FMC Docket 20-02, Proposed Rulemaking to Amend Service Contract Regulations

The Federal Maritime Commission has issued its Docket 20-02 to put forward a rulemaking proposal that will amend its rules governing service contracts between ocean carriers and their customers. The proposed rule amendment is intended to reduce regulatory burdens on ocean carriers; however, it will not change the requirement for ocean carriers to electronically file a true and complete copy of every service contract before any cargo moves pursuant to that service contract.

FMC’s action in this matter is a response to Petition No. P3-18. The petition was submitted by the World Shipping Council (WSC) in September 2018 and requested the Commission issue an exemption from service contract filing and essential terms publication requirements set forth in the Shipping Act, 46 U.S.C 40502(b) and (d). The WSC is an association of nineteen ocean carriers provide a coordinated voice for the liner shipping industry in its work with policymakers and other industry groups. After more than one year of consideration, the Commission issued an order to deny in part and grant in part this petition and to issue a rulemaking proceeding.

The Commission’s order on Petition P3-18, issued December 20, 2019, denied WSC’s request for to grant all ocean carriers an exemption from the service contract filing requirements. The Commission said it was unable to find that this exemption would not be detrimental to commerce. The Commission decided to retain the requirement as set forth the Shipping Act that carriers confidentially file all service contracts and amendments with the Commission. However, the Commission agreed to grant WSC’s request for an exemption from the requirement that carriers publish certain essential terms (ET) of each service contract, and this is why it has issued Docket 20-02. The Commission determined that the elimination of the essential terms (ET) publication requirement would not result in a substantial reduction in competition or be detrimental to commerce.

An effective date for the changes set forth in FMC Docket 20-02 has not yet been set because the rulemaking requires the FMC to invite public comments and review these carefully. Comments are due April 14, 2020 and may be submitted via email to secretary@fmc.gov The Commission’s review of comments will take some months. If no further changes are made to this rulemaking FMC’s service contract regulations as provided the U.S. Code of Federal Regulations, Title 46, Part 530, will be amended to remove the requirements for the publication of essential terms of service contracts. These changes will:

• remove the requirement for each service contract to include “an indication of the method by which the statement of essential terms will be published;”
• remove Subpart C, Publication of Essential Terms, from the regulations entirely. This is the requirement for the publication of a concise statement of the following essential terms (ET) of each service contract: origin and destination; commodity; minimum volume or portion; and duration (dates).
• add a new requirement for carriers to publish a “statement of service contract rules and notices as a separate part of the individual ocean common carrier’s automated tariff system.”

Transpacific Eastbound Carriers Adjust Fuel Surcharges Effective April 1, 2020

Several carriers serving the East Asia/USA trade lanes (U.S. Imports) have adjusted fuel surcharges effective April 1 through June 30, 2020. Details are as follows.

Here is a table of carriers that have posted BAF amounts:

NOTE 1: ONE calls the above Bunker surcharge the Bunker Adjustment Factor (BAF). ONE also filed a ONE Bunker Surcharge (OBS) in its FMC tariff. Tariff rates which are published prior to January 1, 2019 shall be subject to BAF for their duration, unless otherwise excepted in the rate itself; all TRIs published after January 1, 2019 shall be subject to OBS.

NOTE 2: CMA CGM shows in its FMC tariff that the BAF amounts per Rule 010.08 (BAF03) remain the same as the previous quarter.

NOTE 3: OOCL calls the above Bunker surcharge the Fuel Cost Recovery Charge (T-62). The Fuel Cost Recovery Charge will not apply to shipments when Bunker Surcharge (T-52) and/or Low Sulphur Fuel Surcharge and/or Low Sulphur Adjustment Charge (T-51, T-63) are already applied or included in the base rate. The Bunker Surcharge (T-52) does not apply for the Transpacific trade lane effective January 1, 2020.

NOTE 4: Subject to Low Sulphur Fuel Charge (LSF or LSS).

NOTE 5: Updated on a monthly basis.

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

Transpacific Eastbound Carriers File GRIs Effective March 15 and April 1, 2020

Several leading carriers serving the Trans Pacific container trades have recently updated their respective tariffs to include new General Rate Increases (GRIs) effective March 15, 2020, including American President Lines (APL), CMA CGM, COSCO, Evergreen, Hapag Lloyd, Ocean Network Express (ONE), and Yang Ming. See table below for GRI amounts per 40ft container; GRI amounts for all other container sizes are as per formula. The March 15th GRIs will be the sixth GRI of 2020 for the East Asia/USA trade lane.

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

Some carriers updated their tariffs to include new General Rate Increases (GRIs) effective April 1, 2020, including American President Lines (APL), CMA CGM, COSCO, Evergreen, Hapag Lloyd, Hyundai Merchant, Ocean Network Express (ONE), and Yang Ming. See table below for GRI amounts per 40ft container; GRI amounts for all other container sizes are as per formula. The April1st GRIs will be the seventh GRI of 2020 for the East Asia/USA trade lane.

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

Transpacific Westbound Carriers Update Fuel Surcharges Effective April 1, 2020

Several carriers serving the USA/East Asia trade lanes (U.S. Exports) have adjusted their fuel surcharges for the April to June 2020 quarter. Here is a table of carriers that have posted BAF amounts:

NOTE 1: ONE calls the above Bunker surcharge the Bunker Adjustment Factor (BAF). ONE also filed a ONE Bunker Surcharge (OBS) in its FMC tariff. Tariff rates which are published prior to January 1, 2019 shall be subject to BAF for their duration, unless otherwise excepted in the rate itself; all TRIs published after January 1, 2019 shall be subject to OBS.

NOTE 2: CMA CGM shows in its FMC tariff that the BAF amounts per Rule 010.4 (BAF-03) remain the same as the previous quarter.

NOTE 3: OOCL calls the above Bunker surcharge the Fuel Cost Recovery Charge (T-62). The Fuel Cost Recovery Charge will not apply to shipments when Bunker Surcharge (T-52) and/or Low Sulphur Fuel Surcharge and/or Low Sulphur Adjustment Charge (T-51, T-63) are already applied or included in the base rate. The Bunker Surcharge (T-52) does not apply for the Transpacific trade lane effective January 1, 2020.

NOTE 4: Subject to Low Sulphur Fuel Charge (LSF or LSS).

NOTE 5: Updated on a monthly basis.

NOTE 6: Yang Ming calls the above Bunker surcharge its New Bunker Charge.

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

Transpacific Westbound Carriers File GRIs Effective in March 2020 and on April 1, 2020

Some carriers updated their respective tariffs to provide General Rate Increases (GRIs) effective March 2020, including APL, CMA CGM, COSCO, Evergreen, Hapag Lloyd, Hyundai Merchant, OOCL, and Yang Ming; Ocean Network Express (ONE) applied GRIs in February 2020. 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: APL published GRI rules in its FMC tariff for effective March 15, 2020. See below for details.

1. Origin USA, except Alaska, Guam, Hawaii, Puerto Rico, U.S. Virgin Islands; destination Asia, Australia, East Africa, New Zealand, Middle East, West Asia; USD 75/150/150 per 20ft/40ft/40HC dry containers; apply to both tariff and service contract rates.
2. Origin Chicago, Kansas City; destination Asia; Australia, East Africa, New Zealand; West Asia; USD 300/600/600 per 20ft/40ft/40HC reefer containers; apply to both tariff and service contract rates.
3. Origin USA, except Alaska, Guam, Hawaii, Puerto Rico, U.S. Virgin Islands; destination Japan, Korea; USD 150/300/300 per 20ft/40ft/40HC reefer containers; apply to both tariff and service contract rates; do not apply for fresh produce.
4. Origin US East Coast Ports; destination Asia, Australia, East Africa, New Zealand, West Asia; USD 150/300/300 per 20ft/40ft/40HC reefer containers; apply to both tariff and service contract rates.

NOTE 2: CMA CGM published a GRI rule in its FMC tariff for effective March 15, 2020. See below for details.

Origin USA port of load or inland points via said ports; destination Asia/Far East ports of discharge or inland point via said ports; USD 25/50/50 per 20ft/40ft/45ft; not applicable to Open Top (OT) rates, Flat Rack (FR&FF/CF) rates, Reefer rates, nor ISO Tank container rate items.

NOTE 3: COSCO published a GRI rule for effective March 23, 2020. See below for details.

Origin USA; destination Asia (Brunei, Cambodia, People's Republic of China, Indonesia, Japan, Korea, Malaysia, Mongolia, Myanmar, Philippines, Singapore, Taiwan, Thailand, Vietnam), to Oceania Countries (Australia, New Zealand), Middle East Countries (Bahrain, Iraq, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, United Arab Emirates), and Indian Sub-continent (Afghanistan, Bangladesh, India, Pakistan, Sri Lanka); USD 240/300/300 per 20ft/40ft/45ft; apply to dry cargo and cargo moving in tank containers, excluding refrigerated cargo, in-gauge and out-of-gauge cargo moving in OT/FL/FR/PL containers.

NOTE 4: Evergreen published a GRI rule in its FMC tariff for effective March 20, 2020 for USD 80/100/100/100 per 20ft/40ft/40HC/45HC container for all dry commodities.

NOTE 5: Hapag Lloyd published a GRI rule for effective March 23, 2020. See below for details.

Origin USA; destination East Asia (Japan, Republic of Korea, Taiwan (PRC), Hong Kong (PRC), China (PRC), Macau (PRC), Vietnam, Laos, Cambodia, Thailand, Myanmar, Malaysia, Singapore, Brunei, Indonesia, The Philippines, Russian Pacific Coast Provinces); USD 50/75 per 20ft/40ft container of all types; applicable to all dry, flat rack, open-top containers.

NOTE 6: Hyundai Merchant published GRI rules in its FMC tariff for effective March 1, 2020 and March 15, 2020. See below for details.

Effective March 1, 2020: Origin Chicago, IL and Minneapolis, MN; applicable to agricultural products; USD 100 per container, any size.

Effective March 15, 2020:

1. Origin USEC or USWC base port; USD 160/200/200 per 20ft/40ft/45ft container
2. Origin IPI or RIPI location; USD 240/300/300 per 20ft/40ft/45ft container.
3. Applicable for all dry cargo, all container types, and shipper owned containers.
4. Do not apply to Korea Door Points.

Effective March 15, 2020:

1. Origin USEC or USWC base port; USD 200 per 40HC reefer container.
2. Origin IPI or RIPI locations; USD 300 per 40HC reefer container.
3. Do not apply to Vegetables, All Kinds (VAK); Frozen French Fries.
4. Do not apply to Korea Door Points.

NOTE 7: ONE published GRI rules in its FMC tariff for effective February 1, 2020 and February 10, 2020. See below for details.

Effective February 1, 2020: Origin all cargo loading at ports Seattle, Tacoma, Oakland, Los Angeles, and Long Beach; destination all port and points within the locations defined in tariff Rule No. 1.002 (TPWB); USD 500 per 40HC reefer container, USD 450 per 20ft reefer container.

Effective February 10, 2020: Origin USA; destination South Korea on door delivery term in the tariff due to trucking cost increase set by Korean government; various amounts for all types of containers; see tariff Rule No. 102.106 for full details.

NOTE 8: OOCL published a GRI in its FMC tariff for effective March 15, 2020. See below for details.

1. Origin Chicago, IL; Kansas City, KS; Kansas City, MO; Detroit, MI; Columbus, OH; destination all Asia/Indian Sub-continent/Middle East; USD 25 per container (20ft/40ft/45ft); applicable on all service contract rates for dry cargo of general agricultural products, excluding cotton, hay, dried fruits and nuts.
2. Origin Houston, TX; New Orleans, LA; Mobile, AL; destination all Asia/Indian Sub-continent/Middle East, except China; USD 40/50/50 per 20ft/40ft/45ft container; applicable for all commodities.

NOTE 9: Yang Ming published a GRI rule in its FMC tariff for effective March 19, 2020. See below for details.

Origin USWC Port, IPI, MLB, RIPI, USEC Port; destination Far East, Asia, India, Sub-Continent and Mid-East; USD 50/100/100/100/100 per 20ft/40ft/40HC/40HCR/45ft container; applicable on commodities defined in the tariff, including agricultural products, hides, logs and lumber, wood pulp, clay, metal scrap, cotton, resin, chemicals, hay, wastepaper, cargo nos.

Some carriers updated their respective tariffs to provide General Rate Increases (GRIs) effective April 1 2020, including APL, CMA CGM, COSCO, Evergreen, Hapag Lloyd, Hyundai Merchant, OOCL, and Yang Ming. 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: APL published a GRI rule in its FMC tariff to apply for dry cargo.

NOTE 2: CMA CGM will not apply GRI to Open Top (OT) rates, Flat Rack (FR&FF/CF) rates, Reefer rates, nor ISO Tank container rate items. GRIs for origin U.S. West Coast, U.S. East Coast, and Tampa ports of load will be USD 50/100/100 per 20ft/40ft/45ft container. GRIs for origin U.S. Gulf Coast, except Tampa, ports of load will be USD 100/200/200 per 20ft/40ft/45ft container. GRIs for origin U.S. inland points via any U.S. Port of Load will be USD 100/200/200 per 20ft/40ft/45ft container.

NOTE 3: COSCO published a GRI rule in its FMC tariff for refrigerated cargo at USD 500 per container.

NOTE 4: Evergreen published a GRI rule in its FMC tariff for dry cargo effective April 03, 2020.

NOTE 5: Hapag Lloyd published a GRI rule in its FMC tariff for USD 50/100/100 per 20ft/40ft/40HC dry container. These amounts are applicable for dry commodities with origin ports of loading New York, Norfolk, Savannah, Charleston, Jacksonville, destined to the Indian Sub-continent, which includes India, Pakistan, Sri Lanka, Bangladesh.

NOTE 6: Hyundai Merchant published a GRI rule in its FMC tariff for Vegetables, All Kinds (VAK) and Frozen French Fries, including chilled potatoes and chilled onions at USD 150 per 40HC reefer container.

NOTE 7: ONE published three GRI rules in its FMC tariff.

One GRI will apply for all dry commodities. All cargo received at the port of loading in the USA, excluding Hawaii, will be USD 80/100/100/100 per 20ft/40ft/40HC/45ft container. All cargo received at all interior points as defined in the tariff or moving under Mini Land Bridge in the USA, excluding Hawaii, will be USD 160/200/200/200 per 20ft/40ft/40HC/45ft container.

One GRI will apply for refrigerated commodities at USD 280/300 per 20ft/40HC reefer container. This GRI will apply for cargo received at ports of New York, Norfolk, Wilmington, Charleston, Savannah, and Jacksonville.

One GRI will apply for refrigerated commodities at USD 180/200 per 20ft/40HC reefer container. This GRI will apply for all cargo received at Chicago, IL.

NOTE 8: OOCL published a GRI rule in its FMC tariff applicable for all service contract rates, unless otherwise specified in individual service contracts. The GRI amounts will be USD 75 per container for dry cargo, and USD 500 per container for refrigerated and refrigerated dangerous cargo.

NOTE 9: Yang Ming published a GRI rule in its FMC tariff for commodities defined in the tariff, including agricultural products, hides, refrigerated cargo, logs and lumber, woodpulp, clay, metal scrap, cotton, resin, chemicals, hay, wastepaper, cargo nos. The GRIs amount will be USD 50/100/100/100 per 20ft/40ft/40HC/45ft container, and USD 1000 per 40HC reefer container.

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