January 5 , 2005 Volume 9, Number 1 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.

NSA Filing Will Begin January 19, 2005

The Federal Maritime Commission (FMC) has issued the Final Rule in Docket No. 04-12, to finalize its new rules for Non-Vessel-Operating Common Carrier Service Arrangements, 46 CFR Part 531. The Final Rule will allow NVOCCs and their affiliates to offer NVOCC Service Arrangements (NSAs) to their shipper customers. NVOCCs will now be permitted to agree, on a confidential basis, with their shipper customers on the terms and conditions of service.

Cargo moving under NSAs will be exempt from the common carrier tariff publication requirements of the Shipping Act, Section 8; however, the new FMC regulations require filing of all NSAs through the FMC's SERVCON filing system, and the publication of five essential terms of each NSA in public tariffs. NVOCCs that do not wish to file NSAs must continue to publish their freight rates in public tariffs in FMC approved electronic systems.

The Final Rule permits NVOCCs acting as carriers to offer NSAs only to non-NVOCC shippers. The Commission found that, in light of recent judicial determinations, it must limit the exemption in such a way in order to meet the substantive requirements of its exemption authority under section 16 of the Shipping Act of 1984 to ensure against substantial harm to competition. The Final Rule will become effective on January 19, 2005 and NSA filing may begin that day.

Before an NVOCC can enter into an NSA with a shipper for service to or from the USA, it must satisfy all applicable FMC regulation. An NVOCC in the USA must hold a valid license to operate as an Ocean Transportation Intermediary (OTI), submit the required surety bond to FMC, and publish a tariff in compliance with FMC regulations. NVOCCs operating outside the USA who are subject to FMC jurisdiction are not required to hold the OTI license, but must register with FMC, submit a surety bond, and publish a tariff. Once these requirements are satisfied the NVOCC must register to file NSAs with the Commission. The NSA registration procedure is not difficult, but it must be completed before NSA filing begins. No cargo may move under an NSA until the NVOCC has registered and filed its NSA electronically with the Commission, and published its essential terms in an electronic tariff system approved by the Commission’s Office of Tariffs and Service Contracts.

Distribution-Publications, Inc. (DPI) has prepared the NSA registration documents for each of its NVOCC clients to approve and sign. These were provided in December along with a memo reviewing the new regulations, a complete copy of the regulations, and a sample NSA. This memo provides a step-by-step review of how DPI will assist with the NSA registration procedure, and with the NSA filing procedure, including SERVCON filing requirements and NSA publishing requirements for essential terms. It also reviews the regulations governing NSA amendments, corrections, cancellation and transmission errors, and NSA record keeping. DPI’s services also include consultation on NSA terms.

TACA Reduces Bunker Surcharges, Increases Currency Adjustment Factor

The Trans-Atlantic Conference Agreement (TACA) , whose member carriers serve the trade between the USA and North Europe , United Kingdom and Ireland , Scandinavia and Baltic Ports , announced significant reductions to their Bunker Adjustment Factor (BAF) due to falling oil prices. However, in response to the recent low value of the US dollar TACA will be increasing its Currency Adjustment Factor (CAF) from 7 to 9 percent effective January 16, 2005.

Bunker Adjustment Factor (BAF), effective January 16, 2005 through February 15, 2005 .

TACA members are Atlantic Container Line, Hapag-Lloyd Container Line, Mediterranean Shipping Co., A P Moller-Maersk Sealand, Nippon Yusen Kaisha (NYK) Line, Orient Overseas Container Line, and P&O Nedlloyd Limited. Tariff rates and surcharges are published in TACA's relevant FMC tariffs and on its website www.tacaconf.com.

FMC Commissioner Harold J. Creel, Jr. Sworn in for Third Term

Commissioner Harold (Hal) J. Creel, Jr. is set to serve a third five year term on the Federal Maritime Commission (FMC). President George W. Bush nominated Creel in November for another term, and the U.S. Senate confirmed this nomination on Nov. 20, 2004. Commissioner Creel was sworn in on Dec. 6, 2004. His new term will expire on June 30, 2009.

Commissioner Creel was initially nominated to the FMC by former President Clinton and was confirmed by the U.S. Senate on August 17, 1994. He served as Chairman of the Commission from February 1996 to August 2002. As Chairman he oversaw the revision of Commission regulations required to implement the Ocean Shipping Reform Act (OSRA) of 1998. Extensive investigations of shipping practices in Japan and China were also a focus during Creel's Chairmanship. Both investigations were eventually joined by other departments of the US federal government before settlements were reached.

Prior to joining the Commission, Creel was Senior Counsel of the Merchant Marine Subcommittee in the U.S. Senate. In this capacity he advised the Senate on issues pertaining to commercial shipping. Before serving as Senate counsel Creel worked as an attorney with the National Oceanic and Atmospheric Administration (NOAA) of the Department of Commerce. Creel is a native of Florence, SC, and a graduate of Wofford College in Spartanburg, SC. He later attended the South Carolina School of Law, graduating in 1982.

FMC Denies Crowley Petition to Revoke OTI License

The FMC has denied Petition No. P3-04 filed by Crowley Logistics, Inc. and its subsidiary Apparel Transportation, Inc. which called for the revocation of the ocean transportation intermediary license of Apparel Logistics, Inc. According to the petition, five days before Crowley Logistics bought Miami-based Apparel Transportation, its now former officer and director, Manuel Lescano, incorporated a separate new company named Apparel Logistics. Crowley Logistics claimed that due to the similarity of names, Apparel Logistics was able to deceive Apparel Transportation customers into doing business with it. Apparel Logistics rebuffed this claim, stating that Lescano chose the name only because he liked it. FMC denied this petition on Dec. 23 stating that Crowley and Apparel Transportation failed to develop any evidence to show that the Commission staff erred in granting an OTI license to Apparel Logistics.

Volume 9  Number 1     January 5, 2005