October 3, 2008 Volume 12, Number 10 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.

President George W. Bush nominated Sean T. Connaughton to be a Federal Maritime Commissioner and designated as Chairman of the Commission upon appointment for the remainder of a five-year term ending June 2012.  Connaughton is currently the administrator of the Maritime Administration at the Department of Transportation (MARAD).  Before taking up his post at MARAD in 2006, Connaughton served as Counsel at Troutman Sanders LLP and Chairman of the Prince William (VA) Board of County Supervisors.  Earlier in his career, he served in the United States Coast Guard.  Connaughton received his bachelor's degree from the United States Merchant Marine Academy, his master's degree from Georgetown University and his JD from George Mason University.

Since the resignation of FMC Commissioner Paul A. Anderson in April of this year, the FMC has operated with only three Commissioners.  The FMC is authorized to have five Commissioners, one of whom is designated as Chairman. Anderson, who joined the Commission in 2003, was nominated by President Bush for a second term in August 2007, but was never confirmed by the U.S. Senate and resigned shortly after Congressional criticism of the agency.  President Bush officially nominated Connaughton September 9, but because the Democratic-controlled U.S. Senate must approve this nomination before he can begin serving at the FMC, it is not clear at this time if Connaughton will ever take up this post.

The Federal Maritime Commission has begun an investigation into the Port of Long Beach and the Port of Los Angeles Clean Truck Programs for possible Shipping Act violations.  The FMC is now closely examining elements of both programs, and is particularly scrutinizing the Los Angeles program.  The ports’ Clean Truck Programs aim to reduce air pollution in and around the ports by progressively banning older trucks from hauling cargo to and from the ports.  The first of the progressive bans on older trucks began October 1 and barred all pre-1989 trucks from the ports.  The ports’ plans require all pre-2007 trucks to be replaced or retrofitted by the year 2013.

According to Docket No. 08-05, served September 24, 2008, the FMC is taking a closer look at the programs’ concession agreements and fee exemption standards.  The FMC Docket notes that neither port has “published criteria or standards governing the granting or denial of a concession.”  The Commission is also further examining the Port of Los Angeles’ program’s financial incentives, ban on independent owner operators and concession agreement requirements.  The Port of Los Angeles is offering extensive financial incentives to companies that operate 2007 EPA compliant-trucks.  The program provides $20,000 per clean truck and up to $10,000 in further incentives during the program’s first year.  Incentive payments will come from the port’s Clean Truck Fund and other port funds.  According to the Docket, successful applicants for the incentive program will be chosen at the “sole discretion of the port.”

The Ports of Long Beach and Los Angeles are marine terminal operators and under Section 10 of the Shipping Act of 1984 are required “to establish, observe, and enforce just and reasonable regulations and practices relating to or connected with receiving, handling, storing or delivering property.”  If Shipping Act violations are found the ports could be subject to penalties.  An initial decision in this investigation will be issued by the FMC no later than Sept. 24, 2009.

The FMC’s investigation does not prevent the ports from implementing the Clean Truck Programs. However, implementation of the $35 per TEU Clean Truck Fee (CTF) has been delayed.  Both ports decided more time was needed to complete computer programs designed to collect the fees.  The fees are expected to take effect by November 1, 2008 and will apply on all containers moved by trucks that do not comply with the new Clean Truck requirements.

California Governor Arnold Schwarzenegger has vetoed the proposed California Port Investment Fee (CPIF), which would have imposed a fee of up to $30 per TEU on containers moving through the ports of Los Angeles, Long Beach and Oakland.  The proposed fee, a part of Senate Bill 974 sponsored by California State Sen. Alan Lowenthal (D-Long Beach), was approved by the California State Assembly and Senate this summer, and was expected to generate around $300 million to be used for infrastructure projects aimed at reducing air pollution.  In his veto statement, Gov. Schwarzenegger said he supports the policy objectives of the bill, but vetoed it because it “does not provide necessary assurances that projects will achieve the greatest cost-effectiveness, emission reductions, and public health protection.”  The Governor noted California Proposition 1B, which was approved by voters in 2006, will provide $1 billion in funding to improve air quality and this will directly benefit the communities in and around the Ports of Long Beach, Los Angeles, and Oakland.

The Westbound Transpacific Stabilization Agreement (WTSA), FMC Agreement No. 011325, whose member lines serve the US export trades from the USA to East Asia, announced reductions to Bunker Adjustment Factors (BAF) and Inland Fuel Charges (IFC) for the month of November.  The WTSA also rolled out a new BAF formula.  Under the new formula, BAF will be calculated and charged separately for the US Pacific (West) Coast and Atlantic (East) Coast.  WTSA member lines have filed tariff rules implementing the new formula for dry cargo.  Some service contracts are still subject to the old formula BAF.  Similar new guidelines for refrigerated cargo will be announced soon.  WTSA’s new BAF formula uses a straight average of Hong Kong and Los Angeles bunker prices for the West Coast BAF; and Hong Kong and New York bunker prices for the East Coast BAF.

BAF for November under the old formula will be US$ 976 per 20ft ctr, US$ 1220 per 40ft/45ft ctr and US$ 58 per WM. November BAF calculated using the new formula for dry container cargo is as follows: from/via US Atlantic/Gulf Coast Ports - US$ 720 per 20ft ctr and US$ 900 per 40ft/45ft ctr; from/via US Pacific Coast Ports - US$ 614 per 20ft ctr and US$ 767 per 40ft/45ft ctr. Refrigerated container shipments from/via all US Ports will be subject to November BAF of US$ 976 per 20ft ctr, US$ 1220 per 40ft ctr. Inland Fuel Charges (IFC) for November will be reduced to US$ 375 per container for rail and intermodal rail/truck shipments, and US$ 108 per container for local/regional truck shipments.

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.

In the same trade lane, Maersk Line is increasing its quarterly bunker surcharges.  Maersk Line is not a WTSA member carrier. Maersk’s BAF for October thru December 2008 for both dry and reefer containers is as follows: from/via US Atlantic/Gulf Coast Ports - US$ 190 per 20ft ctr and US$ 380 per 40/45ft ctr; from/via US Pacific Coast Ports - US$ 125 per 20ft ctr and US$ 250 per 40/45ft ctr.  Visit http://baf.maerskline.com for more info.

The carrier members of the Transpacific Stabilization Agreement (TSA), serving the East Asia/USA trade lane announced reductions to Bunker Adjustment Factors (BAF) and Inland Fuel Charges (IFC) for November 2008.  BAF for November will be US$ 976 per 20ft ctr, US$ 1220 per 40ft ctr, US$ 1373 per 40ft hi-cube ctr, US$ 1545 per 45ft ctr and US$ 27 per WM.  November IFC is US$ 375 per container for MLB and IPI shipments moving via rail, and to US$ 108 per container for truck transport to Group 4 points in California, Oregon and Washington, and for East Coast local store-door truck moves.

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.