Signals Newsletter March 3, 2010 / March 15, 2010
Volume 14, Number 3 / Volume 14, Number 3-A
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.

 FMC Proposes Changes to NVOCC Tariff Regulations

The Federal Maritime Commission (FMC) voted February 18, 2010 to draft a proposed rule that, if adopted, would offer licensed NVOCCs an exemption from the requirement to publish and adhere to tariff rates.  The detailed rule making proposal has not yet been released by the Commission, but key features have been announced.  Instead of publishing tariff rates, licensed NVOCCs would have the option to utilize “unpublished rate arrangements” provided these are agreed to by shippers in writing before cargo moves.  These rate arrangements must be retained by the NVOCC for FMC inspection.  The motion to draft the proposed new rule was approved by a 3 to 1 vote, with FMC Chairman Lidinsky in the majority.  It directs the FMC staff to prepare a notice of proposed rulemaking that would offer the exemption, while imposing several conditions, including:

  1. The exemption would be voluntary; i.e. NVOCCs could choose to continue publishing rates in their tariffs or they could use “unpublished rate arrangements” that satisfy FMC requirements;
  2. The exemption would only apply to NVOCCs holding the Ocean Transportation Intermediary (OTI) license;
  3. The exemption would be limited to tariff rates; NVOCCs would still be required to continue to publish and maintain tariff rules that comply with Section 8 of the Shipping Act;
  4. The proposed rule would exempt licensed NVOCCs from the tariff rate publication requirements of Section 8 of the Shipping Act and from Section 10(b)(2)’s requirement to adhere to published rates.  The proposed rule making will request comments on whether the exemption should also extend to Sections 10(b)4 and 10(b)8 of the Shipping Act which prohibit unfair and unjust discriminatory practices.

If adopted, the exemption would require NVOCCs who choose to utilize it to observe the following requirements:

  1. Tariff rules must be maintained and note that the NVOCC has chosen to operate under the exemption;
  2. Public access to tariff rules must be provided by the NVOCC free of charge to the public;
  3. Unpublished rate arrangements must be agreed to and memorialized in writing, including the applicable rate for each shipment, by the date cargo is received by the carrier at the origin.  The proposed rule making will request comments on additional terms that should be required in the unpublished rate arrangement documentation.
  4. Records of unpublished rate arrangements and associated communications must be retained by the NVOCC for five years and made available for inspection by the FMC as required by its licensing regulations.

The FMC’s action in this matter was prompted by a Petition filed in July 2008 by the National Customs Brokers and Freight Forwarders Association of America, Inc.  The Petition requested that rate disputes between NVOCCs and their shipper customers be settled solely under contract law and not the tariff provisions of the Shipping Act of 1984.  Commissioner Joseph E. Brennan voiced strong opposition to the Petition and the motion approved at the FMC meeting of February 18.  He released a statement in which he explained he opposes the petition on the basis of both law and policy.  In Commissioner Brennan's view, exempting NVOCCs from tariff rate requirements represents a step backward from the standpoint of consumer protection.  He urged the Commission to hold a public hearing on this matter.

On February 23, 2010 the FMC Secretary issued a news release to remind NVOCCs that these potential new regulations do not yet apply.  At this time, NVOCCs must continue to comply with the Commission's current tariff regulations.  Changes to the NVOCC tariff publication requirements will occur only after the Commission publishes a Notice of Proposed Rulemaking, considers public comments on that proposal, and publishes a Final Rule.

 TSA Carriers Adjust Surcharges, Applaud FMC Decision to Allow Slow Steaming

The carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223, serving the East Asia/USA trade lane announced several changes to fuel surcharges effective April 1, 2010. The TSA Carriers also applauded the decision of Federal Maritime Commission, after a 45-day review, to allow its members to discuss and coordinate strategies that will reduce air and water pollution, as well as vessel fuel consumption.

Bunker Adjustment Factors (BAF) calculated using TSA’s old monthly formula will decrease effective April 1, 2010 to US$ 688 per 20ft ctr, US$ 860 per 40ft ctr, US$ 968 per 40ft hi-cube ctr, US$ 1089 per 45ft ctr, and US$ 19 per WM (LCL).  However, the “New Formula BAF” for the April-June 2010 quarter will increase slightly to US$ 368 per 40ft ctr to US Pacific Coast Ports and US$ 727 per 40ft ctr to US Atlantic and Gulf ports, with other container sizes charged accordingly.  Inland Fuel Charges (IFC) will increase April 1, 2010 to US$ 211 per ctr for shipments to IPI destinations served via West Coast Ports, US$ 106 per ctr for shipments to RIPI destinations served via East Coast Ports, and US$ 61 per ctr for shipments to Group 4 Points in California, Oregon and Washington and to East Coast local store door points.

The Emergency Revenue Charge (ERC) of US$ 320 per 20ft ctr; US$ 400 per 40ft ctr, US$ 450 per 40ft high-cube, and US$ 505 per 45ft ctr that was recently implemented by most of the TSA Carrier members remains in effect.  The ERC is an interim charge that is distinct from the previously announced 2010 General Rate Increase (GRI) of US$ 800 per FEU for West Coast port-to-port and local cargo, and US$ 1,000 per FEU for all other all-water and intermodal shipments.  Several of the TSA Carriers have said the ERC will expire upon execution of new contracts in 2010.  However, their tariffs do not yet reflect expiration dates for the ERC or new rules for the 2010 GRIs – these are expected soon.

The amendment to the TSA Carrier agreement that allows the carriers to coordinate their implementation of slow steaming took effect on February 6, 2010 without opposition from the FMC.  Slow steaming allows vessels to save fuel, which reduces their emissions and provides substantial cost savings.  TSA’s 15 members are American President Lines, China Shipping (CSCL), CMA-CGM, COSCO Container Lines, Evergreen Marine, Hanjin Shipping, Hapag-Lloyd Container Line, Hyundai Merchant Marine, "K" Line, Maersk Line, Mediterranean Shipping, NYK Line, OOCL, Yang Ming Marine and Zim Integrated Shipping Services.  Visit www.tsacarriers.org

 WTSA Carriers Announce another GRI; Increase Fuel Surcharges and Doc Fees

The Westbound Transpacific Stabilization Agreement (WTSA), FMC Agreement No. 011325, whose member lines serve the U.S. export trades from the USA to East Asia, announced another general rate increase (GRI), as well as increases to Bunker Surcharges, Inland Fuel Charges and Documentation Fees.

 

 WTSA Bunker Adjustment Factors (BAF), effective: April 1, 2010– June 30, 2010

 
 

Traffic to/from and via:

 

US Atlantic/Gulf Coast Ports

US Pacific Coast Ports

 

US$ 834 per 20ft dry ctr 

US$ 420 per 20ft dry ctr

 

US$ 1042 per 40ft/45ft dry ctr   

US$ 525 per 40ft/45ft dry ctr

 

US$ 1387 per 40ft/45ft reefer ctr  

US$ 739 per 40ft/45ft reefer ctr

The Inland Fuel Charge (IFC) for April-June 2010 will increase to US$ 211 per ctr for rail and intermodal rail/truck shipments, and US$ 61 per ctr for local/regional truck shipments.  Currency Adjustment Factors (CAF) for the same period are: Taiwan 5% and Singapore 17%.  The US Origin Documentation Fee for all cargo will increase to US$ 50 per bill of lading on April 1, 2010.  Another GRI has been filed by the WTSA Carriers.  Effective April 1, 2010 this GRI will increase all rates for dry cargo by US$ 240 per 20ft ctr and US$ 300 per 40ft ctr.  Rates for refrigerated cargo will increase by US$ 300 per 20ft ctr from US Pacific Coast Ports and by US$ 500 per 40ft container from US Atlantic and Gulf Coast Ports and from all inland locations. The 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.  For more info visit www.wtsacarriers.org.

 FMC Announces Settlement Agreements: $625,000 in Civil Penalties Paid ( This article is released 15Mar2010 )

The Federal Maritime Commission (FMC) has announced four compromise agreements in which an ocean carrier and intermediaries agreed to pay a total of $625,000 in civil penalties for alleged violations of the Shipping Act of 1984. The agreements were reached with a vessel-operating common carrier (VOCC) and three ocean transportation intermediaries (OTIs). The agreed penalties resulted from investigations conducted by the Commission's Area Representatives in Los Angeles, Seattle, South Florida, and Washington, D.C. Staff attorneys with the Bureau of Enforcement negotiated the compromise agreements. The parties settled and paid penalties, but did not admit to violations of the Act or the Commission's regulations. The compromise agreements are:

China Shipping Container Line: China Shipping Container Line is an ocean common carrier headquartered in Shanghai and controlled by the government of the People's Republic of China. China Shipping agreed to pay $440,000 as part of a compromise agreement. That agreement settled alleged violations of the Shipping Act of 1984 that involved more than one thousand shipments over four years. These alleged violations included: (1) providing transportation services to intermediaries that did not have tariffs, licenses, or bonds as required by the statute; (2) misdescribing cargo they shipped; (3) allowing use of service contracts by persons who were not parties to those contracts; and (4) providing transportation that was not in accordance with the rates and charges set forth in published tariffs. China Shipping provided the Commission with information regarding the activities at issue, terminated those activities, and agreed to cooperate fully with any further Commission investigation regarding those activities.

A.T.I. U.S.A. Inc.: A.T.I. U.S.A. Inc. is a licensed and bonded Non-Vessel Operating Common Carrier (NVOCC) and freight forwarder based in Elizabeth, New Jersey. A.T.I. paid $115,000 in civil penalties pursuant to a compromise agreement. The Commission alleged that A.T.I. violated sections 10(a)(1), 10(b)(1), and 10(b)(2)(A) of the Shipping Act of 1984 by obtaining transportation services at less than applicable rates and charges for ocean common carriers, and by charging rates that did not comply with its published tariffs. Specifically, the Commission alleged that ATI misdeclared the measurements of certain shipments of motor vehicles and permitted use of service contracts by persons who were neither signatories nor affiliates to those contracts.

MT Global Freight Solutions Inc.: MT Global is a licensed and bonded NVOCC located in Grapevine, Texas. MT Global entered into a compromise agreement with the Commission, and pursuant to that agreement, made a payment of $35,000. The Commission alleged that MT Global violated section 10(a)(1) of the Shipping Act by obtaining transportation services at less than applicable rates and charges by unlawfully accessing service contracts to which MT Global was not a signatory or affiliate, and violated section 10(b)(2)(A) of the Act by providing ocean transportation services at other than the rates or charges provided in its published tariffs.

Cosa Freight Inc.: Cosa Freight Inc. is a licensed and bonded NVOCC located in Pomona, California. Cosa Freight made a payment of $35,000 pursuant to a compromise agreement. The Commission alleged that Cosa Freight obtained, and allowed others to obtain, ocean transportation for property at less than the rates and charges that would otherwise be applicable by improperly accessing and allowing others to access service contracts to which Cosa Freight was not a signatory, in violation of section 10(a)(1) of the Shipping Act. The Commission also alleged that Cosa Freight violated section 10(a)(1) of the Shipping Act by misdescribing commodities that were shipped.

In its announcement of these settlement agreements FMC Chairman Richard A. Lidinsky, Jr. praised the Commission's Area Representatives and Bureau of Enforcement for their hard work protecting competition and the shipping public: "These penalties should serve as a reminder to any carriers or intermediaries who may be tempted to disregard the Commission's rules against unfair or deceptive practices. The Federal Maritime Commission's team on the front lines will be vigilant in protecting the emerging green shoots of recovery in the ocean shipping industry, international trade, and the larger economy."

This is the first announcement of settlement agreements since Chairman Lindinsky joined the Commission and since Peter J. King was named Director of the Bureau of Enforcement. Mr. King was previously FMC’s General Counsel. In August 2009 the Commission announced eight compromise agreements, resulting in the collection of $748,000 in civil penalties from one ocean carrier, one OTI-Forwarder, six OTI-NVOCCs and one unlicensed entity.


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Vol. 14 No. 3, March 3, 2010

The information contained herein is obtained from reliable sources. It is subject to change at any time, however, depending on changes in laws and regulations. While we continually attempt to monitor this information, we do not guarantee its accuracy and are not responsible for any damages suffered by any party in reliance on it.