January 6, 2009 Volume 13, Number 1 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 Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223, whose member lines serve the East Asia/USA trade lane, filed an agreement amendment with the Federal Maritime Commission (FMC) that will authorize members to discuss and agree upon vessel capacity.   If left unchallenged by the FMC, Amendment 043, filed with the FMC on December 18, 2008, will allow TSA members to begin discussing vessel capacity in early February 2009. 

The TSA’s current agreement allows members to broadly discuss the East Asia/USA trade lane.  According to the agreement, members are authorized to discuss and agree upon rate policies, practices and guidelines.  These include general revenue recovery, rate and charge adjustments, service matters, carrier costs, efficiencies in the trade, and differentials among members’ rate levels, charges, or services, regarding certain cargo.  Amendment 043 will further authorize TSA members to discuss and agree upon cost savings and more efficient use of vessels, equipment and networks through coordination of members' capacity plans.  More specifically, TSA members will coordinate “layup, drydocking, or other off-hiring of vessels, rationalization of vessels and/or vessel capacity operated, or planned to be operated,” by members or feeder vessels employed by members.  Niels Erich, a TSA spokesman was reported as saying the group filed the amendment due to “prospects for a sustained downturn” in the shipping industry in 2009. 

TSA carrier members control a significant portion of trade in the East Asia/USA trade lane.  This may prompt the FMC to challenge the amendment and delay its effectiveness.  The FMC reviews all agreement amendments to ensure that they do not result in an unreasonable reduction in competition.  TSA’s 14 carrier members 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, NYK Line, OOCL, Yang Ming Marine and Zim Integrated Shipping Services. Visit http://www.tsacarriers.org.

The Ports of Los Angeles and Long Beach will not be receiving millions of dollars in California state grant money for their Clean Truck Programs.  The California Air Resource Board (CARB) informed the ports in late December that funding for the grant has been suspended.  The grant, part of Proposition 1B approved by California taxpayers in 2006 to fund transportation projects throughout the state, was supposed to be funded through state bonds.  The California Treasurer’s Office, however, was unable to generate the needed monies.  In a letter to the ports CARB said, "We must instruct you to suspend entering into any new equipment project or other contracts that would be funded from Proposition 1B grant monies or expending funds for contracts that you have already signed." 

The ports have also been unable to begin collecting the $35 per TEU Clean Truck Fee.  The fee was to generate an additional $1.6 billion for the programs.  This fee, originally slated for October 1, 2008, was first postponed due to technical problems, but is now being challenged by the Federal Maritime Commission.  On December 17, 2008, the FMC requested further information from the ports regarding their Port Fee Services Agreement,  Agreement No. 201199.  This agreement would allow marine terminal operators to begin collecting the Clean Truck Fee.  Commissioners Creel and Commissioner Dye commented that, given the significant changes in the economy, the Commission must continue to fulfill its statutory obligations to ensure that the agreement will not unreasonably reduce competition in the Ports of Los Angeles and Long Beach.  

Despite these major funding losses, the ports are determined to move forward with their respective programs.  The Port of Long Beach will reportedly use $72 million in port funds put aside for the program to continue their Clean Truck Program.  The Port of Los Angeles is also moving ahead with its program.  The port began distributing an estimated $44 million in incentive checks at the end of December to truckers that agreed to deploy new, privately-funded clean trucks into drayage service in advance of the Clean Truck Program’s ban on older trucks. 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 Oct. 1 and barred all pre-1989 trucks from the ports.

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 that it will transition to quarterly Bunker Adjustment Factors (BAF) and Inland Fuel Charges (IFC) in 2009.  Many WTSA members are charging the following BAF for dry and reefer container cargo for the period of January to March 2009.

The Inland Fuel Charge (IFC) for January to March 2009 will be US$ 311 per container for rail and intermodal rail/truck shipments, and US$ 90 per container for local/regional truck shipments.  WTSA’s 10 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. See www.wtsacarriers.org

The carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223, serving the East Asia/USA trade lane announced the January to March 2009 Currency Adjustment Factor (CAF) for Japan, and reductions to Bunker Adjustment Factors (BAF) and Inland Fuel Charges (IFC) for February 2009.  CAF for Japan was increased from 8 to 11 percent for the period of January to March 2009.  BAF for February will be reduced to US$ 292 per 20ft container, US$ 365 per 40ft container, US$ 411 per 40ft hi-cube container, US$ 462 per 45ft container and US$ 8 per WM.  Inland Fuel Charges (IFC) effective February 1, 2009 will be reduced as follows: US$ 169 per container for shipments to IPI destinations served via West Coast Ports, US$ 85 per container for shipments to RIPI destinations served via East Coast Ports, and US$ 49 per container for shipments to Group 4 Points in California, Oregon and Washington and to East Coast local store door points. 

This is the fifth consecutive month the TSA has reduced BAF surcharges.  TSA’s BAF reached its peak in September 2008 when BAF was US$ 1192 per 20ft container, US$ 1490 per 40ft container, US$ 1676 per 40ft hi-cube container, US$ 1886 per 45ft container and US$ 33 per WM.  TSA’s 14 carrier members 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, NYK Line, OOCL, Yang Ming Marine and Zim Integrated Shipping Services. Visit http://www.tsacarriers.org.