February 4 , 2005 Volume 9, Number 2 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 Meets With Shipping Executives for Panel Discussion

The Federal Maritime Commissioners and key Commission staff met on January 27, 2005 with select group of shipping industry executives to help the Commission gain a greater awareness and understanding of current issues and concerns of the industry. This briefing was the second in a series of meetings with different sectors of the shipping industry. The Commission’s first panel discussion was held in September 2004 with members of the National Customs Brokers and Forwarders Association of America, Inc. (NCBFAA). For this recent panel discussion top executives and CEOs of vessel-operating common carriers met with the Commission to discuss the industry’s relationship with government agencies and the changing role of FMC oversight since the passage of the Ocean Shipping Reform Act of 1998. The group also discussed shipping industry’s future, expansion of cargo capacity, and current limitations of the freight transportation infrastructure. Participants included CEOs and top executives from APL, MOL ( America ), Inc., ZIM Integrated Shipping Services, Crowley Maritime Corp., World Shipping Council , and the law firm Sher & Blackwell.

FMC Chairman Steven Blust has made increased communication between the shipping industry and the commission a major goal. The Chairman, Commissioners and staff also received briefings on transportation infrastructure issues, U.S. cargo security, and emerging industry trends. In a press release, Blust said “the briefing with the vessel-operating carrier executives was vibrant and informative. I look forward to further briefings with other industry segments - shippers, marine terminal operators and port authorities, passenger vessel operators and other segments of the maritime community.”

FMC Releases Annual Program Performance Report FY 2004

The FMC’s Annual Program Performance Report Fiscal Year 2004 is now available at the Commission’s web site: www.fmc.gov This report provides a summary of the Commissions goals and achievements for the fiscal year 2004, as well the Commission’s revised mission statement. The FMC’s goals for 2004 were focused on efficient regulatory process, compliance, balanced enforcement, technological efficiencies and management capabilities. According to the report, the Commission reached most of its goals and objectives.

One of the goals pursued by the Commission in 2004 was to improve compliance, enforcement and regulation by utilizing databases to identify unlicensed and non-compliant OTIs, as well as vessel operating common carriers (VOCCs) doing business with such OTIs. Over 200 such entities were identified and contacted during the year by the Commission, during which time 360 new or amended licenses were issued. New investigative or audit reviews were opened with respect to 50 OTI entities, and investigations were concluded in 70 instances. The conclusions to 15 of these reviews included compromise or settlement agreements and penalties. VOCC activity with possible unlawful OTIs was also a focus of investigative or audit activity by the Commission, and 18 cases were concluded, with 5 resulting in possible penalties. The report credits this activity for a decline in the number of unlicensed OTIs, and an increase in number of licensed and compliant OTIs. The FMC also worked toward creating greater public understanding, voluntary compliance and responded to industry concerns in 2004 by holding 20 public “Navigating the Regulations” seminars around the country.

WTSA Carriers Announce General Rate Increases

The Westbound Transpacific Stabilization Agreement (WTSA) has recently announced General Rate Increases (GRI). WTSA is a voluntary discussion and research forum of 13 major container shipping lines serving the trade from ports and inland points in the U.S. to destinations throughout Asia. It is recognized by the FMC as a rate discussion agreement – FMC Agreement No. 011325. General Rate Increases of US$200/40 foot and US$160/20 foot container for all cargoes not covered under separate, commodity-specific rate programs will take effect March 1, 2005.

These increases are part of WTSA’s rate program which began in 2004 to address rising operating costs, equipment imbalances and system-wide infrastructure congestion outside carriers’ control. Commodities under existing WTSA rate programs or currently under separate review are not subject to the March 1st GRI; these commodities include wastepaper, forest products, metal scrap, hay, soybeans, peas, beans and lentils, dried fruit and nuts, hides, clay, cotton, chemicals and resins, onions in dry containers, refrigerated commodities and plastic scrap.

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., NYK Line, OOCL, P&O Nedlloyd B.V., and Yang Ming Marine Transport Corp. WTSA members publish individual FMC tariffs, and provide information about their joint plans at http://www.wtsacarriers.org

FMC Receives Petitions for NSA Final Rule Reconsideration and Stay

The International Shippers’ Association (ISA) and the American Institute for Shippers’ Association, Inc. (AISA) have filed petitions with the FMC for reconsideration and stay of the recent Final Rule on NVOCC Service Arrangements (FMC Docket 04-12). Both the ISA petition, filed January 7, and the AISA petition, filed January 12, 2005, call for reconsideration and stay of the Final Rule on the grounds that the NSA Rules, which prohibit NVOCCs and shipper associations from being a Shipping Party to an NSA, unfairly benefit larger shipping companies and will hurt smaller NVOCCs and shipping associations.

The ISA petition states that the Commission does not have the required authority to make such a change to shipping regulations, while the AISA petition claims that by not allowing shipping associations to be party to NSAs the FMC is unlawfully regulating the membership of shipping associations. Both associations had filed previous comments with the Commission before the Final Rulemaking was issued, but claim their comments were ignored. Both associations have also threatened judicial action if their concerns are not addressed satisfactorily. The FMC has not yet commented on these new petitions, however, the final rule took effect on January 19, 2005, and NSA registration and NSA filing has begun.

SIGNALS™ Now Available Online in Chinese

Distribution-Publications, Inc. (DPI) has announced its monthly SIGNALS™ newsletter on the regulations and activities of the US Federal Maritime Commission (FMC) is now available in Chinese at www.dpiusa.com. DPI has enjoyed strong support from carriers, forwarders and NVOCCs based in Hong Kong, China and Taiwan for many years. This support dates back to the 1970s, when DPI helped China Ocean Shipping Company (COSCO) first enter the US trades and DPI published its FMC tariffs. As part of an expanded effort to serve its Chinese speaking customers DPI has arranged for skilled translator with extensive maritime experience to translate its SIGNALS newsletter, web pages and related materials. DPI's President, James Devine, has recently returned from visits to Shanghai, Hong Kong and Tokyo where he made presentations on recent changes in FMC regulations, specifically the new regulations that permit NVOCC's to enter into confidential contracts with their shipper clients.

Volume 9  Number 2     February 4, 2005