March 5, 2002 Volume 6, Number 3 Oakland, California

SIGNALS™ provides detailed information on the regulations and activities of the US Federal Maritime Commission (FMC), and related developments in the ocean freight industry. For past issues, please consult our index.

FMC Delays Proposed Carrier Agreement to Manage TransPacific Reefer Trade

The Federal Maritime Commission (FMC) has delayed the implementation of a recently filed amendment to the Westbound Transpacific Stabilization Agreement (WTSA) that would allow WTSA to establish a reefer trade management program. The FMC has formally requested additional information on the WTSA’s plan to allocate program shares to its member carriers for one-year periods, which would be based on recent market shares of the carriers. The proposed reefer management program includes a system of penalties and payments for overcarriage and undercarriage of containerized refrigerated cargoes. If a carrier exceeds its allocated program share it would pay a penalty to the WTSA’s administrator; if a carrier’s liftings of reefer cargo are below its allocated share, it would receive a financial incentive from the agreement.

The WTSA’s reefer management program has drawn sharp criticism from shippers who see it as anticompetitive. The National Industrial Transportation League (NITL) has urged the FMC not to allow the agreement to take effect. In formal comments recently filed with the FMC the NITL said "The approach being proposed by WTSA goes too far. The way it is structured, individual carriers actually have disincentives to competing for traffic." The FMC has delayed the agreement from taking effect by requesting additional information, however the Commission has not yet indicated if it will take any further action.

The Westbound Transpacific Stabilization Agreement (WTSA) serves the trade between the USA and Asia. Its 14 member carriers are: American President Lines Ltd., A.P. Moller-Maersk Sealand, China Ocean Shipping (Group) Co., Evergreen Marine Corporation, Hanjin Shipping Company, Ltd., Hapag-Lloyd Container Linie GmbH, Hyundai Merchant Marine Co., Ltd., Kawasaki Kisen Kaisha, Ltd., Mitsui O.S.K. Lines, Ltd., Nippon Yusen Kaisha, Orient Overseas Container Line Limited, P&O Nedlloyd B.V., P&O Nedlloyd Limited, and Yangming Marine Transport Corp.

The FMC has also delayed the implementation of two other recently filed carrier agreements in the TransPacific trade, and requested additional information. The "Indamex/TSA Bridging Agreement" (FMC Agreement No. 011784) is a new agreement between the Indamex Agreement and the Transpacific Stabilization Agreement (TSA); both agreements serve the US Import trades. FMC Agreement No.: 011548-005 is an amendment to the existing agreement between Hanjin Shipping Co., Ltd. and Sinotrans Container Lines, Co., Ltd.

Michael A. Rosas Appointed FMC Administrative Law Judge

Michael A. Rosas has joined the Federal Maritime Commission as an Administrative Law Judge. Judge Rosas is replacing Judge Paul B. Lang who recently joined another federal agency. Prior to joining the FMC Judge Rosas served in the Social Security Administration as an Administrative Law Judge. Before becoming a Social Security judge, Judge Rosas served as an Assistant New York State Attorney General, and served as an attorney in the office of Governor Mario Cuomo and as an Assistant New York City Corporation Counsel. He has extensive experience in commercial and personal injury litigation. Judge Rosas is a member of the New York Bar and served as an Arbitrator in the New York City Civil Court. A native New Yorker, Judge Rosas received his undergraduate degree from John Jay College of Criminal Justice, and his law degree from Golden Gate University School of Law in California. He also studied at the Inter American University of Puerto Rico.

Annual Performance Plan Issed by FMC:   Fiscal Year 2003 Goals Set

The Federal Maritime Commission has issued its Annual Performance Plan for FY 2003. This plan was developed with the benefit of nearly three years' experience under the new ocean shipping environment resulting from the Ocean Shipping Reform Act of 1998 (OSRA). The plan establishes specific performance goals to enhance the performance of the FMC staff, and to improve its ability to provide more efficient and user-friendly services. The FY 2003 Plan seeks to take better advantage of emerging technologies to offer time/cost saving e-services.

The majority of Commission activities are set by the Shipping Act and other federal laws, and its goals essentially are based upon legislative mandates which are clear and direct. The FY 2003 Performance Plan restates the FMC’s strategic goals and its mission statement, and links these to 15 mission-driven short-term goals. Information security has taken on new and increased importance for all federal agencies, and the FMC’s plan reflects this. Key performance goals for the FMC for FY 2003 include:

• Alternative Dispute Resolution (ADR): Increase by 50% over FY 2002 the number of formal proceedings in which the Commission's ADR mediation services are actively utilized towards informally resolving the involved dispute.

• Controlled Carriers: Further develop and apply updated ocean carrier constructive costs benchmark for use in analyses of controlled carrier rate activity. Refine and update the program for review and monitoring of activities of controlled carriers, to determine excessive anticompetitive actions or Controlled Carrier Act violations. Initiate appropriate enforcement action as necessary to address any such activities or practices.

• Information Security: Ensure that an effective agency-wide security program that complies with the Government Information Security Reform Act is in place. The program must provide for: appropriate management controls and risk management; all necessary contingency planning; the physical security of all equipment; security awareness training for agency employees; and appropriate documentation of all procedures and system operations.

• OTI Licensing: Effectively automate the general indices of the Bureau of Enforcement's system of records used in reviewing applications for the FMC license to operate as an Ocean Transportation Intermediary (OTI): NVOCC or Ocean Freight Forwarder. Develop effective program for updating OTI licensee data. Review and monitor activities of non-traditional transportation intermediaries and logistics service providers to determine applicability of, and compliance with, OTI regulations.

• Passenger Vessels: Evaluate passenger vessel operator (PVO) program and suggest changes, if necessary, to assure that it meets contemporary needs of cruising public. Enhance informal complaint database to include more specific details on types of complaints against cruise operators.

• Service Contracts: Refine the ongoing program to evaluate the level of adherence in individual carrier service contracts to agreement voluntary service contract guidelines in major trade lanes.

Volume 6   Number 3      March 5, 2002

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