FMC Amends Service Contract Regulations to Eliminate Essential Terms Publications

The U.S. Federal Maritime Commission (FMC) has implemented changes to its service contract regulations. Effective 25Jun2020 the FMC service contract regulations in the U.S. Code of Federal Regulations, Title 46, Part 530 were amended as per FMC Docket 20-02 to remove the requirements for the publication of essential terms (ET) of service contracts. This simplifies the service contracting process for ocean carriers.

In Docket 20-02 FMC has made no changes to its requirements for service contract filing. Every new service contract and every service contract amendment must be filed with FMC’s SERVCON database and must include all provisions of the contract and accurate freight rates and charges. Service contracts must not be uncertain, vague or ambiguous and must not make reference to terms not explicitly contained in the service contract itself unless those terms are readily available to the parties and the Commission. The regulations continue to require each service contract to include a “certification of shipper status” wherein the contract shipper confirms its status as cargo owner, NVOCC, otherwise. When the certification identifies the contract shipper as an NVOCC the ocean carrier is required to obtain proof that such NVOCC has a published tariff and proof of financial responsibility (surety bond) as required by the Shipping Act and FMC regulations before signing the service contract.

The publication of this final rule culminates a process initiated by petition filed by the World Shipping Council at the Commission in 2018. After due consideration, the Commission declined this Petition’s request to exempt ocean carriers from the service contract filing requirements. However, the Commission approved the Petition’s request to remove the essential terms publication requirement. Docket 20-02 removes the requirement for the publication of five essential terms (ET) of each service contract, viz: origin; destination; commodity; minimum volume or portion; and duration (dates). Since May 1, 1999 ocean carriers have been required to publish these essential terms (ETs) for each service contract and provide online access to these ETs to the shipping public in the manner that was required by FMC. As of Jun 25, 2020, this is no longer required.

Earlier this year, in an effort to provide regulatory relief in light of the COVID-19 pandemic, FMC issued a temporary order to allow ocean carriers to file their service contracts with the Commission up to thirty (30) days after they are signed by the contract parties and effective. This temporary order was issued April 27, 2020 under FMC Docket No. 20-06 and is valid through December 31, 2020, but could be extended or made permanent. FMC’s decision to grant an extra 30 days to file new service contracts into FMC’s SERVCON database was similar to a decision it issued in 2017 that allows service contract amendments to be filed in SERVCON within thirty (30) calendar days after the effective date.

PierPass Fees at Ports of Los Angeles and Long Beach to Increase 4.2% Effective August 1, 2020

Members of the West Coast Marine Terminal Operators Agreement (WCMTOA) announced that the PierPass fee will increase on August 1, 2020 by 4.2 percent, from USD 32.12 per TEU (twenty-foot equivalent unit), and USD 64.24 for all other container sizes, to USD 33.47 per TEU, and USD 66.94 per FEU (forty-foot equivalent unit), respectively.

This fee is also called the PierPass Traffic Mitigation Fee (TMF) and applies for both day and night cargo, across all hours of operation. The TMF applies to non-exempt containers; exempt containers include empty containers, import cargo or export cargo that transits the Alameda Corridor in a container and is subject to a fee imposed by the Alameda Corridor Transportation Authority, and transshipment cargo. Empty chassis and bobtail trucks are also exempt from the TMF. PierPass does not set a fee for less than containerload shipments. NVOCCs who impose a PierPass fee for LCL shipments and/or a PierPass handling fee must file these fees in their FMC tariff rules, or clearly note these in their tariff rates or NVOCC Negotiated Rate Arrangements (NRAs).

The Federal Maritime Commission (FMC) first authorized The West Coast Marine Terminal Operators Agreement (WCMTOA) under FMC Agreement No. 201143 in June 2003. In 2005 the WCMTOA was amended to allow its members to create PierPass, Inc. and implement the “OffPeak program” to reduce severe cargo-related congestion on streets and highways around the Los Angeles and Long Beach ports. OffPeak established regular weeknight night and Saturday work shifts to handle trucks delivering and picking up containers at marine terminals and implemented the PierPass TMF. In November 2018 FMC approved the change of the TMF to the current flat fee for container moves on all shifts, known as PierPass 2.0.

Transpacific Eastbound Carriers File GRIs Effective July 15 and August 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 July 15, 2020, including American President Lines (APL), CMA CGM, COSCO, Evergreen, Hyundai Merchant Marine, 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 July 15th GRIs will be the fourteenth 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 August 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 August 1st GRIs will be the fifteenth GRI of 2020 for the East Asia/USA trade lane.

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