July 3, 2008 Volume 12, Number 7 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 Federal Maritime Commission issued an Order to Show Cause against an Ocean Transportation Intermediary (OTI) for failing to maintain a Qualifying Individual as required by Commission’s licensing regulations.  The FMC ordered Central Agency of Florida, Inc., a licensed OTI operating since 1999 in Miami, to explain why it has failed to designate and maintain a Qualifying Individual.  The FMC is prepared to revoke Central’s OTI license and issue a cease and desist order if Central is unable to show cause.

Commission regulations require that an OTI employ an individual with “a minimum of three years of experience in ocean transportation intermediary activities in the United States, and the necessary character to render ocean intermediary services.”  Regulations also state that this individual, otherwise known as the Qualifying Individual or QI, must be an active corporate officer.  Furthermore, in the event that the QI resigns from the corporation, regulations require that a new QI be designated and notification be sent to the FMC within thirty days.  According to Docket No. 08-02, issued June 6, 2008, Central’s Qualifying Individual, Patricio Quevedo, resigned in 2007.  Quevedo, who was also listed as President and sole shareholder on Central’s OTI application, filed an Officer/Director Resignation Form with the state of Florida resigning as an officer of Central on January 24, 2007.  Without a QI, Central no longer qualifies for an OTI license and the FMC will suspend or revoke Central’s OTI license if it is found that Central willfully failed to comply with FMC regulations.  Central must respond to the Order to Show Cause by July 11, 2008.  The Commission will issue a decision in this docket no later than December 24, 2008.

The Federal Maritime Commission approved the controversial discussion agreement between the Ports of Los Angeles and Long Beach and several Marine Terminal Operators (MTOs) which will allow the ports to coordinate their Clean Truck Programs.  The Clean Truck Programs will reduce air pollution in and around the ports by progressively banning older trucks from hauling cargo to and from the ports.  This discussion agreement, titled Los Angeles/Long Beach Port/Terminal Operator Administration and Implementation Agreement (AIA) (FMC Agreement No. 201178), was filed with the FMC in February 2008 and was initially scheduled to take effect on April 15, 2008.  The FMC delayed approval until it reviewed additional details about the Agreement.  With the anti-trust immunity granted by the agreement, the ports and terminal operators are now free to discuss and agree upon implementation and administration of joint environmental programs, including as the Clean Truck Programs, as well as security programs.

Thirty one members of California’s Congressional delegation and Congresswoman Nancy Pelosi (D-California) Speaker of the United States House of Representatives wrote letters to the FMC in support of the agreement and Clean Truck Program proposed by the Port of Los Angeles, which unlike the Port of Long Beach’s program, requires all truck drivers to be employees of licensed motor carriers.  The letter from California’s Congressional delegation emphasized the need for a viable trucking sector and a sustainable solution to port pollution.  The first of the Clean Truck Programs’ progressive truck bans is set to go into effect October 1, 2008 and will bar all pre-1989 trucks from the ports.  The ports’ plans require all pre-2007 trucks to be replaced or retrofitted by the year 2013.

The FMC found that there was no basis for rejecting the agreement at the present time, since many details for implementation of the programs have yet to be decided.  However, the FMC stressed that the agreement will be subject to further reviews.  Florence A. Carr, Director of the Commission's Bureau of Trade Analysis said, "The Shipping Act directs the Commission to evaluate the potential impacts of all agreements, both prior to their effectiveness and on an ongoing basis.  Under these statutory requirements, further agreements reached pursuant to the AIA, and those related agreements of the Ports of Los Angeles and Long Beach, must be timely filed with the Commission to allow for the competitive review and analysis required by Congress.”

The Trans-Atlantic Conference Agreement (TACA), whose member carriers served the trade between the USA and North Europe, United Kingdom and Ireland, Scandinavia and Baltic Ports, ceased operation June 30, 2008.  As of July 1, 2008 the TACA tariffs are no longer applicable, but remain accessible for the public for historical access – as is required by FMC regulations.  On September 25, 2006, the EU Council of Ministers abolished Council Regulation 4056/86 to repeal the block exemption for liner conferences on routes to and from the European Union, but allowed two years for this decision to take effect.  Effective October 18, 2008, Council Regulation No. 1419/2006 officially puts an end to liner conferences in the European trade lanes.  TACA was the successor to one of the very first shipping conferences, the North Atlantic Steam Traffic Conference of New York, organized in 1868 by Sir Samuel Cunard.

Shippers should refer to individual carriers' tariffs for governing rules, regulations and rates in effect from July 1, 2008. Former TACA carrier members are now charging Bunker Adjustment Factors (BAF) according to their own formulas.  Maersk Line announced its new BAF formula in February.  Maersk implemented this formula for transatlantic trade routes May 1 and for transpacific trade routes July 1, 2008.  The Maersk BAF Calculator and updates on BAF changes are available at www.maerskline.com.  Atlantic Container Line, Maersk Line, Mediterranean Shipping Co., NYK Line and OOCL were the five members of TACA on its last day in business.  Visit http://www.tacaconf.com/ for more information.

Representatives of carrier members of the Transpacific Stabilization Agreement (TSA) and the Westbound Transpacific Stabilization Agreement (WTSA), met with the Federal Maritime Commission June 25, 2008 to present their views on current economic issues affecting carriers in the import and export trades.  At the briefing, TSA and WTSA Chairman Ron Widdows, who is also CEO of Singapore-based container line APL Ltd., provided a presentation on economic conditions affecting capacity and equipment availability in the U.S. export trade.  Widdows’ also spoke on economic issues impacting vessel-operating common carriers and recent global trends.  Representatives from five other shipping lines also attended the briefing.  The Commission, noting that the purpose of the Shipping Act is to promote the growth of U.S. exports through a competitive ocean transportation system, encouraged the carriers to work with shippers to find a common solution to difficulties facing U.S. exporters.  The Commission regularly holds such industry briefings in an effort to increase FMC understanding of the current issues affecting the shipping industry.

In related news, rising fuel costs prompted both the TSA Carriers and WTSA Carriers to update their tariffs to increase Bunker Adjustment Factors (BAF) and Inland Fuel Charges (IFC) for the month of August 2008 to new highs.  TSA’s BAF will be US$ 1012 per 20ft container, US$ 1265 per 40ft container, US$ 1423 per 40ft hi-cube container, US$ 1601 per 45ft container and US$ 28 per WM.  TSA’s IFC will be US$ 464 per container for MLB and IPI shipments moving via rail, and US$ 134 per container for truck transport to Group 4 points in California, Oregon and Washington, and for East Coast local store-door truck moves.  WTSA’s BAF will be US$ 1012 per 20ft container, US$ 1265 per 40ft/45ft container and US$ 60 per WM.  WTSA’s IFC will be US$ 464 per container for rail and intermodal rail/truck shipments, and US$ 134 per container for local/regional truck shipments.

The 15 members of the TSA Carriers 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, MOL, Inc., NYK Line, OOCL, Yang Ming Marine, and Zim Integrated Shipping Services.  Visit www.tsacarriers.org.  The 10 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..