VIT DEFENDS HOLDING AGENTS LIABLE FOR SHIPOWNERS' DEBTS PETITION TO FMC PROMPTS DEBATE

VIT DEFENDS HOLDING AGENTS LIABLE FOR SHIPOWNERS' DEBTS PETITION TO FMC PROMPTS DEBATE

Blocking port operators from collecting a shipowner's unpaid terminal charges

from the owner's local shipping agent could disrupt the flow of international trade, Virginia International Terminals Inc. told the Federal Maritime

Commission.

VIT, the operating arm of the Virginia Port Authority, said it strongly opposes a July petition asking the FMC to outlaw marine-terminal tariff provisions that hold agents liable for debts incurred by shipping lines they represent.The petition was filed by seven shipping and maritime associations representing all three U.S. seacoasts and the Great Lakes. It pits 250 independent vessel agents, including members of the Norfolk, Va.-based National Association of Maritime Organizations, against public marine terminals that file tariffs at the commission.

The FMC is asking for comments on the petition. It recently extended the deadline to Sept. 15 at the request of the Georgia Ports Authority.

Shipping agents make arrangements needed for a ship to call at a port, provide services for crews on behalf of owners, and serve as the liaison with local government agencies, among other functions.

VIT's terminal tariff stipulates that it "reserves the right to assess charges and submit invoices to any user of the terminal, its agent or servants."

The tariff says the "primary responsibility for terminal charges incurred by a vessel shall rest with the local agent and-or owner of such vessel unless other arrangements have been made."

Those provisions have been in force for many years, VIT told the

commission. It said it has turned to the local shipping agent "only in rare instances," usually involving bills left by tramp ships that don't call frequently at Hampton Roads. A tramp is an ocean carrier that follows no fixed schedule and goes wherever the cargo is, something like a taxicab.

While major shipping lines are creditworthy, VIT said, shipowners engaged in tramp service present substantial credit risk. The vessel agent, who has the opportunity to receive funds in advance, is in the best position to deal with the shipowner, it said.

Alternatively, the terminal would have to put the shipowner on a cash basis, which would "inhibit or eliminate certain commerce in the port," it said.

It's wrong "to hold agents responsible for charges when the (offending) party is identified," especially taking into account that in many cases terminals deal directly with shipping lines, James Provo, president of the National Association of Maritime Organizations, replied in defense of the FMC petition.

"Terminals will allow lines to continue to build up costs, (as agent) you tell them you can't pay the costs, then they come to you and say you're the guy," said Mr. Provo, who is senior vice president of T. Parker Host Inc., a leading Hampton Roads agent.

In their petition, agents argued that outside the maritime industry it is well established in commercial law that an agent is not liable for the debts of its principal, except by agreement.

Vessel agents receive a relatively small fee for the services they perform, sometimes only several hundred dollars, World Shipping Inc., a Cleveland-based agent, said in separate comments to the FMC.

The sums being far less than port charges, the present tariff system exposes agents to potential liability far out of proportion to their revenues, the company said. It said it can "fathom no rational reason why the independent agents should assume guarantor status to the port authorities."