FMC Closed Due to Federal Government Budget Impasse

The Federal Maritime Commission closed effective Wednesday, December 26, 2018 as part of the partial federal government shutdown due to a lapse in appropriations. The Commission will resume normal operations when appropriations legislation is enacted and the federal government reopens.

With the exceptions of Acting Chairman Michael A. Khouri and Commissioner Rebecca Dye, who are Presidentially-appointed, Senate-confirmed officials, all Commission employees have been placed on furlough and are prohibited by law from performing any duties during the shutdown. As a result, all Commission functions have been suspended. No transactions or filings will be accepted until appropriations legislation is enacted and the federal government reopens.

The FMC shutdown does not prevent ocean carriers and NVOCCs from updating their tariffs. Because tariffs are maintained by carriers and NVOCCs, or tariff publishers acting on their behalf, the FMC shutdown does not impact tariff filing. Carriers may also continue to update service contracts; once FMC reopens its SERVCON database of service contracts will resume operations and will then accept service contracts with effective dates matching their signing dates.

FMC Proposes Administrative Changes to OTI Licensing Regulations

The Federal Maritime Commission has issued a notice of proposed rulemaking to amend its rules governing licensing, bonding requirements and general duties for ocean transportation intermediaries (OTIs) which are provided in the U.S. Code of Federal Regulations, Title 46, Part 515. The proposed changes are provided in FMC Docket No. 18-11, which was issued December 12, 2018, and apply to ocean freight forwarders and NVOCCs in the USA who are required to be licensed by FMC as OTIs, and also to NVOCCs outside the USA who have registered with the Commission. Most of the proposed changes are of an administrative and procedural nature. No new requirements are proposed, but the proposal would change the timing of some requirements and would improve and clarify the license renewal process.

One of the proposed changes to would require NVOCCs applying for a license to provide the Commission with a completed form FMC-1 prior to the Commission issuing a license. Form FMC-1 is the tariff registration form, which notifies the Commission of the location (web site) where the NVOCC’s tariff will be accessible. The FMC Office of Service Contracts and Tariffs reviews tariffs for compliance. Currently, license certificates are issued by the FMC Bureau of Certification and Licensing after approval of a license application and receipt of the required NVOCC surety bond. The FMC-1 and tariff must follow promptly, and prior to the commencement of NVOCC service, however, some NVOCCs have failed to comply with this requirement. The proposed change would require licensed NVOCCs to submit Form FMC-1 prior to issuance of the license certificate. This change would ensure that NVOCCs comply with all requirements for commencing service in the U.S. trades in a timely manner.

Another change proposed would alter the initial period between initial OTI licensing and license renewal from three years to a period of not less than one year to not greater than four years. This change would spread out license renewal deadlines across the entire calendar year and thereby facilitate the efficient and prompt processing of such renewals by the Commission. The proposed rule would also change the deadline for completing the renewal process. Currently, the regulations require licensed OTIs to complete the renewal process no later than 60 days prior to the renewal date. The proposed rule would change the deadline to the renewal date itself. This change would reduce the burden on licensed OTIs by allowing them additional time to complete the renewal process.

Comments on FMC Docket No. 18-11 are due on or before January 18, 2019 and may be submitted to secretary@fmc.gov. Comments should be attached to the email as a Microsoft Word or text-searchable PDF document. Only non-confidential and public versions of confidential comments should be submitted by email.

Commission Approves Recommendations in Detention and Demurrage Report

The Federal Maritime Commission voted December 7, 2018 to approve the recommendations of Commissioner Rebecca Dye as set forth in her final report of the Fact Finding 28 investigation. Her recommendations also included the establishment of a Shipper Advisory Board. “The work done since March of this year has yielded four main ideas that I am confident will make a difference and are the concepts to pursue to finality. We do not want to miss a rare opportunity to make things better and toward that goal, we will promptly convene innovation teams to ensure implementation is commercially viable,” said Commissioner Dye.

Fact Finding Investigation 28 was prompted by Petition P4-16 filed at the Commission by the Coalition for Fair Port Practices in December 2016. Petition P4-16 requested the FMC initiate a rule making proceeding for the purpose of adopting a rule that will interpret the Shipping Act to clarify what constitutes “just and reasonable practices” with respect to the assessment of demurrage, detention, and per diem charges by ocean common carriers and marine terminal operators when ports are congested or otherwise inaccessible.

In January 2018, the Commission held a two-day hearing that explored issues raised in the petition by soliciting testimony from shippers, ocean transportation intermediaries, ocean carriers, truckers, and marine terminal operators. Following the hearing, the Commission initiated Fact Finding Investigation 28 and named Commissioner Rebecca Dye the Investigative Officer.

The final report was based on an eight-month examination of the practices of vessel operating common carriers and marine terminal operators in levying charges on shippers related to equipment and land usage and free-time granted between when a container is offloaded and when it must be picked-up by a trucker. Commissioner Dye examined detention, demurrage, and per diem practices generally, and found that demurrage and detention charges can incentivize cargo to move expeditiously and that standardizing practices for when these fees are levied would improve velocity at ports.

At this time the Commission has still not yet proposed any changes to its regulations as a result of Petition P4-16, or as a response to the final report in Fact Finding Investigation 28. However, the Commission has voted to convene Innovation Teams in 2019 that will address how to provide:

• Transparent, standardized language for demurrage and detention practices;
• Clear, simplified, and accessible demurrage and detention billing practices and dispute resolution process;
• Explicit guidance regarding the types of evidence relevant to resolving demurrage and detention disputes;
• Consistent notice to cargo interests of container availability; and
• An FMC Shipper Advisory Board which would offer information and insights to the Commission on emerging maritime issues.

Transpacific Eastbound Carriers File GRIs Effective January 15 and February 1, 2019

Several carriers updated their respective tariffs to include new General Rate Increases (GRIs) effective January 15, 2019, 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 January 15th GRIs will be the second GRI of 2019 for the East Asia/USA trade lane.

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

Several carriers updated their respective tariffs to include new General Rate Increases (GRIs) effective February 1, 2019, 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 February 1st GRIs will be the third GRI of 2019 for the East Asia/USA trade lane.

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

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