The U.S. Federal Maritime Commission (FMC) recently issued a final rule adjusting the amount for the Chinese Bond Rider for licensed NVOCCs doing business with the People's Republic of China. The new rule increases the bond rider amount from US$ 21,000 to US$ 50,000. The rule also allows NVOCCs to meet the increased bond requirement by maintaining a bond of at least US$ 125,000. This new rule is intended to provide licensed NVOCCs with the ability to post a bond with the Commission that satisfies the equivalent of Chinese RMB 800,000. The rule also amends current regulations to allow NVOCCs to meet the increased bond requirement by aggregating their total existing bond coverage.

This new rule was issued in light of fluctuating currency valuations. In April 2004, under FMC Docket No. 04-02, the Commission issued a rule that gave NVOCCs in the United States who also operate in China the option to increase their FMC bonds from US$ 75,000 to US$ 96,000 and use these bonds to satisfy part of China's NVOCC licensing requirements. Under Chinese regulations, NVOCCs doing business in China must have RMB 800,000 on deposit in China to satisfy any potential claims by Chinese agencies of shipping regulation violations. The FMC's China Bond Rider allows U.S. based NVOCCs to increase the amount of their FMC bond to satisfy this China licensing requirement. The FMC reports that since 2004, about 350 NVOCCs have used the program to satisfy China's licensing requirements. This amounts to about 10 percent of all NVOCCs in the United States.

In April 2011, China requested that the Commission review the China Bond Rider regulations and increase the total bond amount required for NVOCCs doing business in China from US$ 96,000 to US$ 122,000 to reflect current currency valuations. China asserted that at the present exchange rate an increase was necessary to cover the RMB 800,000 required by Chinese regulations. In response to this request, the FMC opened an inquiry into the possible revision of the Commission's China Bond Rider regulations and issued a proposed rulemaking. The FMC received comments from a variety of shipping industry entities, including NVOCCs, The National Custom Brokers and Forwarders Association (NCBFAA), and the bonding agency Roanoke Trade. The majority of comments supported the increase and requested that NVOCCs be allowed to aggregate their bond coverage to meet the additional amount.

With the issuance of the final rule, the Commission has amended its China Bond Rider regulations in 46 CFR Part 515 to increase the bond amount required for the optional China Bond Rider to US$ 50,000, and to provide a method for NVOCCs to demonstrate financial responsibility by aggregating their total bond coverage. The final rule was formally issued in Docket No. 11-09 and enters into effect on November 23, 2012. A web page that provides guidance on the optional China Bond Riders is provided at www.fmc.gov

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The Federal Maritime Commission recently announced that historical FMC reports and decisions dating from 1919 to 1987 are now accessible to the public through the FMC's Electronic Reading Room at www.fmc.gov. Federal Maritime Commission Reports, final decisions, and orders made by the Commission and its predecessor agencies between 1919 and 1987 were originally compiled by the Commission in twenty eight volumes. These decisions are no longer in publication or widely available. With the addition of these reports, the entire body of Commission decisions issued from 1919 to the present is now available electronically through the Commission's website.

In other news, the Commission announced its next regular meeting will be held October 11, 2012. The meeting agenda has not yet been announced. For more info, contact the FMC Office of the Secretary, email: secretary@fmc.gov

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Carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223 serving the East Asia/USA trade lane have announced a set of guideline rate and ancillary charge adjustments that they intend to apply to all new and renewed service contracts from mid-October going forward. These carrier initiatives aim to reverse 2011 and 2012 losses and raise the baseline for freight rates as they head into a new round of 2013-14 contract negotiations.

TSA is recommending rate increases of US$ 800 per 40-foot container (FEU) to the U.S. West Coast, US$ 1,000 per FEU via all-water to the U.S. East and Gulf Coasts, and US$ 1,200 per FEU for all intermodal shipments. TSA Executive Administrator Brian M. Conrad stressed that the proposed rate increases are badly needed because overall rate levels fell so far earlier in the year. He added that interim general rate increases taken during 2012 were each only partially applied as individual contract terms or negotiations with customers allowed.

Carrier members also reiterated the need for full fuel cost recovery, including the bunker charge; the recently adopted low-sulfur component to address the higher cost of using cleaner-burning fuels within North America coastal zones; and a new, simplified intermodal fuel component. Beginning January 1, 2013, TSA Carriers are recommending that fuel-related charges be consolidated under the bunker charges for greater simplicity and improved collection. This will include conversion of the existing three-tier Inland Fuel Surcharge (IFS) into a single bunker component, effective January 1, 2013.

The TSA's New Formula Bunker Adjustment Factor (BAF) for the October to December 2012 quarter, with adjustment for slow steaming, is US$ 527 per 40ft container (FEU) to U.S. West Coast Ports and US$ 1020 per FEU to U.S. East and Gulf Coast Ports, with other sizes as per the formula. IFS for the October to December 2012 quarter is US$ 348 per container for shipments to IPI destinations served via West Coast Ports, US$ 174 per container for shipments to RIPI destinations, and US$ 101 per container for shipments to Group 4 Points and to East Coast local store door points. The Currency Adjustment Factor (CAF) for the same period is 22 percent for shipments from Japan.

The TSA's 15 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, Maersk 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.

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The Westbound Transpacific Stabilization Agreement (WTSA), FMC Agreement No. 011325, whose member carriers serve the U.S. export trades from the USA to East Asia will maintain surcharges at current amounts for the October to December 2012 quarter. Some WTSA Carriers have also filed incremental rate increases in the form of General Rate Increases (GRIs) entering into effect from October through November 1, 2012.

WTSA Bunker Adjustment Factors (BAF) for the October-December 2012 quarter, with adjustment for slow steaming, are US$ 1120 per 20ft dry container, US$ 1400 per 40ft/45ft dry container, and US$ 1850 per 40ft/45ft reefer container for shipments from and via U.S. Atlantic/Gulf Coast Ports. BAF for shipments from or via U.S. Pacific Coast Ports is US$ 563 per 20ft dry container, US$ 703 per 40ft/45ft dry container, and US$ 984 per 40ft/45ft reefer container. The Inland Fuel Surcharge (IFS) for the same period is US$ 348 per container for rail and intermodal rail/truck shipments and US$ 101 per container for local/regional truck shipments. Currency Adjustment Factors (CAF) for the same period is 7 percent for Taiwan and 21 percent for Singapore.

Some WTSA Carriers have filed rate increases as part of their ongoing effort to stem revenue erosion in the U.S.-Asia cargo market. GRIs filed by carrier members range from US$ 0 up to US$ 530 per 40ft container. GRI effective dates and amounts vary by carrier member; view specific carrier FMC tariffs for more information.

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 information visit www.wtsacarriers.org.

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