December 3 , 2004 Volume 8, Number 12 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.

Registration for NVOCC Service Arrangements (NSA) Begins

The FMC has begun accepting registrations for the filing of NVOCC Service Arrangements (NSAs) by Non-Vessel Ocean Common Carriers. Under proposed new FMC rules NVOCCs will be permitted to provide their shipper clients with individually-negotiated contracts for ocean and intermodal transportation to/from the USA. While these new rules are not yet finalized, the Commission has implemented a registration procedure and upgraded its SERVCON filing system to handle the expected volume of NSA filing in 2005.

The NSA registration procedure requires each NVOCC to prepare FMC Form-78 and submit it to the FMC Bureau of Trade Analysis. NVOCCs who utilize a tariff publisher to file their NSAs must include a Letter of Authorization which will allow the publisher to use its user ID and password for NSA filing. NSA filing regulations will be similar to Vessel Operating Common Carrier service contract filing regulations in place since May 1999. These regulations require the filing of all service contracts through the FMC's SERVCON filing system and the publication of five essential contract terms in public tariffs. The effective date of the NSA cannot be prior to the filing date of the true and complete copy of the NSA or amendment with the Commission, and cargo may not move under NSA rates prior to FMC filing.

Until the proposed NSA regulations are finalized NVOCCs may not begin using NSAs. The deadline for comments on the proposed regulations was Nov. 30, 2004. While the FMC is anxious to finalize these rules it has received a significant objection to the proposed regulations from at least one party. The American Institute for Shippers’ Associations Inc. (AISA) has strongly objected to FMC's plan to allow NSAs only between NVOCCs and cargo owners. ASIA represents several shipper associations comprised of multiple NVOCCs. According to the proposed new NSA regulations an NSA shipper is defined as a cargo owner, the person for whose account the ocean transportation is provided, the person to whom delivery is to be made, or a shippers' association. The term does not include NVOCCs or shippers' associations whose membership includes NVOCCs. FMC must address these comments before it finalizes the new NSA regulations.

Once NSA filing begins NVOCCs are expected to make extensive use of these to provide shippers with customized pricing and defined service levels. The obvious benefit to NVOCCs is NSAs will provide a minimum quantity or portion of a shipper’s cargo over a fixed period of time. NSAs may also provide for non-performance penalties to apply if the shipper fails to meet the volume commitment, or if the NVOCC fails to provide the service level as defined in the NSA. These non-performance penalties may take many different forms. An NSA could require a shipper to pay the NVOCC ‘short-shipment penalties’ on the difference between the quantities of cargo actually shipped and the minimum quantity commitment. Alternatively, an NSA could provide for refunds to be paid by the NVOCC to the shipper when the minimum is satisfied, or not paid if the minimum is not met. NSAs may also reference the rules and surcharges of the NVOCC’s tariff. There are many creative pricing options that can be used in NSAs without violating FMC regulations.

It is important to emphasize NSA filing will be optional. NVOCCs that do not wish to use NSAs will not be required to register using Form FMC-78, but must continue filing all their selling rates and charges in their published tariffs.

TSA Carriers Increase Bunker Surcharges & Extend Peak Season Surcharge

TSA Member Carriers are: American President Lines, CMA-CGM, COSCO Container Lines Ltd., Evergreen Marine Corp., Hanjin Shipping, Hapag-Lloyd Container Line, Hyundai Merchant Marine, ‘K’ Line, Mitsui O.S.K. Lines, NYK Line, OOCL, P&O Nedlloyd, and Yangming Marine. Many other carriers and NVOCCs serving the East Asia/USA trades have filed similar increases, or will file these soon in their tariffs. FMC regulations require these increases to be filed in ocean carrier or NVOCC tariffs at least 30 days before the effective dates. Additional information on surcharges applied by the TSA Carriers can be viewed at http://www.tsacarriers.org/

WTSA Carriers Increase Bunker & Currency Surcharges

The Westbound Transpacific Stabilization Agreement (WTSA), whose member carriers serve the trade from the US to East Asia, recently announced the following amendments to Bunker Adjustment Factors (BAF) and Currency Adjustment Factors (CAF) as filed in the FMC tariffs of its member carriers:

Bunker (BAF):	Valid Thru Dec 31, 2004	Effective January 1 thru March 31,2005
	US$ 220 per 20' container	US$ 256 per 20' container
	US$ 275 per 40'/45' container	US$ 320 per 40'/45' container
	US$ 14 per WM	US$ 17 per WM

Currency (BAF):	Valid Thru Dec 31, 2004	Effective January 1 thru March 31,2005
	Japan 49%	Japan 50%
	Taiwan 4%	Taiwan 4%
	Singapore 8%	Singapore 10%

Revisions to BAF, CAF and other surcharges for transportation services are published in the FMC tariffs of the WTSA member carriers, and shown on its website: http://www.wtsacarriers.org The 13 members of WTSA are: American President Lines, Ltd., China Shipping Container Lines Co., Ltd., COSCO Container Lines Co., Ltd., Evergreen Marine Corporation , Hanjin Shipping Co., Ltd., Hapag-Lloyd Container Line GmbH, Hyundai Merchant Marine Co., Ltd., ‘ K ’ Line , Mitsui O.S.K. Lines, Ltd., N YK Line , O OCL , P&O Nedlloyd B.V., and Yang Ming Marine Transport Corp.

Volume 8  Number 12     December 3, 2004