FMC Proposes to Amend Definition of Unjust and Unreasonable Practices

The Federal Maritime Commission (FMC) has issued Docket 18-10 to provide a Notice of Proposed Rulemaking seeking public comment on a new interpretive rule to redefine the Shipping Act’s prohibition against failing to establish “just and reasonable regulations and practices by ocean carriers, terminal operators and ocean transportation intermediaries relating to or connected with receiving, handling, storing, or delivering property.” If adopted, this rulemaking will guide future Commission decisions.

In Docket 18-10 the FMC proposes to clarify that the proper scope of Section 41102(c) of the Shipping Act of 1984, and the conduct covered by it, should be guided by an interpretation which requires that a regulated entity engage in an unjust and unreasonable practice on a normal, customary, and continuous basis in order for the practice to be considered a violation of the Act. If adopted, the new interpretive rule would be added to Chapter 46, Part 545 of the U.S. Code of Federal Regulations (CFR). This is the part of FMC regulations that provides interpretations of the Shipping Act and statements of policy.

The Commission believes that this interpretation will be properly aligned with the broader common carriage foundation and purposes of the Act and is consistent with statutory and legislative history and with judicial precedent. This interpretation would prune and pare back the types of recent claims that have been be filed with the FMC by parties injured by unreasonable or unjust conduct. However, Docket 18-10 points out there are other statutes and common law remedies designed to address such circumstances. Comments on FMC Docket 18-10 are due October 10, 2018 and should be submitted to the FMC Secretary. For further information review this docket or contact: secretary@fmc.gov

Commissioners to Continue Work on Investigation of Detention & Demurrage Practices

Fact Finding Investigation No. 28 into the conditions and practices relating to detention, demurrage, and free time in U.S. international ocean commerce continues to be an important focus for the Federal Maritime Commission. On September 5, 2018 the interim report for Fact Finding 28 in this investigation was submitted by Commissioner Rebecca Dye, who serves as the Investigative Officer in this proceeding. This nineteen-page report summarizes preliminary observations and outlines the next steps this investigation will take. These will include an attempt to standardize the terms demurrage and detention as used in international ocean commerce.

This investigation of detention and demurrage practices was prompted by Petition P4-16, which was submitted by the Coalition for Fair Port Practices in December 2016 and has generated many comments. In January 2018, the Commission held two days of hearings on issues raised in this petition from interested parties. During October 2018, Commissioner Dye will hold field interviews at California and Florida ports as part of phase two of the investigation. Dates for interviews at the Port of New York and New Jersey will be announced soon. Parties interested in meeting with Commissioner Dye should contact Christine Stavropoulos, tel: 202-523-0206 or email: cstavropoulos@fmc.gov A final report is due on December 2, 2018.

Maersk to Apply New Bunker Adjustment Factor (BAF) Effective January 1, 2019

Maersk Line A/S has announced its plan to switch from the Standard Bunker Factor (SBF) to the New Bunker Adjustment Factor (BAF), effective January 1, 2019. This is in preparation for the upcoming global sulphur cap of 0.5% adopted by the International Maritime Organisation (IMO), effective January 1, 2020.

The BAF will be reviewed quarterly, unless during 2020 the fuel price changes more than USD 50 per ton since the last adjustment, during which BAF adjustments will be made monthly.

Maersk will charge BAF separately from the basic ocean freight. Maersk will apply the following formula to determine the BAF amount: FUEL PRICE x TRADE FACTOR = BAF.

The BAF will also be separate from the low-sulphur surcharge (LSS). The LSS surcharge will apply on top of the bunker surcharge. LSS surcharge addresses the MARPOL emission control regulations that require all vessels steaming within 200 miles of the North American coast -- called the Emission Control Areas or ECAs -- to burn fuel with a sulfur content of 0.1 percent.

Transpacific Eastbound Carriers File GRIs Effective October 15 and November 1, 2018

Several carriers updated their respective tariffs to include new General Rate Increases (GRIs) effective October 15, 2018, including APL, CMA CGM, COSCO, Evergreen, Hapag Lloyd, Hyundai Merchant, Ocean Network Express, and Yang Ming. See table below for GRI amounts per 40ft container; GRI amounts for all other container sizes are as per formula. The October 15th GRIs will be the nineteenth GRI of 2018 for the East Asia/USA trade lane.

Note 1: COSCO GRIs apply on all cargo moving under service contracts only.

The following carriers also updated their respective tariffs to include new General Rate Increases (GRIs) effective November 1, 2018: APL, CMA CGM, COSCO, Evergreen, Hapag Lloyd, Hyundai Merchant, Ocean Network Express, and Yang Ming. Each carrier maintains its own tariffs and controls its own pricing. See table below for GRI amounts per 40ft container; GRI amounts for all other container sizes are as per formula. The November 1st GRIs will be the twentieth GRI of 2018 for the East Asia/USA trade lane.

Note 1: COSCO GRIs apply on all cargo moving under service contracts only.

Transpacific Westbound Carriers File General Rate Increases Effective November 1, 2018

Some carriers updated their respective tariffs to provide General Rate Increases (GRIs) effective November 1, 2018, including APL, COSCO, Hapag Lloyd, Ocean Network Express (ONE), OOCL, and Yang Ming. CMA CGM, Evergreen, and Hyundai Merchant applied GRIs in October 2018. The following table provides GRI amounts for 40ft dry containers, except as noted. GRI amounts for all other container sizes are as per formula.

Note 1: CMA CGM applied its GRI effective October 15, 2018 at USD 80/100/100 per 20ft/40ft/40HC dry containers for cargo from any USA port of load, and USD 100 per dry container for any USA inland point via USA port of load.

Note 2: COSCO filed GRIs of USD 160/200 per 20ft/40-45ft reefer containers, for commodities Beef/Pork/Poultry/Meat NOS, Frozen; All Refrigerated Cargo NOS, Frozen (Excluding Chilled/Fresh cargo), from Norfolk, Savannah, Charleston, Mobile, Seattle, Oakland to destinations Vietnam, Philippines, Taiwan.

Note 3: OOCL filed GRIs for commodity cotton at USD 300 per dry container for shipments to Thailand, USD 50 per dry container for shipments from USWC/USEC origins, and USD 100 per dry container from IPI origins. For commodity agricultural products, excluding hay and cotton, GRIs will be USD 50 per dry container.

Each carrier maintains its own tariffs and controls its own pricing.