June 5, 2007
Volume 11, Number 6
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 Votes to Permit TSA to Propose Indian Subcontinent Addition to Geographic Scope

The Federal Maritime Commission announced May 25, 2007 it has voted to allow the Transpacific Stabilization Agreement (TSA) member carriers to file an amendment to their agreement to once again include the Indian Subcontinent to TSA’s geographic scope, thus modifying a Settlement Agreement reached with the Commission in September 2003.  This Settlement Agreement, reached after an investigation launched by the Commission in response to complaints from Non-Vessel-Operating Common Carriers regarding practices of TSA member carriers during the 2002-2003 service contract season, removed the Indian Subcontinent from TSA’s geographic scope.  The 2003 Settlement Agreement, aimed at improving competition in the Transpacific trades, changed to structure of the TSA by eliminating two bridging agreements, as well as requiring carrier members to end certain practices involving discussion and agreement of rates and negotiation of service contract terms negatively affecting NVOCCs.  Also, as part of the settlement in place of civil penalties, TSA carriers made a payment of $1.35 million.

TSA proposed an Addendum to this 2003 Settlement Agreement to allow filing of an amendment to expand TSA’s geographic scope to again include the Indian Subcontinent in April of this year.  TSA pointed out that carrier members have fully complied with the Settlement, and further argued that since 2003 the position of TSA member carriers in Indian trade have changed substantially. TSA also cited reduced in market share in the region, as well as increases in overall trade, overtonnaging and new competitive services.

While the Commission voted 3-1 in favor of allowing this Addendum, Commission Brennan, in voting against the proposal, was thoroughly unconvinced by TSA’s arguments.  In his dissenting opinion, Commissioner Brennan wrote “TSA’s April 25th letter to the Bureau of Trade Analysis seeks to justify the modification, in part, on ‘wild rate fluctuations.’ Yet, rather than elaborate upon rate levels that have continually varied in an irregular way…TSA merely states that “many” rates have fallen by “up to” a third in the past six months as a result of overcapacity.  The foreseeable risks and consequences of ordinary business judgment relating to capacity should not be a reason for the Commission to relinquish a bargained-for term of its 2003 Settlement with TSA.”  Brennan also noted that while according to statistics provided by the FMC’s Bureau of Trade Analysis the TSA still holds the majority share of the market.

This amendment to the geographic scope of TSA Agreement No. 011223, will be subject to regular Commission review and public comment before it may become effective.  Interested parties may submit comments to the Federal Maritime Commission regarding this amendment, once notice of its filing appears in the Federal Register.

 TSA: Announces Significant BAF Increases, New Member, Customer Meetings

The carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223, serving the East Asia/USA trade lane announced significant increases to Bunker Adjustment Factors (BAF) and slight reductions to Inland Fuel Surcharges (IFC) for July. TSA also made announcements regarding addition of new member, Zim Integrated Shipping Services, and plans for two June customer meetings in San Francisco and New York.

BAF effective July 1, 2007 to July 31, 2007 is as follows: US$ 510 per 20ft container, US$ 635 per 40ft container, US$ 715 per 40ft hi-cube container, US$ 805 per 45ft container and US$ 15/WM.  IFC effective July 1, 2007 to July 31, 2007 will be reduced to US$ 211 per container per container for mini-land bridge (MLB) and inland point intermodal shipments moving via rail, and to US$ 61 per container local and regional truck transport to "Group 4" points in California, Oregon and Washington, and for East Coast local store-door truck moves.  The Currency Adjustment Factor for Japan of 0 percent has been extended through September 30, 2007.

TSA Carriers’ also recently amended their tariffs to provide for a Peak Season Surcharge (PSS) of US$ 320 per 20ft container, US$400 per 40ft container, US$450 per 40’ hi-cube container, and $510 per 45’ container effective from June 15, 2007 through October 15, 2007.  The PSS could be extended, possibly through February 29, 2008.

Following the retirement of Executive Director Albert A. Pierce at the end of 2006, TSA underwent a restructuring.  It is now led by Ronald D. Widdows, CEO of American President Lines, who will serve as Executive Committee Chairman for 2007.  Deputy executive director Brian M. Conrad remains in charge of administrative functions for TSA.  The group has implemented plans to increase flexibility and market-responsiveness.  Already this year TSA membership has increased, customer meetings are underway and expansion of the TSA’s geographic scope to include the Indian-Subcontinent is awaiting FMC review. Zim Integrated Shipping Services, based out of Haifa, Israel, will officially become a TSA member carrier on June 23, 2007, after an FMC required 45-day notice period.  Zim operates a worldwide fleet of 100 vessels, with a combined carrying capacity of about 240,000 TEU. In 2006 Zim carried over 2 million TEUs; it is currently in the process of building 20 new ships for its worldwide service.  The TSA held its first customer meeting with shippers in Long Beach this past March.  Additional customer meetings are scheduled for June 7 and June 25, in San Francisco and New York respectively.  A tentative agenda for the meetings includes discussion of fuel costs, operating cost issues, service contract cycle and the contracting process.

The 14 member carriers of TSA are American President Lines, CMA-CMG, COSCO Container Lines Ltd., Evergreen Marine Corp., Hanjin Shipping, Hapag-Lloyd Container Line, Hyundai Merchant Marine, "K" Line, Mediterranean Shipping Co., Mitsui O.S.K. Lines, NYK Line, OOCL, Yang Ming Marine, and Zim Integrated Shipping Services. Visit http://www.tsacarriers.org for additional information.

 WTSA Announces Increase to Panama Canal Surcharge, BAF Increases, Adjusts Rates

The Westbound Transpacific Stabilization Agreement (WTSA), whose member lines serve the US export trades from the USA to East Asia, announced rate adjustment recommendations, increases to July Bunker Adjustment Factors (BAF) and implementation of an increased Panama Canal Surcharge.  WTSA also announced reductions to July Inland Fuel Surcharges.  The Panama Canal Surcharge effective June 1, 2007 will be US$ 212 per container, and $11.50 per weight ton or $4.50 per cubic meter for cargo rated on a weight or measurement basis.  BAF effective July 1, 2007 to July 31, 2007 will be increased to US$ 508 per 20ft container, US$ 635 per 40ft/45ft container, and US$ 32 per WM.  Inland Fuel Charges for July will be US$ 211 per container for rail and intermodal rail/truck shipments, and US$ 61 per container for local/regional truck shipments.

WTSA also announced rate increase recommendations for U.S.-Asia shipments of hay, hides and “protein shipments” of beef, pork and poultry effective July 1, 2007, with increases for agri-products becoming effective August 1, 2007. Rate details may be found at http://www.wtsacarriers.org  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.

 TACA: First Bunker Adjustment Factor Increase since November 2006, CAF Maintained

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, noting recent above average increases in fuel prices, announced its first increase to Bunker Adjustment Factors (BAF) since November 2006.  For the period of June 16, 2007 to July 15, 2007, BAF will be increased to US$ 494 per 20ft container, US$ 988 per 40ft/45ft container and US$ 49 per WM for shipments to/from Atlantic/Gulf Coast Ports; and US$ 741 per 20ft container, US$ 1482 per 40ft/45ft container and US$ 74 per WM for shipments to/from Pacific Coast Ports. Current Currency Adjustment Factors (CAF) of 10 percent will remain unchanged at least until July 17, 2007.  TACA members are Atlantic Container Line, Maersk Line, Mediterranean Shipping Co., NYK Line and OOCL.  For more information visit www.tacaconf.com.


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Vol. 11 No. 6, June 5, 2007

The information contained herein is obtained from reliable sources. It is subject to change at any time, however, depending on changes in laws and regulations. While we continually attempt to monitor this information, we do not guarantee its accuracy and are not responsible for any damages suffered by any party in reliance on it.