June 3, 2009 Volume 13, 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.

Federal Maritime Commissioners Brennan, Creel and Dye were congratulated and thanked for their hard work by the U.S. House Subcommittee on Coast Guard and Maritime Transportation at the May 13, 2009 hearing to review the proposed FMC budget for fiscal year 2010 (FY 2010).  This was in sharp contrast to last year’s budget hearing in which a frustrated Congressman Elijah E. Cummings (D-MD), Chairman of the Subcommittee, said the agency "appears to be broken" and FMC Commissioner Joseph Brennan likened the agency to a “four-headed monster.”  At the center of the Subcommittee’s concerns last year were reports of low employee morale at the FMC.  The Subcommittee’s criticism cited a 2005-2006 study done by an outside consultant that found that no staff meetings were being held, and that the agency was adverse to change.  This year the FMC Commissioners brought with them proof that the agency had changed its ways – news that the agency was to receive the 2009 Most Improved Small Agency Award.  The FMC was ranked 6th out of 32 small federal agencies in the 2009 Best Places to Work in the Federal Government rankings.  This biennial survey of federal government employee satisfaction is conducted by The Partnership for Public Service and American University's Institute for the Study of Public Policy Implementation.  Results of the survey indicated a 28 percent increase in overall employee satisfaction at the FMC.  The Commissioners cited a new schedule of regularly held Commission meetings as a major factor in the dramatic improvement of employee morale.   

Commissioner Rebecca Dye and Commissioner Harold Creel appeared along with Commissioner Joseph Brennan as he presented the FMC’s plans and budget for fiscal year 2010.  President Obama's FY 2010 budget appropriates $24,558,000 for the FMC.  This will provide the Commission with an increase of 7.7 percent, or $1,758,000 over the appropriation for the current fiscal year 2009, which ends September 30, 2009.  The proposed FY 2010 budget includes funds to maintain current staff and fund all current programs at the FMC.

Commissioner Brennan addressed the state of the U.S. shipping industry by providing the Subcommittee with some bleak numbers.  He reported that U.S. liner exports dropped by 13 percent and imports dropped by 10 percent in the first quarter of fiscal year 2009.  He also noted that “freight rates have also declined precipitously” and that increased market concentration was likely due to the poor global economy.  Brennan said that currently approximately 11 percent of the global containership capacity lays idle.  He also briefly outlined some of the Commission’s important work over the past year.  The Clean Truck Programs at the Ports of Los Angeles and Long Beach were on the top of the list.  The Commission had challenged the programs in U.S. Federal Court on the basis that they violated anti-competitive standards of the Shipping Act.  Brennan stated that while the Court had denied the FMC’s request for a preliminary injunction against the programs, the Commission was considering its options for appeal.

Commissioner Brennan also informed the Subcommittee of the Commission’s continued monitoring of carrier and marine terminal operator agreements.  Brennan noted the Commission’s ongoing investigation into the pricing and operations of carriers serving the trade between the U.S. and Australia/New Zealand.  He also highlighted the Transpacific Stabilization Agreement’s withdrawal of a proposed agreement amendment that would have allowed TSA carrier-members to discuss and agree upon capacity rationalization.  The TSA carriers withdrew the proposed amendment after the FMC requested more detailed information regarding the amendment.

Lastly, Commissioner Brennan emphasized the FMC's important and unique regulatory role in assisting front-line security efforts by providing detailed information on all parties utilizing the U.S. supply chain.   The FMC works closely with U.S. Customs and Border Protection (CBP) and the Department of Homeland Security (DHS) to share data on ocean carriers, marine terminal operators, OTIs and other entities engaged in U.S. foreign commerce. 

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 increases to Bunker Adjustment Factors (BAF) and reductions for Inland Fuel Charges (IFC) effective July 1, 2009.  The WTSA also announced revisions to Currency Adjustment Factors (CAF) and a new terminal handling surcharge for Vietnam. 

The Inland Fuel Charge (IFC) for the July thru September 2009 period will be reduced to US$ 132 per ctr for rail and intermodal rail/truck shipments, and US$ 38 per ctr for local/regional truck shipments.  Currency Adjustment Factors (CAF) effective July thru September 2009 are as follows: Japan 0%, Korea 0%, Taiwan 4% and Singapore 13% (down from 14%).  The WTSA Carriers update their CAF, BAF and IFC surcharges on a quarterly basis.

Also effective July 1, 2009, the WTSA Carriers will implement Vietnam Terminal Handling Charges (THC) of US$ 77 per 20ft ctr, US$ 118 per 40ft ctr and US$ 144 45ft ctr.  The WTSA’s 10 member carriers are American President Lines, COSCO Ctr Lines, Evergreen Marine Corp., Hanjin Shipping, Hapag-Lloyd Ctr Line, Hyundai Merchant Marine, "K" Line, NYK Line, OOCL and Yang Ming Marine.  For more information, visit www.wtsacarriers.org.

The carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223, serving the East Asia/USA trade lane announced increases to Bunker Adjustment Factors (BAF) calculated using both their old monthly BAF formula and new quarterly BAF formula.  The TSA Carriers also announced reductions to Inland Fuel Charges (IFC) and Currency Adjustment Factor (CAF).  The group switched from monthly to quarterly BAF and a new calculation formula in April.  However, shipments moving under tariff rates and 2008-09 service contracts that extend beyond May 1, 2009 are still subject to BAF calculated using TSA’s old monthly calculation formula. 

July 2009 BAF calculated using TSA’s old monthly formula will increase to US$ 472 per 20ft ctr, US$ 590 per 40ft ctr, US$ 664 per 40ft hi-cube ctr, US$ 747 per 45ft ctr, and US$ 13 per WM (LCL).  Quarterly BAF according to TSA’s new formula will also increase as follows for July 1 thru September 30, 2009: shipments via West Coast Services - US$ 150 per 20ft ctr, US$ 188 per 40ft ctr, US$ 212 per 40ft hi-cube ctr, US$ 238 per 45ft ctr; shipments via East Coast Services - US$ 308 per 20ft ctr, US$ 385 per 40ft ctr, US$ 433 per 40ft hi-cube ctr, US$ 487 per 45ft ctr. 

Inland Fuel Charges (IFC) and Currency Adjustment Factor (CAF) for the July - September 2009 period will be reduced.  The IFC will be US$ 132 per ctr for shipments to IPI destinations served via West Coast Ports, US$ 66 per ctr to RIPI destinations served via East Coast Ports, and US$ 38 per ctr to Group 4 Points in California, Oregon and Washington and to East Coast local store door points.  CAF for shipments from Japan will be reduced from 16 to 13 percent.

The TSA Carriers also announced a new Terminal Handling Charge (THC) for shipments from Vietnam effective July 1, 2009.  The Vietnam THC will be US$ 77 per 20ft ctr, US$ 118 per 40ft ctr and US$ 144 45ft ctr. The TSA’s 14 carrier members are American President Lines, CSCL, CMA-CGM, COSCO Ctr Lines, Evergreen Marine, Hanjin Shipping, Hapag-Lloyd Ctr Line, Hyundai Merchant Marine, "K" Line, Mediterranean Shipping, NYK Line, OOCL, Yang Ming Marine and Zim Integrated Shipping Services.  The group’s web site at www.tsacarriers.org provides additional information.