On Friday, September 17, 2010, President Barack Obama announced his intent to nominate Commissioner Rebecca F. Dye for another term as Federal Maritime Commissioner, and announced his intent to nominate Long Beach Board of Harbor Commissioner Mario Cordero for Federal Maritime Commissioner.

Cordero is a workers’ compensation defense attorney for the law offices of Wayne Singer, and practices in Long Beach and San Francisco. He is currently serving his second six-year term on the Long Beach Board of Harbor Commissioners Cordero has been a strong advocate for cleaning up the port environment and has been a strong advocate of the Port of Long Beach’s Green Port Policy.  Commissioner Dye has been nominated by the president for a third four-year term on the FMC. Dye, a former Coast Guard officer and law instructor at the Coast Guard Academy, is a Republican. Federal rules require that no more than three of the five FMC members be from the same political party.  Dates have not yet been set for Senate confirmation hearings for these nominations. 

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Reps. James L. Oberstar, D-Minn. and Rep. Elijah Cummings, D-Md., introduced a new bill in the U.S. House of Representatives, entitled the Shipping Act 2010, (H.R. 6167). This bill would eliminate antitrust immunity for ocean carrier agreements. This bill comes in response to the numerous complaints Congress received earlier this year from importers and exporters about problems obtaining adequate vessel and container capacity, and due to sharp increases in ocean freight rates and surcharges. Rep. Oberstar said in floor remarks that “eliminating the antitrust immunity for these conference agreements will increase competition by requiring ocean carriers to compete in the marketplace with the best price and service to get shippers’ business. That will benefit industry as a whole.” The bill was also prompted by the European Union’s successful elimination of antitrust immunity for ocean carrier in 2007.

The Shipping Act of 2010, if adopted, would require ocean carriers to continue to file service contracts with the FMC, and empower the FMC resolve service contract disputes quickly through mediation and arbitration.  The bill would allow carriers to continue to operate vessel sharing agreements, but will place a limit on sharing agreements of 30 percent of the capacity in a trade lane.  Additionally, the bill will also address carriers’ practice of imposing steep surcharges, and prohibit carriers from discriminating against a shipper that provides its own container or other equipment. To address the practice of bumping or rolling containers, the bill would prohibit ocean carriers from “engaging in deceptive practices, including the unreasonable failure to provide transportation services as agreed to in a negotiated service contract.” The FMC would be responsible to develop remedies and penalties for carriers that engage in deceptive practices.

The response from ocean carriers to the bill was quick and negative.  The World Shipping Council, which represents most major liner-shipping companies, said in a statement, “Capacity shortages in late 2009 and early 2010 were brief, market-driven and unforeseen by shippers and carriers,” and that “the proposed legislation would not and could not prevent difficulties if such extreme economic conditions recur in the future.”  WSC criticized the bill, saying the bill “would effectively destroy the current system of operating agreements serving American maritime foreign commerce.” “If the Congress is to undertake a review of the Shipping Act and consider whether and how to design a different regulatory system for America’s international maritime commerce, the liner shipping industry is prepared to discuss the issues, and the best way to address them with shippers, ports, labor and the Congress,” WSC said.

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The Federal Maritime Commission (FMC) has ordered special reporting requirements for the Westbound Transpacific Stabilization Agreement (WTSA) and the Transpacific Stabilization Agreement (TSA).  The FMC requires both groups to now file with the Commission minutes of all Chief Executive Officer committee meetings; revenue policy committee meetings; any other meeting at which voluntary service contract guidelines, general rate increases, or surcharges are discussed or agreed upon, or where capacity information might be shared. The groups must also file minutes with the Commission for all communications between the Chief Executive Officers of member carriers.

The WTSA, FMC Agreement No. 205-011325, is a voluntary discussion and research forum of 10 container shipping lines serving the trade from ports and inland points in the U.S. to destinations throughout Asia. 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. Each member of the WTSA is also a member of the TSA. WTSA members thus comprise two thirds of the membership of the TSA. WTSA members handle roughly 65 percent of the TransPacific Westbound trade (US exports).

The TSA, FMC Agreement No. 205-011223, is also a voluntary discussion and research forum. The TSA Carrier group serves the Transpacific Eastbound trade (US imports); it consists of 15 carrier members: 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.  A.P. Moller-Maersk (Maersk Line) joined the group in December 2009, and with addition of Maersk, TSA members now handle approximately 94 percent of the Transpacific Eastbound trade. Pursuant to their FMC filed Agreement, TSA members have the authority to discuss the rates they charge their customers and agree on “voluntary” guidelines for service contracts and service contract rates. The members can also discuss general trade conditions. Shortly after Maersk Line joined the group, an amendment to the Agreement was filed authorizing the parties to discuss and agree on practices, terms, and conditions relating to their environmental impact programs, including “slow steaming.”  The FMC reviewed this amendment, and allowed it to become effective February 6, 2010. 

The two carrier groups came under FMC scrutiny after an FMC fact-finding investigation into capacity shortages prompted concerns over the power these two groups have to set pricing and industry practice guidelines. Since December 2009, importers and exporters have complained of serious shortages in vessel space for their shipments. The FMC found ocean carriers were slow to begin redeploying vessels to the US-Asia trade lanes in response to increased shipper demand. As a result, many shippers, including shippers with annual service contracts, found their cargo bookings were abruptly cancelled, denied, or rolled to later voyages. These special reports will be required through September 2011. 

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The carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223, serving the East Asia/USA trade lane announced decreases to Bunker Adjustment Factors (BAF) effective November 1, 2010 calculated using the group’s old monthly BAF formula. November 2010 Bunker Adjustment Factors (BAF) calculated using TSA’s old monthly formula will increase to US$ 652 per 20ft ctr, US$ 815 per 40ft ctr, US$ 917 per 40ft hi-cube ctr, US$ 1032 per 45ft ctr, and US$ 18 per WM (LCL). 

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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