November 4, 2009 Volume 13, Number 11 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 Oakland Board of Port Commissioners has approved a ban on pre-1994 drayage trucks.  Beginning January 1, 2010, drayage trucks with engine year models earlier than 1994 will be banned from the Port of Oakland.  All drayage trucks with engine year models between 1994 and 2003 must be retrofitted with diesel particulate filters before they will be permitted to enter the Port of Oakland.  The Port’s truck ban is one of the first steps outlined in its Maritime Comprehensive Truck Management Plan (CTMP) aimed at reducing trucking emissions in and around the port.  Oakland’s CTMP calls for progressive truck bans to be put in place each year.  The Port plans to ban all trucks that do not meet 2007 emission standards by January 1, 2014. 

Oakland’s CTMP is a program developed within the Port’s larger Maritime Air Quality Improvement Plan (MAQIP).  The MAQIP is the Port’s master plan for reducing diesel pollution in and around the Port by 85 percent by 2020.   Port Board President Victor Uno said, “This is another step that clearly demonstrates our commitment to a healthy community.  The strict truck ban will help us achieve our goal of reducing the health risk from diesel pollution from seaport sources.”  For more information on the Port of Oakland’s programs visit www.portofoakland.com.

The Federal Maritime Commission (FMC) recently announced an order of investigation into alleged Shipping Act violations committed by Hong Kong-based NVOCC World Chance Logistics (Hong Kong), Ltd.  World Chance is a bonded and tariffed NVOCC registered with the FMC under No. 018712.  According to FMC Docket No. 09-07 , the Commission has evidence that World Chance and its sole share-holder, Johnny Yu, may have permitted unrelated shippers of pyrotechnics to have direct access to the rates in World Chance service contracts.  The FMC is also investigating allegations that World Chance and Yu may have provided rates and charges to pyrotechnics shippers which were not in accordance with the rates and charges contained in World Chance’s tariff.   

According to Docket No. 09-07, in 2005, Yu incorporated Fireworks Logistics Association Ltd. (FLA), a private limited company in Hong Kong.  FMC alleges FLA does not appear to have a separate legal identity and lists World Chance’s Hong Kong address as its own and uses World Chance’s telephone and fax numbers and its email account.  Based on information it has reviewed, FMC suspects that World Chance utilized FLA as an unfair device or means of obtaining lower rates and to receive volume incentive payments not otherwise applicable.

The Shipping Act of 1984 prohibits any person from knowingly and willfully obtaining or attempting to obtain ocean transportation of property at less than the otherwise applicable rates or charges by means of false billing, false classification, false weighing, false report of weight, false measurement, or any other unjust or unfair device or means.  The Shipping Act also prohibits carriers from allowing any person to obtain transportation of property at less than applicable tariff or contract rates and charges by means of false billing, false classification, or by any other unjust or unfair device or means.  Furthermore, the Shipping Act also prohibits providing service in the liner trades not in accordance with the rates and charges published in a tariff or filed in an NVOCC service arrangement.  A party found guilty of Shipping Act violations will be subject to a penalty not exceeding US$ 6000 for each violation.  Penalties for violations committed willfully and knowingly may not exceed US$ 30,000 for each violation.  An initial decision in this investigation and hearing will be issued by an FMC Administrative Law Judge by October 22, 2010.  The Commission will issue a final decision no later than February 22, 2011.

The United States Australasia Discussion Agreement (USADA), FMC Agreement No. 011117, whose member lines provide direct service between the U.S. and Australia and New Zealand, announced plans to implement a general rate increase (GRI).  Effective December 1, 2009, a GRI of US$ 150 per 20ft container and US$ 300 per 40ft container will take effect for shipments in dry and reefer containers.  USADA’s Bunker Adjustment Factors (BAF) for December 2009 will remain at November 2009 levels of US$ 540 per 20ft container and US$ 1080 per 40ft/40ft hi-cube/45ft container. 

USADA is a voluntary discussion and research forum of six container shipping lines serving the trade to and from ports and inland points in the U.S. to destinations throughout Australia and New Zealand.  The USADA’s six member carriers are CMA CGM, Hamburg Sud, Hapag-Lloyd, Marfret, Maersk Line and ANL Singapore d/b/a U.S. Lines.

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 the group’s old monthly BAF formula.  TSA also announced a new Vietnam Documentation Fee will take effect in mid-November.

Effective December 1, 2009, Bunker Adjustment Factors (BAF) calculated using TSA’s old monthly BAF formula will be increased to US$ 652 per 20ft container, US$ 815 per 40ft container, US$ 917 per 40ft hi-cube container, US$ 1032 per 45ft container, and US$ 18 per WM (LCL).  These old formula BAF amounts are filed in the tariffs of most of the TSA Carriers and apply on cargo moving under tariff rates or 2008 service contracts that remain in effect.  TSA’s new Vietnam Documentation Fee of VN$ 400,000 (+VAT) goes into effect November 15, 2009.

TSA Carriers also released voluntary revenue recovery guidelines for upcoming 2010 contract negotiations.  Recommendations for 2010 contract negotiations focus on a three part plan including a General Rate Increase (GRI), Peak Season Surcharge (PSS) and full collection of floating bunker surcharges and other accessorial charges. The GRI is expected to take effect May 1, 2010 at US$ 800 per 40-foot container (FEU) for local West Coast and Group 4 Western coastal states cargo, and US$ 1,000 per FEU for intermodal and U.S. East and Gulf Coast all-water cargo, with per formula increases for other equipment sizes.  A Peak Season Surcharge (PSS) of US$ 800 per 40-foot container (FEU) effective from August thru November 2010 is planned to address higher cargo handling, equipment positioning and contingency planning costs during periods of peak cargo volume.

OOCL Chief Executive Officer Philip Chow explained that “these increases must be viewed in the context of the equally sudden and significant volume and rate declines seen in early 2009.  In many cases these recommended increases will only return carriers to where they were in late 2008 in terms of revenue per box.  The 2010-11 program reflects a determination, finally, that the race to the bottom on pricing in the transpacific must stop."  TSA reported that independent analysts estimate that the top 17 global container lines lost a cumulative $6 billion in the first half of 2009 alone, with many forced to seek out fresh capital in financial markets or government aid to stay afloat.  Other analysts estimate carriers will lose at least $20 billion for the full year in 2009, due to reduced demand and severely depressed rates.

The 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. The group’s web site at www.tsacarriers.org provides additional information.