May 2, 2008 Volume 12, Number 5 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.

Federal Maritime Commissioners were severely criticized by members of Congress for poor agency management and low employee morale at a recent budget hearing.  All four Commissioners were in attendance at the April 15th hearing in which FMC Commissioner Paul Anderson presented the fiscal year 2009 FMC budget request in a statement before the U.S. House of Representatives Subcommittee on Coast Guard and Maritime Transportation.  The subcommittee is taking a close look at the FMC because its five year congressional budget authorization will expire at the end of fiscal year 2008.  The subcommittee will be making a report to Congress regarding the agency and its budget authorization.

The FMC’s proposed fiscal year 2009 budget request provides for $23,953,000 – an increase of 7.8 percent over the fiscal year 2008 budget.  This increase will cover salary increases, increased official travel, and increases in rent and other contracts.  In his remarks before the House subcommittee, Commissioner Anderson outlined the FMC’s activities over the past year, and spoke about FMC’s role in monitoring China’s shipping regulations, and the Port of Los Angeles/Long Beach Clean Trucks Program.  Anderson also stressed the role the FMC plays in improving maritime security, and said the FMC is more closely scrutinizing licensees and other regulated transportation entities.

Congressman Elijah E. Cummings (D-MD), Chairman of the subcommittee, opened the hearing by summarizing the results of a 2006 survey of FMC employees and a 2005-2006 study by an outside management consultant.  He said that "the evidence we have before us presents a picture of an agency that appears to be broken."  The 2006 survey found that only 56.3 percent of employees believed the FMC was a good place to work, and only 40 percent felt agency leaders generated motivation.  Only 27.3 percent of workers felt pay raises were dependant on how well employees performed.  The 2005-2006 study found that no staff meetings were being held, and that the agency was adverse to change.

Commissioners responded to these allegations by agreeing they needed to do better.  Commissioner Harold J. Creel, Jr. admitted “we have got to start working together as a group.”  Commissioner Joseph E. Brennan compared the agency to a “four-headed monster,” to make the point that with four commissioners and no chairman the agency is nearly impossible to run. The commission has been without a chairman since Steven Blust resigned in November 2006.  Commissioner Paul Anderson was nominated for the position of FMC Chairman by President Bush in the summer of 2007, but has not been confirmed by the U.S. Senate.  The House subcommittee firmly requested the FMC Commissioners prepare to meet with the subcommittee again in 60 days to report on progress and further discuss agency management and directional issues.

The Federal Maritime Commission (FMC) discussed a number of important issues at open and closed sessions of a Commission meeting held April 30, 2008.  In the open session of the meeting, the agenda focused on FMC meeting processes/procedures, and its 2007 Annual Employee Survey – which is now available on its website: www.fmc.gov  This October 2007 survey indicated 52 percent of FMC employees were satisfied with their jobs, and 23% were “very satisfied.”  The FMC’s Office of Inspector General Semiannual Report for the Oct 2007 thru March 2008 period, and FMC Docket No. 06-05 - Verucci Motorcycles, LLC v. Senator International Ocean, LLC were also discussed.

In the closed session of the meeting, Commissioners discussed internal administrative practices and personnel matters.  Directions were also given to staff regarding requests for information from the House Subcommittee on Coast Guard and Maritime Transportation. The proposed Los Angeles/Long Beach Port /Terminal Operator Administration and Implementation Agreement, FMC Agreement No. 201178, was also discussed.  The Commissioners have requested additional information from the Port of Los Angeles and the Port of Long Beach concerning this Agreement.  The timing and substance of this meeting did respond to the criticism the Commissioners received from the U.S. House of Representatives Subcommittee on Coast Guard and Maritime Transportation  at the recent budget hearing.  Another meeting of the FMC Commissioners with open and closed sessions is scheduled for May 7, 2008.

The carrier members of the Transpacific Stabilization Agreement (TSA), serving the East Asia/USA trade lane will increase Bunker Adjustment Factors (BAF) and Inland Fuel Charges (IFC) for the month of June 2008.  The TSA Carriers also announced Peak Season Surcharges (PSS) of US$ 400 per 40’ container effective June 1 to October 31, 2008.

In a recent press release, the TSA Carriers announced they will not extend any contracts.  In addition to re-establishing full floating bunker surcharges in all contracts for the 2008-09 season, the TSA Carriers have also filed general rate increases (GRI) effective May 1, 2008.  The GRI amounts are US$400 per 40ft ctr to US West Coast ports, and US$ 600 per 40’ft ctr for intermodal and East Coast all-water shipments, with GRIs for other container sizes as per formula.  “Admittedly, the carriers have sent mixed signals to the market in the past about whether we were truly serious in addressing revenue and cost issues in our pricing,” said Ronald D. Widdows, CEO of Singapore-based container line APL Ltd. and Chairman of the TSA Carriers, but he went on to say “this time – out of necessity – the lines are quite serious.”

BAF effective for the month of June 2008 will increase to US$ 832 per 20ft ctr, US$ 1040 per 40ft ctr, US$ 1170 per 40ft hi-cube ctr, US$ 1317 per 45ft ctr, and US$ 23 per WM.  IFC for June 2008 will increase to US$ 385 per ctr for MLB and IPI shipments moving via rail, and to US$ 111 per ctr for truck transport to Group 4 points in California, Oregon and Washington, and for East Coast local store-door truck moves.  The Panama Canal Surcharge was increased to US$ 260 per ctr and $14 per weight ton or $6 per measure ton for LCL as of May 1, 2008.

The 15 members of the TSA are American President Lines, CSCL, CMA-CGM, COSCO Container Lines, Evergreen Marine, Hanjin Shipping, Hapag-Lloyd Container Line, Hyundai Merchant Marine, "K" Line, Mediterranean Shipping, Mitsui O.S.K. Lines, NYK Line, OOCL, Yang Ming Marine, and Zim Integrated Shipping Services.  Visit www.tsacarriers.org for additional information.

The Westbound Transpacific Stabilization Agreement (WTSA), FMC Agreement No. 011325, whose member lines serve the US export trades from the USA to East Asia, have announced increases to their Bunker Adjustment Factors (BAF) and Inland Fuel Charges (IFC) for the month of June.  BAF for June 2008 will be increased to US$ 832 per 20ft ctr, US$ 1040 per 40ft/45ft ctr, and US$ 50 per WM.  IFC for the same period will be increased to US$ 385 per ctr for rail and intermodal rail/truck shipments, and US$ 111 per ctr for local/regional truck shipments.

WTSA member carriers are American President 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 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 an increase to their Currency Adjustment Factor (CAF) and Panama Cannel Surcharge.  TACA will raise the Panama Canal Surcharge to US$ 260 from US$ 212 effective May 8, 2008.  This increase is in response to implementation of a toll increase by the Panama Canal Authority (PCA) effective May 1, 2008.  The PCA is raising tolls to fund expansion of the waterway.  CAF for the period of May 16 thru June 15, 2008 will be increased from 12 to 15 percent.

Bunker Adjustment Factors (BAF) will remain at current levels thru at least June 15: BAF to/from/via US Atlantic/Gulf Coast Ports - US$ 607 per 20ft ctr, US$ 1214 per 40ft/45ft ctr, US$ 61/WM, and BAF to/from/via US Pacific Coast Ports - US$ 911 per 20ft ctr, US$ 1822 per 40ft/45ft ctr, and US$ 91/WM.

TACA members are Atlantic Container Line, Maersk Line, Mediterranean Shipping Co., NYK Line, and OOCL.  Visit www.tacaconf.com for more information.