SIGNALS™ provides detailed information on the regulations and activities of the US Federal Maritime Commission (FMC), and related developments in the ocean freight industry. For past issues, please consult our index.

THE Alliance Authorized by FMC to Establish Contingency Fund

The Federal Maritime Commission (FMC) has voted to allow an amendment to THE Alliance Agreement, FMC Agreement No. 012439 to go into effect that permits establishing a contingency fund that can be used to help member carriers manage through, and recover from, the insolvency, or financial distress of a participating line.

THE Alliance Agreement is comprised of five ocean carriers: Hapag-Lloyd, K Line, Mitsui OSK Lines (MOL), NYK Line, and Yang Ming Marine. Under the terms of the agreement, THE Alliance members are permitted to share vessels, charter and exchange space on each other’s ships, and enter into cooperative working arrangements. This amendment to THE Alliance agreement was submitted on August 14, 2017, and the Commission granted a request of THE Alliance for an expedited review. The FMC approved the amendment effective September 21, 2017. The normal FMC review period requires a minimum of 45 days. “THE Alliance sought this amendment to address marketplace issues and consumer concerns. This amendment reflects the market process in action," noted Federal Maritime Commission Acting Chairman Michael Khouri.”

Each of THE Alliance carrier members will initially contribute USD 1 million into the contingency trust fund and a further USD 9 million in additional funds or through a letter of credit. With the current five carrier members, this will create a fund of USD 50 million. The agreement establishes the voting rights and obligations for the carrier members in the event of an “Insolvency Event or Material Adverse Change.” It also establishes procedures for the orderly removal and/or replacement of vessels and the rights of the remaining carrier members to negotiate directly with agents and subcontractors of the affected carrier member. The contingency fund would be administered by a trustee.

FMC Commissioner William Doyle voted in favor of allowing this amendment to take effect and said he “supports the goal behind this amendment: the smooth and continuous flow of cargo even in the face of another ocean carrier bankruptcy or catastrophic failure.” Doyle also noted the massive disruption of supply chains caused by the bankruptcy of Hanjin Shipping Company, Ltd. in 2016, and said, “I applaud the innovative actions taken by carriers of THE Alliance. It is a responsible commercial reaction to the events of last year and it serves to assure the shipping public that its cargo will be delivered in a reliable and timely manner.”

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FMC Supply Chain Innovation Initiative Reports Progress

Progress made by the FMC’s Supply Chain Innovation Teams was reported by FMC Commissioner Rebecca Dye at a recent Commission meeting. Three teams are focused on export issues and have been making substantial progress. Commissioner Dye reported research and interviews have revealed the common theme that technology does not come first when trying to improve systems or processes. The proper sequence is to first define the needs and purpose of a project and then choose the technology that accomplishes the goals. Since February 2016, Commissioner Dye has been leading teams of stakeholders in discussions to identify commercial solutions to issues that interfere with the smooth operation of the U.S. international supply chain. These teams are tasked with developing commercial solutions to port congestion and related supply chain challenges. A final report on this project is expected later this year.

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Transpacific Eastbound Carriers File GRIs Effective October 15, 2017 and November 1, 2017

Some carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223 serving the East Asia/USA trade lanes (U.S. Imports) updated their respective tariffs to include new General Rate Increases (GRIs) effective October 15, 2017 and November 1, 2017, including APL, COSCO, Evergreen, Hapag Lloyd, and OOCL. K Line is no longer carrier member, but filed similar GRIs in its FMC tariff.

CMA CGM, Hyundai, and Yang Ming postponed the effective date of GRIs from October 1 to October 15, 2017. *

NYK is no longer a carrier member, but it too postponed GRIs from effective October 1 to effective October 15, 2017. **

The following tables provide GRI amounts per 40ft dry container; GRI amounts for all other container sizes are as per formula. For some carriers, these October and November GRIs will be the thirteenth and fourteenth GRIs of 2017 for the East Asia/USA trade lane, respectively.

TSA EASTBOUND (Asia to USA)
GENERAL RATE INCREASE (GRI)
Effective October 15, 2017
Carrier
in USD, per 40ft ctr
APL
1000
CMA CGM *
1000
Cosco
800
Evergreen
600
Hapag Lloyd
700
Hyundai *
600
K Line
800
NYK **
1000
OOCL
600
Yang Ming *
800

TSA EASTBOUND (Asia to USA)
GENERAL RATE INCREASE (GRI)
Effective November 1, 2017
Carrier
in USD, per 40ft ctr
APL
1000
CMA CGM
1000
COSCO
600
Evergreen
1000
Hapag Lloyd
700
Hyundai
600
K Line
800
NYK
1000
OOCL
600
Yang Ming
800

The TSA Carrier group web site at www.tsacarriers.org provides additional information; however, each carrier maintains its own tariffs and controls its own pricing.

The TSA's 10 member carriers are: American President Lines, CMA CGM, COSCO Container Lines, Evergreen Marine, Hapag-Lloyd AG, Hyundai Merchant Marine, Maersk Line, Mediterranean Shipping, OOCL, and Yang Ming Marine.

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TSA Westbound Carriers File General Rate Increases Effective November 1, 2017

Some members of the Transpacific Stabilization Agreement Westbound (TSA), FMC Agreement No. 011223, whose member carriers serve the USA/East Asia trade lanes (U.S. Exports), have updated their tariffs to provide General Rate Increases (GRIs) effective November 1, 2017. The following table provides GRI amounts for 40’ dry containers. GRI amounts for all other container sizes are as per formula.

TSA WESTBOUND (USA to Asia)
GENERAL RATE INCREASE (GRI)
Effective November 1, 2017
Carrier
in USD, per 40ft ctr
APL
150
CMA CGM
150
Evergreen
50
Hyundai
150
NYK
150
OOCL
100 / 150 (see note 1)
Yang Ming
100

Note 1: OOCL filed GRIs of USD 80/100 per 20ft/40ft, respectively, for cargo from Vancouver, Seattle, Tacoma, Los Angeles, Long Beach, Oakland, and U.S. East Coast Ports, and GRIs of USD 120/150 per 20ft/40ft, respectively, for all other U.S. origins.

The TSA Westbound Carrier group only issues recommended guidelines to its member carriers. The group's web site at www.tsa-westbound.org provides additional information; however, each carrier maintains its own tariffs and controls its own pricing. General rate increases are filed only in carrier tariffs.

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