Since early 2002, two groups representing ocean freight consolidators, or non-vessel operating common carriers (NVOCCs), have alleged that the members of the Transpacific Stabilization Agreement (TSA) have actively discriminated against them. The U.S. Federal Maritime Commission (FMC) appears to believe there is some merit to their allegations and is stepping up its investigation into those claims.

The TSA is a group of 15 ocean carriers that have authority under U.S. law to discuss but not enforce rates, surcharges, and service terms. The complaint filed by the National Customs Brokers & Forwarders Association of America (NCBFAA) and the International Association of NVOCCs (IANVOCC) charges that the TSA and its members have exceeded their authority as a discussion agreement and have violated the Ocean Shipping Reform Act of 1998 by refusing to deal with intermediaries until after they had finished negotiating with proprietary shippers. As a result, say the plaintiffs, by the time NVOCCs get their turn at the table, the market has tightened and rates have risen. The industry groups further allege that TSA carriers have applied general rate increases and peak-season surcharges to their shipments but did not apply similar surcharges to contracts with proprietary shippers.

The TSA adamantly refutes those charges. "In our estimation, the NCBFAA's accusations are incorrect, and we will prove so," says Executive Director Albert Pierce. "The FMC does not, you will note, have any findings as of yet, and we don't believe there will be any."

Despite Pierce's conviction, the FMC apparently has seen enough in the complaints filed by NCBFAA members over the last year to open a formal fact-finding investigation. In an order issued on May 30, the commission noted that, "Evidence produced ... suggests that TSA members may have engaged in unjustly discriminatory practices in the matter of rates and charges" toward NVOCCs.

The NCBFAA, for one, is encouraged by the commission's decision to launch an official investigation. "The FMC is looking to understand the scope of TSA's control of ocean carrier practices in the Pacific and Indian Subcontinent trades," says Edward Greenberg, transportation counsel for the group. "It appears that they're concerned that the control may be more than contemplated, either through the agreement on file with the agency or by the statute. We think this is a very positive development."

The investigation revolves around the question of whether or not TSA member lines acted in concert to purposely stymie intermediaries. That would violate the approved workings of ocean carrier discussion groups, where members may collectively discuss industry issues but must act on an individual basis. Pierce dismisses the notion that any such collusion occurred. "I chair every meeting," he says. "I'm involved with every piece of communication, and TSA did not act in concert to do anything that's accused in the complaint. I know that for a fact."

Whether or not TSA members acted inappropriately, NVOCCs are concerned that even raising the complaint will make them targets for retaliation. Thus, although the NCBFAA is standing front and center on the issue, many members refuse to publicly admit that they are involved in the complaint. "They're concerned about backlash," says Greenberg. "If you complain publicly, you may be out of business tomorrow. Individual companies that come forward may find their normal avenues to freight closed or find themselves subject to contracts that aren't as financially attractive as they might have been had they kept their mouths shut."

Again, Pierce flat-out denies the charge. "It would be foolish on our part [to retaliate] since NVOCCs make up at least 25 percent of our eastbound carriage," he responds. "I know all the carriers, from the top executives right down to the working level, and I personally believe it would never be the case."

The FMC has asked the TSA to produce a number of documents, mostly meeting minutes and reports. Once it has considered those documents, the commission will decide whether to seek adjudication.

The NCBFAA hopes the tide will turn its way. "It's supposed to be a competitive market out there, and we're concerned that it isn't as competitive as it ought to be," Greenberg says. "We want the process to act the way the statute intended."

For the full text of the FMC's Fact Finding Order of Investigation No. 25, go to www.fmc.gov.