July 6, 2009 Volume 13, 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.

President Barack Obama recently designated FMC Commissioner Joseph E. Brennan to serve as Acting Chairman of the Federal Maritime Commission.  Brennan has been serving on the Commission for ten years.  He was first nominated to the post by President Clinton in 1999, and was sworn in for another five-year term after being nominated by President George W. Bush in 2004.  If confirmed by the U.S. Senate, Brennan will be the first FMC chairman since Steven R. Blust left the agency in late 2006. 

In recent years Brennan has been a vocal and colorful critic of some FMC decisions.  He was a strong supporter of the Los Angeles/Long Beach Clean Trucks Programs, and called the FMC’s decision to block the programs a “colossal mistake.”   In mid-2008, in response to congressional criticism, he called the agency a “four-headed monster.”  Upon accepting this presidential designation, Brennan said he wants the Commission “to meet all of its regulatory responsibilities while always trying to minimize the cost to regulated entities and the American taxpayer.”  He also noted that “the shipping statutes and regulations are meant to ensure fair competition and consumer protection.”

Over the past ten years Brennan has participated in many aspects of the Federal Maritime Commission. He was the fact-finding officer in the 2003 FMC investigation into the service contract practices of the Transpacific Stabilization Agreement (TSA). This investigation led to an extensive compromise agreement with the TSA, and prompted changes in the Commission’s regulations of service contracts.  

Brennan’s attitude reflects his long history as a public official. He was elected governor of the State of Maine in 1978 and served from 1979 to 1987.  He also served in the U.S. House of Representatives representing Maine’s 1st District from 1987 to 1991.  Prior to his governorship, Brennan served as the minority whip in the Maine House of Representatives from 1965 to 1971 and as district attorney of Cumberland County from 1971 to 1972.  He served as the minority floor leader in the Maine State Senate from 1973 to 1974 and became Maine's attorney general in 1975.  Brennan earned a B.S. in economics from Boston College in 1958 and a J.D. from the University of Maine, School of Law in 1963.

On June 9, 2009, President Barack Obama nominated Richard A. Lidinsky, Jr. to serve as a Federal Maritime Commissioner.  Lidinsky, an attorney and international trade consultant, is a maritime industry veteran and former FMC attorney.  He will be returning to the agency after nearly 35 years.

Lidinsky began his career at the Federal Maritime Commission in 1973 as Legislative Counsel in the Office of General Counsel.   After leaving the FMC in 1975, he was appointed by the Maryland Port Administration to be Director of Tariffs and National Port Affairs, as well as counsel.  As a representative for the Port of Baltimore, he helped draft sections of the Panama Canal Treaty Implementing Legislation and the Shipping Act of 1984.  He is also credited with negotiating one of the first US-China trade agreements.  In 1985, Sea Containers Ltd., the global maritime manufacturer and leasing company, recruited him to establish their Washington, DC office.  He has also served as a member of many maritime committees, including the Sealift Transportation Committee of the National Defense Transportation Association, the Transportation and Port Security Committee of the British-American Business Association, and the U.S. NATO Delegation on the Ports and Intermodal Transportation Committee.  Lidinsky received his BA from the School of Government and Public Administration of American University in 1968 and his JD from the University of Maryland in 1972.  He served in the U.S. Coast Guard from 1968 to 1975.

The Federal Maritime Commission’s legal challenge to the Clean Truck Programs of the Ports of Los Angeles and Long Beach is withdrawn.  On June 16, 2009 the FMC filed a motion in the U.S. District Court in Washington D.C.  requesting the court to dismiss its challenge.  In his first major act as FMC Chairman, Joseph E. Brennan stated: "While today's action remains subject to approval of the U.S. District Court, I am gratified that we have taken this step to clear the path for the Ports' Clean Trucks Programs." 

While the FMC has taken this step to clear the path for Clean Trucks, the Ports must still address a separate court proceeding in California.  In April 2009 the American Trucking Associations, Inc. (ATA) was granted a preliminary injunction against portions of the Clean Truck Programs.  The United States District Court for the Central District of California enjoined numerous sections of the programs’ concession requirements, including the Port of Los Angeles’ employee-driver mandate. 

The legal challenge by FMC was initially filed with the U.S. District Court in November 2008 after the FMC found many portions of the Clean Truck Programs to be anti-competitive and decided to seek a permanent injunction of certain aspects of the programs’ trucking concession agreements and fee exemptions.  The FMC also sought to enjoin the Port of Los Angeles’ employee-only mandate for trucking companies. 

According to an FMC news release, the anti-competitive aspects of the Clean Truck Programs have been substantially resolved.  The FMC noted that while U.S. District Court Judge Richard A. Leon issued a decision in April 2009 declining to grant the FMC’s request for a preliminary injunction, the ATA’s successful legal challenge has enjoined many of the anti-competitive aspects of the Clean Truck Programs.  Furthermore, in May 2009, the Port of Long Beach resolved many of the issues concerning Clean Truck Fee exceptions and incentives that the FMC had taken issue with.  The FMC also cited the economic downturn as one reason for the withdrawal of its court challenge.  The FMC initially feared that the Clean Truck Programs would substantially increase the cost of transportation at the Ports of Los Angeles and Long Beach, but in light of the current economic climate the Commission has determined that this is unlikely.  

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 their old monthly BAF formula.  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.  August 2009 BAF calculated using TSA’s old monthly formula will increase to US$ 580 per 20ft ctr, US$ 725 per 40ft ctr, US$ 816 per 40ft hi-cube ctr, US$ 918 per 45ft ctr, and US$ 16 per WM (LCL). 

Quarterly BAF according to TSA’s new formula will not increase in August.  This new formula BAF is fixed for the July-September 2009 quarter as follows:  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) for the July - September 2009 quarter are 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.  

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.