for marine

properties for use as a public container terminal subject to an adjustment in

the minimum rental for the second year found compensatory on proposed

10year basis and not shown to be unjustly discriminatory or unfair to other
ports or terminals Lease agreements approved subject to said adjustment

in secondyear minimum rental

Docket No 6922Independent Ocean Freight Forwarder License Ap

plicationViolet A Wilson dba Transmares Applicant Violet A Wilson

doing business as Transmares will be an independent ocean freight forwarder

as defined in the Shipping Act 1916 is fit willing and able properly to

carry on 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 44b of the Shipping Act

1916

The examiners also issued initial decisions in dockets Nos 655

6531 6611 661 67 441683 6816 6819 6824

6826 6827 SD403 and SD404 described under Final Deci

sions of the Commission

Pending Proceedings

At the close of fiscal year 1969 there were 36 pending proceedings

of which 23 were investigations initiated on the Commission sown

motion and the remaining cases were instituted by the filing of

formal complaints and or applications by conferences trade asso

ciations shippers individual steamship companies and others

Final Decisions of the Commission

In proceedings other than rulemaking the Commission heard 11

oral arguments and issued 29 decisions involving 30 proceedings

Of these proceedings seven were discontinued without report one

was referred to the examiner for evidentiary hearing and one was

remanded for further hearing

Docket No 1092Agreement No 8660Latin AmericaPacific Coast

Steamship Conference and Proposed Contract Rate System The contract

rate system of respondent conference was disapproved and the conference

was directed to offer such contracts separately in each trade area which it

serves On reconsideration the matter was remanded for taking of further

evidence
Docket No 1153Truck and Lighter Loading and Unloading Practices

at New York Harbor In furtherance of its previous order in this proceeding

the Commission prescribed truck detention rules to be employed by the New

York Terminal Conference upon a finding that the Conference had failed to

do so itself

Docket No 65 Proposed Rule Governing Time Limits on the Filing o

Overcharge Claims The rules of carriers and conferences providing for a

6month limitation on filing of overcharge claims by shippers were found

not to be violative of the shipping statutes nor did they preclude the filing

of claims with the Commission within the 2 year statutory period Accord

ingly the Commission found no necessity for publishing a proposed 2 year

rule

Docket No 653IInvestigation of Overland and OCP Rates and Absorp

tionsDocket No 666IBoard of Commissioners of the Port of New Orleans

v Pacific Coast Australasian Tariff Bureau The practices of various con

ferences in setting competitive rates for the Pacific coast gateway overland

and overland common point rates were found to be authorized by their

conference agreements and not violative of the shipping statutes The Com

mission directed however that the agreements be updated to make clear the

intent of such practices

Docket No 654Ocean Rate Structures in the Trade Between the United

States and the United Kingdom and Eire Seven specific rates of the North

Atlantic United Kingdom Freight Conference were found to be so unreason

ably high as to be detrimental to the commerce of the United States since the

rates did not conform to ratemaking factors caused economic harm to US

commerce and had not been justified by the conference in relation to lower

inbound rates on similar commodities in the same trade

Docket No 6611Arthur Schwartz and Justamere Farms v Grace Line

The Commission adopted the decision of the examiner in finding that the

refusal of Grace Line to offer refrigerated space to complainants was not in

violation of the shipping statutes or previous orders of the Commission since

complainants had failed to meet their obligations under their freighting con

tracts Accordingly the complaint was dismissed

Docket No 6637KimbrellLawrence Transportation Inc General In

crease in Rates in Kodiak Island Alaska Peninsula and Aleutian Islands

Area of Alaska Respondent srates were found not unlawful but respondent

was directed to adopt a means for reasonable determination of amounts to be

assigned to vessel betterments and expenses

Docket No 6665Ballmill Lumber and Sales Corporation v Port of New

York Authority et al On motion for ruling the Commission found that Port

of New York Authority had not complied with its previous order and directed

the Authority to extend to Ballmill 1 A lease coextensive with Weyer

haeuser co 2 the right to sublet to a subsidiary and 3 permission to

make improvements on the leased premises
Docket No 678Agreement No 9597 Between Flota Mercante Gran

Centroamericana SA Continental Lines SA and Jan C Uiterwyk Co

Respondents were found to have carried out agreements without Commission

approval and to have charged rates other than those on file with the Com

mission in violation of sections 15 and 18 brespectively

Docket No 6744 Sub IAgreement No DC30 Between South At

antic and Caribbean Lines and TMT Trailer Ferry Inc Agreement No

DC30 providing for fixing of rates on refrigerated cargo from Florida to

Puerto Rico was found not violative of the shipping statutes and was ap

proved pursuant to section 15

Docket No 6754 Chr Salvesen and Co v West Michigan Dock and

Market Corporation West Michigan was found to have violated section 16

by unreasonably refusing to serve Salvesen svessel in order of time of arrival

thus granting undue preference to another vessel West Michigan however

was found not to have violated section 16 in the assignment of available

shore labor to stevedore the vessel The matter was then returned to the

presiding examiner to determine the amount of reparations due Salvesen

Docket No 683Lake Charles Harbor and Terminal District v Port of

Beaumont Navigation District Beaumont swharfage and unloading tariff

which assessed a lower rate on bagged rice originating in Arkansas than from

other origins was found not to be in violation of the shipping statutes since

the user of the higher rate was shown to benefit thereby there was no show

ing that the lower rate was less than compensatory and there was no show

ing of related injury to Lake Charles Accordingly the complaint was

dismissed

Docket No 68I6Anthony G ONeill Freight Forwarder License Ap

plicant ONeill was found to be unqualified for licensing by reason of his

lack of knowledge or experience with exporting procedures and his inability

to communicate fully in the English language

Docket No 6819G R Minon Freight Forwarder License Applicant

Minon was found to be unfit for licensing by reason of his cooperation in

the fraudulent diversion of drug shipments and his continued use of an

illegal license

Docket No 6824Agreement No 8200 Between the Far East Conference

and the Pacific Westbound Conference and Modifications 82001 and

82002 The Commission adopted the initial decision of the examiner grant

ing continuing approval of Agreement No 8200 and approving modifica

tions thereto both for a period of 1 year The parties to the proceeding had

suggested this course of action since the practices which were the subject of

the modifications were being tested in other proceedings before the Com

mission and the courts

Docket No 6826Agreements Nos T2108 and T2108A The Commis

sion adopted the initial decision of the examiner approving pursuant to

section 15 agreements between the city of Los Angeles and Japan Line

Kawasaki Kisen Kaisha Mitsui OSK Lines and Yamashita Shinnihon

CT
Steamship Co providing for preferential use of terminal facilities Certain

provisions relating to routing of cargo and retroactive compensation were

ordered deleted and the minimum compensation ordered increased

Docket No 6827Agreements Nos T2138 and T21381 The Com

mission adopted the initial decision of the examiner approving pursuant to

section 15 agreements between the Port of Oakland and Japan Line Kawa

saki Kisen Kaisha Mitsui OSKLines and Yamashita Shinnihon Steam

ship Co providing preferential use of terminal facilities Certain provisions

relating to routing of cargo and retroactive compensation were ordered

deleted

Docket No 69 9South Atlantic and Caribbean Line The Commission

rejected an embargo notice of South Atlantic and Caribbean Line under

which the carrier would refuse to accept any container of less than trailer

Loads consolidated full container loads or a container which came from or

was destined to any point within a 50mile radius of the center of Miami

The carrier contended that this was necessary because of the terms of its con

tract with the International Longshoremen sAssociation but the Commis

sion found that there was no physical disability to carrya fundamental

prerequisite for declaring an embargo

The Commission adopted initial decisions of examiners in special

dockets 403 and 404 granting applications by carriers to refund over

charges to shippers
RULEMAKING

The following rulemaking proceeding instituted during fiscal

year 1969 is in progress

Docket No 69 6 Collection Compromise and Termination of Enforce

ment Claims Proposed rules published February 25 1969

The following rules were published during the fiscal year as a

result of rulemaking proceedings

General OrderSelfPolicing Systems Amendment 3 Docket No 6914

Exemption of TwoParty Rate Fixing Agreements

General Order 13Filing of Tariffs by Common Carriers by Water in the

Foreign Commerce of the United States and by Conferences of Such Carriers

Amendment 2 Docket No 6933 Exemption of Certain Activities of

Alaska Ferry System This rule also amended Tariff Circular 3

General Order 14Shippers Requests and Complaints Amendment 4

Docket No 6915 Exemption of TwoParty RateFixing Agreements

From Reporting Requirements

General Order 16Rules of Practice and Procedure Amendment 3

Docket No 682 IFederal Maritime Commission Conciliation Service

Amendment 4 Docket No 6815 Depositions Written Interrogatories

and Discovery and Amendment 5 Docket No 6834 Special Docket

Applications

General Order I8Conference Agreement Provisions Related to Concerted

Activities Amendment 4 Docket No 6916 Exemption of TwoParty

RateFixing Agreements

General Order 20Security for the Protection of the Public Amendment

3 Docket No 691 Waiver of Amount of Working Capital Requirement

for SelfInsurers

General Order 24Docket No 6755 Filing of Agreements Between

Common Carriers of Freight by Water in the Foreign Commerce of the

United States

53
ACTION IN THE COURTS

Thirteen petitions to review Federal Maritime Commission orders

were pending in the various US Courts of Appeal at the beginning

of the fiscal year During the year nine more petitions were filed

11 of these were disposed of and the remaining 11 were pending

briefing argument or decision as of June 30 1969

The following are some of the more important cases in which the

Federal Maritime Commission was involved during the fiscal year

In American ExportIsbrandtsen Lines et al v FMC USA DC Cir

No 22402 decided June 27 1969 the District of Columbia Circuit affirmed

the Commission sauthority to disapprove rates of a steamship conference

which were found to be so unreasonably high as to be detrimental to the

commerce of the United States The conference was also ordered to submit

new rates with justification The decision represents the first court test of

section 18b5 a 1961 amendment to the Shipping Act 1916

In Matson Navigation Co v FMC USA 405 F 2d 796 9th Cir 1968

the Ninth Circuit although remanding the case for further consideration

upheld the Commission sauthority pursuant to section 15 Shipping Act

1916 to approve merger agreements between steamship companies The Com

mission had approved a merger between two west coast lines over the protest

of a competing line The Commission sauthority was upheld notwithstanding

that opposition andthat of the Department of Justice

In Pacific Far East Line Inc v FMC USA 410 F 2d 257 DC Cir

1969 the District of Columbia Circuit upheld a Commission decision find

ing that a steamship company was unlawfully rebating when it entered into

a reciprocal agreement to purchase its fuel oil from a dairy company which

in turn agreed to ship on the carrier svessels The dairy company which had

never been in the business of supplying oil was assigning its fuel oil contracts

to oil suppliers and receiving a substantial royalty

In Alaska Steamship Co v FMC USA 399 F 2d 623 9th Cir 1968

and SeaLand Service Inc v FMC USA 404 F 2d 824 DCCir 1968

both the District of Columbia and the Ninth Circuit that joint rate tariffs

for port tport service between Seattle Wash and Alaskan ports which in

cluded pickup and delivery within the terminal areas were subject to the

jurisdiction of the Interstate Commerce Commission rather than the Federal
Maritime Commission Both cases involved an interpretation of Public Law

87595 which amended the Interstate Commerce Act

Now pending before the District of Columbia Circuit in American Export

Isbrandtsen Lines et al v FMC USA No 22820 is a petition to review the

validity of a Commission order requiring a conference of terminal operators

in New York to assume responsibility for truck delays due to the inability of

the terminals to provide adequate labor to handle the truck The Commission

had found that the terminals attempt to disclaim liability for labor shortages

was an unreasonable practice in violation of section 17 Shipping Act 1916
LEGISLATIVE DEVELOPMENT

Changes in Penalties for Violations of the Shipping Statutes

The Commission transmitted to the Congress during the fiscal year

ended June 30 1969 a legislative proposal which would change

from criminal to civil the penalties for violation of certain provisions

of the Shipping Act 1916 and the Intercoastal Shipping Act 1933

and authorize the Commission to fix and assess civil penalties The

Commission presently is authorized upon proper complaint to

award reparations for injury suffered as a result of violations of the

Shipping Acts However it has only limited power to impose sanc

tions for the violations The proposal would enable the Commission

to relate the penalty directly to the act sregulatory objectives and

in its discretion to assess a penalty less than the maximum permitted

when in its judgment the assessment of a lesser amount seems appro

priate The proposal was introduced in the Senate as S 3846 No

further action was taken in either House before the expiration of

the 90th Congress It is anticipated that a similar measure will be

recommended in the 91st Congress

Other Legislative Activity

There are several additional areas under consideration in which

the Commission believes that legislation clarifying its jurisdiction is

desirable

1 Pickup and delivery services performed within a port area by

a motor carrier for a common carrier by water subject to the

Shipping Act 1916 or the Intercoastal Shipping Act 1933

traditionally have been considered as incidental to the predomi

nant Linehaul performed by the water carrier subject to the

Commission sjurisdiction The Interstate Commerce Act sec

216 crecently has been interpreted as divesting the Fed

eral Maritime Commission of jurisdiction over the transporta

56
tion where the motor carrier and the water carrier enter into

joint rates in the Alaska and Hawaii domestic offshore trades

If the arrangement is merely a combination of local rates and

not a joint rate the Federal Maritime Commission retains

jurisdiction Thus these decisions permit a water carrier to

choose to be regulated by whichever agency it desires and to

change such election at will Such forum shopping is not con

ducive to effective regulation Appropriate amendment of the

Interstate Commerce Act would restore jurisdiction to the Fed

eral Maritime Commission in those instances where the pickup

and delivery is merely incidental to the ocean transportation

and would result in effective regulation

2 Proposed legislation to specifically authorize the Commission

to seek in connection with a Commission proceeding injunc

tive relief by application to a district court of the United States

having jurisdiction over the partes to enjoin the acts or prac

tices under investigation pending a final determination in the

matter by the Commission The Commission believes that it

can better discharge its statutory responsibilities and better

protect the interests of litigants if it is granted specific author

ity to ask courts to maintain upon appropriate showing the

status quo pending final Commission determination in such

proceedings

On October 24 1968 Public Law 90634 was approved Section

306 aprovides for the President upon complaint of an interested

party to make an investigation to determine whether any exporting

country which is a member of the International Coffee Organization

or group of exporting countries which includes any member of such

organization is taking action which discriminates or threatens to

discriminate against USflag vessels in the shipping of coffee to the

United States If the President finds such action exists he shall notify

the Federal Maritime Commission which shall promptly make ap

propriate rules and regulations under section 19 of the Merchant

Marine Act 1920

During fiscal year 1969 the Commission also made studies of

numerous bills introduced in the Congress and transmitted pertinent

comments to the appropriate committees

s Alaska Steamship Company v Federal Maritime Commission 399 F 2d 623 Sea

Land Service Inc v Federal Maritime Commission 404 F 2d 824

e
Commissioners

ADMINISTRATION

There were no changes in Commission membership during fiscal

year 1969 John Harllee rear admiral US Navy retired con

tinued by designation of the President to serve as Chairman The

other members were Ashton C Barrett of Mississippi James V Day

of Maine James F Fanseen of Maryland and George H Hearn of

New York

Following the Commission spolicy of rotating the vice chairman

ship James V Day was on Jung 30 1968 elected Vice Chairman

succeeding George H Hearn

Personnel

There were 238 employees on duty as of June 30 1969 The Com

mission continued to emphasize effective provision of equal employ

ment during the course of the fiscal year Also new avenues were

created for the advancement of employees in lower level dead end

positions

Staff Organization

Mr James E Mazure director of the Commission sBureau of

Compliance was designated as Acting Managing Director following

the resignation of Edward Schmeltzer on January 10 1969

The Office of Hearing Counsel was effective August 26 1968

redesignated as the Bureau of Hearing Counsel

00 al
Closing of Anchorage Alaska and

Seattle Washington Offices

The Commission soffices in Anchorage Alaska and Seattle

Wash were closed during the second half of fiscal year 1969 the

former because of a court determination that the Commission does

not have jurisdiction over joint porttoport water movement and

port terminal area pickup and delivery services by motor carriers

and the latter as a concomitant measure in the interests of economy

Relocation of Washington DC Office

In late October 1968 the Commission moved to larger modern

quarters at 1405 I Street NW Washington DC 20573

Relocation of Atlantic Coast District Office

In May 1969 the Commission sNew York office moved to the

newly constructed Federal Office Building located at 26 Federal

Plaza New York NY10007

Management Improvement Programs

During fiscal year 1969 the Commission continued to emphasize

cost reduction and efficiency of operations in order to effect maxi

mum utilization of staff resources There were many instances of

reduction in the volume of paperwork required to carry out the Com

mission s programs And most importantly significant advances

were made in our program to improve service to the public Examples

of management activities during fiscal year 1969 include

1 Expansion of Public Information ServicesThe physical size

of the Commission spublic information facility was increased by at

least onethird enabling the provision of services which due to

space limitations were not previously available The new facility

promotes use by the public and enables the Commission to provide

for the first time a true onestop public information service

59
2 Establishment of the Federal Maritime Commission Concilia

tion ServiceThe newly established rule discussed in more detail

in Highlights of the Year permits the Commission smanaging

director to assign to each dispute between shippers and carriers and

among others involved in the waterborne commerce of the United

States a conciliator who will air the dispute either orally or on a

written record and render a nonbinding decision to the parties

thereby avoiding the necessity for protracted costly formal hearings

Bureau

3 Seminar

of Financial

on Language

Analysis conducted

of Business

an employee

The

seminar

Commission s

on the

language and concepts utilized in preparing financial statements

Twelve sessions were held with emphasis on situations and problems

peculiar to the ocean shipping industry Seminars such as this are

intended to provide insight into and understanding of the prob

lems of the shipping industry in order to increase the quality of the

Commission sservices to the shipping community
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61
Statement of Appropriation and Obligation for the Fiscal Year

Ended June 30 1969

APPROPRIATION

Public Law 90470 90th Congress approved Aug 9 1968

For necessary expenses of the Federal Maritime Com

mission including services as authorized by 5 USC

3109 hire of passenger motor vehicles and uniforms

5901

or allowances

5902

therefor as authorized by 5 USC

3 653 000

Public Law 9147 91s Congress approved July 22 1969

Second Supplemental Appropriations Act 1969 to cover

increased pay cost 90000

Appropriation availability 3 743 000

OBLIGATIONS AND UNOBLIGATED BALANCE

Net obligations for salaries and expenses for the fiscal year

ended June 30 1969 3 724 086

Unobligated balance withdrawn by the Treasury 18 914

STATEMENT OF RECEIPTS DEPOSITED WITH THE GENERAL FUND

OF THE TREASURY FOR THE FISCAL YEAR ENDED JUNE 30

1969

Publications and reproductions 8 610

Freight forwarder license fees 8 700

Fines and penalties 87 675

Recoveries for lost Government property 1 182

Miscellaneous refunds 1 234

62

Total general fund receipts 107 401