FMC Issues Proposed Rulemaking to Implement LoBiondo Act

The Federal Maritime Commission issued its Docket 19-06, Regulatory Amendments Implementing the Frank LoBiondo Coast Guard Authorization and seeks public comment by November 8, 2019. In this notice of proposed rulemaking the FMC proposes to revise its regulations to implement the provisions of the Frank LoBiondo Coast Guard Authorization Act of 2018 (Senate Bill S.140). The proposed revisions include amendments to the regulations governing Commission meetings, ocean transportation intermediary licensing, financial responsibility, and general duties, and the submission of public comments on ocean common carrier and marine terminal operator agreements.

On December 4, 2018, the “Frank LoBiondo Coast Guard Authorization Act of 2018” was enacted as Public Law No. 115-282 (LoBiondo Act or Act). These changes were summarized in our SIGNALS issue of 04Feb2019. The FMC staff summarized these changes at the Commission’s May 1, 2019 meeting. In this rulemaking, the Commission is now focusing on the statutory changes that require revision to the Commission’s regulations. The proposed changes include:

• Revising FMC regulations to update references to statutory provisions; this will update FMC regulations provided Chapter 46 of U.S. Code of Federal Regulations, specifically, Parts 515, 530, 532, 535 and 545.
• Revising the regulations governing meetings of the FMC Commissioners to include “nonpublic collaborative discussions,” a new type of meeting established by the LoBiondo Act that is not open to public observation;
• Revising the regulations governing ocean transportation intermediary (OTI) licensing and financial responsibility to reflect statutory changes to the types of persons that are required to be licensed. The LoBiondo Act amended Section 40902 of the Shipping Act to specify that no person or entity may “advertise” or “hold oneself out” as an OTI unless the person holds a valid FMC license. It also amends the Shipping Act to clarify a “disclosed agent” of an OTI is not required to be licensed.
• Revising the regulations governing non-vessel-operating common carriers (NVOCCs) to reflect amendments to several prohibited acts. The LoBiondo Act amended Section 41104 of the Shipping Act to explicitly prohibit carriers from “knowingly and willfully accept cargo from or transport cargo for the account of a non-vessel-operating-common carrier that does not have a tariff as required” by FMC regulations.

Interested parties are invited to submit comments via email to secretary@fmc.gov - include in the subject line: “Docket 19-06, Comments on LoBiondo Regulatory Amendments.” Comments should be attached to the email as a Microsoft Word or a searchable PDF document. Only non-confidential and public versions of confidential comments should be submitted by email. Confidential comments may be submitted by mail to Rachel E. Dickon, Secretary, Federal Maritime Commission, 800 North Capitol Street NW, Washington, DC 20573–0001.

Carriers Announce New Low Sulphur Charges Effective December 1, 2019 Ahead of IMO 2020

Several ocean carriers have updated their FMC tariffs to address increased vessel fuel costs required to comply with the “IMO 2020” low sulphur mandate scheduled to take effect January 1, 2020.

The United Nations International Maritime Organization (IMO) issued new regulations to reduce allowable levels of the sulphur oxide (SOx) content in marine fuel that is used to power ships operating in designated Emission Control Areas.

Effective January 1, 2020, the “IMO 2020” rule requires vessels must be powered by marine fuel, known as low-sulphur fuel oil (LSFO), containing only up to 0.5% of sulphur, instead of the current limit of 3.5% outside Emission Control Areas. The current limit is referred to as the IFO 380 (3.5%); the new mandate is the IMO 2020 (0.5%).

Coastal zones within 200-miles of Emission Control Areas (ECA) in Europe and North America will continue to be regulated by the SOx limit of 0.1%, effective since January 01, 2015. The previous limit for ECAs was 1% of SOx since 2012 by way of the MARPOL Annex VI global treaty agreement. The European ECA covers the North Sea and Baltic Sea. The North American ECA covers the U.S. and Canadian Atlantic and Pacific Coasts, the U.S. Gulf Coast, Hawaii, Puerto Rico and the U.S. Virgin Islands.

To recover fuel costs associated with this new mandate, carriers will implement various surcharges. Please see table and notes below. Amounts for all other container sizes are as per formula.

NOTES:

1. APL will apply the Low Sulphur Surcharge (LSS20) effective December 01, 2019. Service contracts, or tariff rates with validity less than three months, that are subject to this LSS20, will not be subject to the Bunker Surcharge (BAF03). APL also updated its FMC tariff to expire Low Sulphur Fuel Surcharge (LSF) for cargo moving Transpacific Westbound, from USA to Asia. The LSF for Transpacific Eastbound from China, Hong Kong, and Taiwan to the USA remain in effect since January 17, 2019.

LSS20 from Asia to US West Coast and Group 4 will be USD 500 per 40ft dry and USD 600 per 40ft reefer; and USD 352 per 40ft dry and USD 422 per 40ft reefer, for all other US destinations.

LSS20 from US West Coast to Asia will be USD 40 per 40ft; and USD 80 per 40ft for all other US origins.

2. CMA CGM announced that it will apply a Low Sulphur Surcharge (LSS20) effective December 01, 2019 to cover the increase in fuel-related costs associated with the implementation of the IMO 2020 regulation. The LSS20 tariffs have been calculated using the price difference between high sulphur fuel and low sulphur fuel average prices of October. The LSS20 will be applicable to all contracts with validity up to three months and the tariff values are available online at http://www.cma-cgm.com/ebusiness/tariffs/charge-finder.

LSS20 from Asia to US West Coast will be USD 216 per 40ft; and USD 352 per 40ft for all other US destinations.

LSS20 from US West Coast to Asia will be USD 40 per 40ft; and USD 80 per 40ft for all other US origins.

3. Evergreen filed in its FMC tariff that unless otherwise specified, its tariff rates and service contracts are subject to Low Sulphur Fuel Charges (LSS and LSS/L or LSS/D). Effective December 01, 2019, its Low Sulphur Fuel Charges (LSS/L or LSS/D) will be replaced by the Low Sulphur Fuel Compliance Charge (LSFCC) and will be renamed to the IMO SOx Compliance Charge (ISOCC).

Effective December 01, 2019, Evergreen will apply the LSS and ISOCC.

The Low Sulphur Fuel Charge (LSS) applies to coastal zones within 200-miles of the U.S. and Canada, also called the ECA. According to Evergreen, capping SOx at 1% of total emissions had required shipping lines to burn low-sulphur diesel fuel within the zone, and modify vessels to alternate between standard bunker and low-sulphur fuels as they enter and leave the zone.

The Low Sulphur Surcharge (LSS/L or LSS/D) applies to cargo originating from Taiwan, Hong Kong, and China ports. This surcharge shall be effective until ISOCC becomes effective December 01, 2019; the LSS/L will be replaced by the ISOCC.

IMO SOx Compliance Charge (ISOCC) applies to coastal zones outside Emission Control Areas.

ISOCC from Asia to US West Coast will be USD 192 per 40ft dry and USD 285 per 40ft reefer; and USD 220 per 40ft dry and USD 330 per 40ft reefer, for all other US destinations.

ISOCC from US West Coast to Asia will be USD 48 per 40ft dry and USD 135 per 40ft reefer; and USD 50 per 40ft dry and USD 170 per 40ft reefer, for all other US origins.

4. Hapag Lloyd introduced a Marine Fuel Recovery (MFR) mechanism January 1, 2019 to replace all existing fuel charges and announced that it will apply the IMO 2020 Transition Charge (ITC) effective December 1, 2019.

The MFR will be reviewed quarterly (or monthly if fuel price fluctuations are above USD 45 per tonne). Hapag Lloyd says that MFR is affected by vessel consumption per day, fuel type & price (specific for HSFO, LSFO 0.5% and LSFO 0.1%), sea and port days, and carried TEU:

MFR per TEU = Fuel Price (per TON) x Fuel Consumption (TON)/Carried TEU.

5. Maersk announced that it will introduce an Environmental Fuel Fee (EFF) on all trades, effective December 1, 2019. The EFF will apply to all tariff rates, and contracts with validity up to 3 months. The EFF amounts will be "calculated as the price difference between high sulphur fuel and low sulphur fuel multiplied by a trade factor." The EFF will only be reviewed if fuel price fluctuates more than USD 50 per ton.

Transpacific Eastbound Carriers File GRIs Effective November 15 and December 1, 2019

Several leading carriers serving the Trans Pacific container trades have recently updated their respective tariffs to include new General Rate Increases (GRIs) effective November 15, 2019, 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 November 15th GRIs will be the twenty-second GRI of 2019 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 December 1, 2019, 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 December 1st GRIs will be the twenty-third GRI of 2019 for the East Asia/USA trade lane.

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