3 Top Japanese Shipping Lines Brace for Fines at U.S. Ports

In a dispute that threatens to snarl shipments to West Coast ports and sour U.S.-Japan maritime relations, Japan’s three major shipping lines braced themselves for penalties of $100,000 on every Japanese container ship that calls on a U.S. port beginning today.

A midnight Wednesday deadline imposed by the U.S. Federal Maritime Commission was to trigger the penalties unless Japan agreed to give U.S. shippers better access to Japanese ports. U.S. negotiators said late Wednesday that it was unlikely an agreement would be reached overnight.

“It’s hard to imagine there could be an agreement finalized in time to stop the sanctions,” said Russell La Mantia, director of the U.S. State Department’s office of transportation policy.

Even if an agreement in principle is reached, he added, the maritime commission would still have to meet and agree to suspend the sanctions. Meanwhile, the dispute could affect a significant portion of the shipping traffic handled by Los Angeles, Long Beach and other West Coast ports.

The $100,000 penalty, which Japanese industry officials say would cost them more than $40 million a year, would be the most severe such sanction ever imposed by the U.S. and the first since an Ecuadorean shipping company was fined $50,000 in the early 1990s for trade infractions, officials said.

The first fine is expected to be imposed Friday, when a Japanese cargo ship is scheduled to arrive at the Port of Los Angeles, U.S. officials said. They were unable to identify the vessel.

Mitsui OSK Lines Ltd. and Nippon Yusen call regularly on Los Angeles, and Kawasaki Kisen Kaisha Ltd., the third major shipper, makes weekly stops at the Port of Long Beach.

A Mitsui OSK spokeswoman in the company’s Concord, Calif., office said Wednesday that she could not comment on the financial impact of the penalties if imposed. But she said the company had assured its customers that there would be no disruption in service.

“Should the sanctions become effective, it is our regret that we will be penalized over issues which we have no control,” she said. Mitsui averages about a dozen calls on U.S. ports each month.

Japanese officials have threatened to bypass U.S. ports in favor of Canada and other sites if the sanctions take effect. But officials at the ports of Los Angeles and Long Beach said they did not think that is feasible because of the high cost and inconvenience.

“There is so much cargo coming through the Southern California ports of Los Angeles and Long Beach that it would be difficult for them to not call here,” said Jeff Leong, a Port of Los Angeles spokesman. “It’s not an impossibility, but they would have to do major reshuffling.”

The three Japanese shipping lines rank among the Port of Los Angeles’ top five customers carrying containerized cargo. Japan is the port’s top trading partner, accounting for $23.5 billion in two-way trade in 1995.

The Japanese government has threatened to retaliate if the sanctions are levied by imposing similar fines on U.S. shippers or filing a complaint with the World Trade Organization.

The bilateral dispute was prompted by complaints from U.S. shipping companies that Japanese port regulations are burdensome and costly, requiring that foreign carriers give advance notice of arrival times and what warehouse they want to unload goods into, among other things.

“These are among the most cumbersome rules in the world,” said Ronald Murphy, assistant secretary of the Federal Maritime Commission. “It increases costs to American shipping [companies] . . . and consumers.”

But it was unclear Wednesday whether the penalties, first proposed by the Federal Maritime Commission in April, would have enough sting to make Japan change its ways.

The fines only apply to container ships--generally those ships carrying finished goods like apparel, stereos and television sets. They do not apply to ships carrying bulk goods like grain, oil, chemicals or, significantly, automobiles.

What’s more, Japan can avoid the penalties even on finished goods if the merchandise is diverted to shipping lines not owned or operated by the three Japanese shippers. The Japanese carriers all have alliances with foreign carriers.

But U.S. officials, noting the importance of continued trade between the two nations, insist that the penalties are crafted well enough to get the attention of the Japanese without disrupting the flow of goods.

“This has been going on for a number of years,” said Murphy of the Federal Maritime Commission. “It’s finally reached the point where the commission felt it had to do something.”

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Iritani reported from Los Angeles and Shiver from Washington.