September 05 , 2006 Volume 10, Number 9 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.

The FMC has been formally requested to issue a ruling that would significantly change its current regulation of ocean transportation intermediaries (OTIs) operating in the USA.  Team Ocean Services, an OTI based in Texas, has filed a Petition with the Commission requesting a declarative order which would authorize the use of unlicensed agents to perform OTI services on behalf of licensed OTIs in the USA.  This is not permitted under current FMC regulations, which require any person or separately incorporated entity in the USA that acts as an OTI to obtain a license from the FMC before it begins OTI operations.  This applies to ocean freight forwarders, NVOCCs and their agents in the USA; it does not apply on operations conducted outside the USA.

Team Ocean currently has twenty (20) bonded branch offices in the USA staffed with its employees, which are permitted by the FMC to share its OTI license to operate as an ocean forwarder and NVOCC.  The addresses of each of its branch offices are listed on its bonds, and an additional $10,000 in bonding is provided for each branch office.  In 2003, Team Ocean entered into a settlement agreement with the Commission, and paid a penalty of $100,000 for allegedly violating the Commission's regulations; the alleged violations included permitting entities to use its license which were not its legitimate branch offices or bona fide employees.  Recently, at the request of attorneys representing Team Ocean, the FMC’s General Counsel issued an opinion stating that if an OTI has a “principal-agency relationship” with an unlicensed agent, such a relationship would not violate the Shipping Act.  In its Petition for the declaratory order, Team Ocean is seeking a clear decision by the whole of the Commission.

The ruling sought in this matter, if approved, would allow independent agents to provide OTI services only when (1) the services provided are based an express authority from the OTI contained in a contract; (2) the contract clearly binds the agent to conduct business on behalf of the OTI principal within the parameters set forth in the contract, and (3) the arrangement provides that the agent will remain under the control of the OTI principal in performing those activities.  If this ruling is approved by the Commission, it could provide OTIs with the opportunity more easily expand their USA operations through the use of agents.  However, it is unlikely the FMC will issue a decision on this anytime soon.  FMC Chairman Blust has recently announced his intention to leave the Commission, and this decision will most likely have to wait for the next Chairman.  Comments on Docket 06-08 are due by October 10, 2006.  Comments may be emailed to FMC Secretary Bryant L. VanBrakle at secretary@fmc.gov

The Federal Maritime Commission recently welcomed Clay G. Guthridge as a new Administrative Law Judge (ALJ).  Guthridge will be replacing departing ALJ, Kenneth A. Krantz.  Guthridge joins the Commission from the Social Security Administration in Dover, Delaware, where he served as an ALJ this past year.  He also has fifteen years of experience as an attorney with the Civil Rights Division of the United States Department of Justice, and served as a staff attorney for the United States Court of Appeals for the District of Columbia Circuit.  Guthridge is a graduate of University of South Carolina School of Law.  FMC Chairman Steve R. Blust welcomed Guthridge, saying, “Judge Guthridge's experience and talent make him a welcome addition to the Commission, and I look forward to working with him.”

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 there will be no changes made to current bunker surcharges through October 15, 2006.  TACA’s current Currency Adjustment Factor (CAF) of 8 percent will also remain unchanged at least until October 15, 2006.  Bunker Adjustment Factors (BAF) for September 16 – October 15, 2006 are as follows: to/from Atlantic/Gulf Coast Ports, US$ 467 per 20ft container, US$ 933 per 40ft/45ft container and US$ 47/WM; to/from Pacific Coast Ports, US$ 700 per 20ft container, US$ 1400 per 40ft/45ft container and US$ 70/WM.  TACA members are Atlantic Container Line, Maersk Line, Mediterranean Shipping Co., NYK Line and OOCL.  Revisions to surcharges are published in TACA's relevant FMC tariffs, and are shown at: www.tacaconf.com.

The Westbound Transpacific Stabilization Agreement (WTSA), whose member lines serve the US export trade from the USA to East Asia, announced adjustments to surcharges.  For the month of October, Bunker Adjustment Factors (BAF) will remain unchanged, but the Inland Fuel Charge (IFC) will be increased slightly. Currency Adjustment Factors (CAF) will be revised for the period October – December 2006.  Details are as follows:

Currency Adjustment Factors for the period Oct. 1 thru Dec. 31, 2006 will be as follows:  Japan 0%, Korea 0%, Taiwan 5%, Singapore 10%.  Inland Fuel Charges (IFC) for October will be raised from US$ 232 to US$ 243 per container for rail and intermodal rail/truck shipments, and from US$ 67 to US$ 70 per container for local/regional truck shipments.  The 11 member carriers of WTSA are American President Lines, China Shipping Container Lines, COSCO Container Lines, Evergreen Marine Corp., Hanjin Shipping, Hapag-Lloyd Container Line, Hyundai Merchant Marine, "K" Line, NYK Line, OOCL and Yang Ming Marine.  For more info visit www.wtsacarriers.org.

The carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223, serving the East Asia/USA trade lane have amended their FMC tariffs to provide for increases to Inland Fuel Surcharges. Current Bunker Adjustment Factors (BAF) will remain unchanged for the month of October.  Details are as follows:

October Inland Fuel Charges (IFC) will be increased to US$ 243 per container for mini-land bridge (MLB) and inland point intermodal (IPI) shipments moving via rail, and US$ 70 per container for local and regional truck transport to "Group 4" points in California, Oregon and Washington, and for East Coast local store-door truck moves.  TSA member carriers are American President Lines, 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 and Yang Ming Marine. Visit www.tsacarriers.org for additional information.