FMC Issues Statement on the P3 Network Vessel Sharing Agreement
The Federal Maritime Commission (FMC) noted the recent decision announced by its Chinese regulatory counterpart, the Ministry of Commerce (MOFCOM), with regard to the P3 Network Vessel Sharing Agreement. The agreement between A. P. Moller-Maersk A/S, CMA CGM S.A., and MSC Mediterranean Shipping Company, S.A. would have authorized the parties to share vessels and engage in related cooperative operating activities in the trades between the U.S. and Asia, North Europe, and the Mediterranean. On June 17, 2014, China’s MOFCOM declined to approve the agreement.
In March 2014, the FMC concluded extensive review of the potential impact the P3 Agreement on the Trans-Pacific and Trans-Atlantic trade lanes and determined that the agreement was not likely at that time, by a reduction in competition, to produce an unreasonable increase in transportation cost or an unreasonable reduction in transportation service under section 6(g) of the Shipping Act. The P3 Agreement parties would have been required to submit monitoring reports to the FMC to ensure compliance with the Shipping Act if their agreement had become operational. The FMC did not investigate the potential impact of the P3 Agreement on the Asia-Europe trade lane, as this is outside its jurisdiction.
In a published statement, FMC Chairman Mario Cordero said, “Ocean carrier vessel space alliances offer the potential benefit of cost savings and environmental efficiencies that come from coordinated deployment of newer, larger vessels. The FMC, in evaluating such agreements, will continue to balance those benefits with the potential harm from a concentration of decision-making power in terms of port coverage, sailing schedules, and necessary trade lane capacity.”
FMC Docket No. 14-05, Possible Violations of the Shipping Act
A formal order of investigation has been instituted by the Federal Maritime Commission under FMC Docket No. 14-05 to determine if Huntington International, Inc., and JC Horizon Ltd. and Judy Lee violated the Shipping Act and FMC regulations. Huntington International, Inc. (Huntington) is a California corporation, which was licensed by the FMC to operate as an ocean freight forwarder and NVOCC from July 2009 thru June 2011. JC Horizon Ltd. (JC Horizon) is a California corporation engaged in the purchase and sale of scrap metal, waste paper, and plastic scrap for export from the United States to foreign destinations. Judy Lee was an officer and director of Huntington, and the sole shareholder and President of JC Horizon.
The FMC’s investigation will determine if Huntington International, Inc. violated the Shipping Act by knowingly and willfully sharing compensation or freight forwarding fees with a shipper (JC Horizon), and by acting as an ocean freight forwarder without a license after June 2011, and by collecting freight forwarder compensation for shipments in which the company’s officer and director (Judy Lee) had a beneficial interest. Additional, the investigation will determine whether JC Horizon Ltd. and/or Judy Lee violated the Shipping Act, by knowingly and willfully directing Huntington to transfer monies derived from freight forwarder compensation collected from ocean carriers on shipments of JC Horizon, or other companies controlled by Judy Lee. In the event violations are found, the FMC will determine if civil penalties should be assessed.
Transpacific Eastbound Carriers Postpone or Reduce PSS, File GRI Effective August 1
Most of the carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223 serving the East Asia/USA trade lanes, have postponed the effective date of their Peak Season Surcharge (PSS) from June 15, 2014 to July 1, 2014. The PSS amount is USD 400 per 40ft container (FEU), with the PSS for other container sizes as per the usual formula. However, some of the TSA carriers, including China Shipping, CMA CGM, COSCO and Evergreen updated their FMC tariffs to apply a reduced PSS of USD 200 per 40ft container for the period of July 1 thru July 14 for shipments to or via the ports of Los Angeles and Long Beach. Some carriers have also updated individual service contracts and tariff rates to postpone or reduce this PSS.
In late June, most of the TSA carrier members updated their FMC tariffs to reflect a new General Rate Increase (GRI) effective August 1, 2014. The GRI amount is USD 600 per 40ft container to all USA destinations, with the GRI amount for all other sizes as per usual formula, except Hanjin Shipping Company has filed a GRI of USD 1000 per 40ft container for shipments from all Asia origins to all USA destinations.
For the July to September 2014 quarter the TSA’s New Formula Bunker Adjustment Factor (BAF), which includes the low-sulfur component, is USD 516 per 40ft container to U.S. Pacific Coast Ports, and USD 990 per 40ft container to U.S. Atlantic/Gulf Coast Ports, with other container sizes as per formula. The new BAF to IPI/MLB destinations moving via the U.S. Pacific Coast is USD 885 per 40ft container. This IPI/MLB BAF includes the Inland Fuel Surcharge (IFC) component. The Currency Adjustment Factor (CAF) for the same period is 10% for shipments from Japan.
The TSA’s fifteen carrier members are: American President Lines, China Shipping Container Lines, CMA CGM, COSCO Container Lines, Evergreen Marine, Hanjin Shipping, Hapag-Lloyd AG, 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; however, each carrier maintains its own tariffs and controls its own pricing. The TSA Carrier group only issues recommended guidelines to its member carriers. Website addresses for all carriers are listed on www.fmc.gov.
TSA Westbound Carriers File GRI Effective July 1, 2014
Several carrier members of the Transpacific Stabilization Agreement Westbound (TSA), FMC Agreement No. 011223, whose member carriers serve the USA/East Asia trade lanes, filed General Rate Increases (GRIs) in their FMC tariffs for effective July 1, 2014. The GRI amount is USD 700 per 40ft container for refrigerated cargo, including beef, pork, poultry, and meat.
TSA Westbound Bunker Adjustment Factor (BAF) for the July-September 2014 quarter, which includes the low-sulfur fuel component, is USD 1098 per 20ft dry container, USD 1363 per 40ft/45ft dry container, and USD 1799 per 40ft/45ft reefer container for shipments from and via U.S. Atlantic/Gulf Coast Ports. BAF for shipments from or via U.S. Pacific Coast Ports is USD 554 per 20ft dry container, USD 689 per 40ft/45ft dry container, and USD 961 per 40ft/45ft reefer container. The Inland Fuel Charges (IFC) for the Jul-Sep 2014 quarter increased to USD 369 per container for rail and intermodal rail/truck shipments and USD 107 per container for local/regional truck shipments. For more information, visit www.tsa-westbound.org.