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Signals™ Headlines - April 3, 2013

FMC Commissioners Vote to Allow G-6 Alliance Agreement to Enter into Effect in the USA

Commissioners of the Federal Maritime Commission (FMC) have voted in approval of a new G-6 Alliance Agreement, FMC Agreement No. 012194, to enter into effect. The G-6 Alliance filed an agreement with the FMC on February 1, 2013 setting forth two principal agreement goals. First, the G-6 Alliance authorizes the parties to charter and exchange space on the parties’ vessels. Second, the G-6 Alliance seeks to coordinate and cooperate with respect to the parties’ transportations services and operations in specific trade lanes.

The G-6 Alliance was formed in December 2011 and formally began operations in March 2012. The members of the G-6 Alliance are American President Lines, Ltd. (APL), Hapag-Lloyd Aktiengesellschaft (Hapag-Lloyd), Hyundai Merchant Marine Company (Hyundai), Mitsui O.S.K. Lines (MOL), Nippon Yusen Kaisha (NYK), and Orient Overseas Container Line Limited (OOCL). Furthermore, the G-6 Alliance is a vessel sharing agreement between the New World Alliance (APL, Hyundai, and MOL) and the Grand Alliance (Hapag-Lloyd, NYK, and OOCL).

The G-6 originally covered cooperation between members on commercial routes between Asia and Europe. The expansion of the G-6 calls for a similar approach for the Asia-North America trade lanes. FMC Commissioner William P. Doyle notes that “this agreement will retain U.S.-Flag vessels in the rotation and increase the frequency of vessel port calls on the U.S. East Coast.” With this new agreement, the G-6 Alliance will deploy more than fifty ships in the Trans-Pacific trade, calling at almost thirty ports in Asia, North America East Coast, Canada, Central America, Caribbean, Indian Sub-continent, Mediterranean, and the Middle East. In particular the new agreement will increase the frequency of vessel port calls on the U.S. East Coast.

In voting to approve the agreement, the FMC will establish a special purpose monitoring program aimed at early detection of capacity coordination among carriers and agreements operating in the market. The new partnership is scheduled to begin in May 2013 with six coordinated service loops. Three of the services will transit the Suez Canal, while the remaining three will transit via the Panama Canal.

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FMC Requests Additional Information from Consolidated Chassis Management Pool Agreement

The Federal Maritime Commission has requested that the parties to the Consolidated Chassis Management Pool Agreement (CCM), FMC Agreement No. 011962, provide additional information regarding the filing of Amendment No. 009 to the agreement. The proposed amendment would allow contributors to the CCM chassis pools, including non-regulated entities such as chassis leasing companies and motor carriers, to serve on the Governing Board of CCM Pools LLC and on the Boards of the Individual Pools.

The CCM is unusual in that it is an agreement whose members include several companies that provide chassis pools as well as the Ocean Carrier Equipment Management Association, Inc. (OCEMA), which is an FMC approved agreement comprised of nineteen leading ocean carriers. The two non-OCEMA common carrier members in the CCM are Matson Navigation Company and Westwood Shipping Lines.

FMC Chairman Lidinsky stated in late 2011 that he supports the concept of chassis pools but that the Chassis Management Pool Agreement “should receive close scrutiny” to ensure that it doesn’t improperly expand the Shipping Act’s antitrust immunity, reduce competition or transportation services, raise transportation costs or encourage labor disruptions. He notes that his vote to allow the previous agreement amendment to take effect in late 2011 was “based on the clarification that the amendment does not seek to extend the Shipping Act’s exemption from other antitrust laws, in any form whatsoever, to entities, such as equipment leasing companies, that are not ocean carriers.” The FMC will review comments on the proposed amendment from interested parties that were received by March 28, 2013.

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Transpacific Eastbound Carriers Announce General Rate Increase for May 1, 2013

Carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223 serving the East Asia/USA trade lane have announced General Rate Increases (GRIs) effective May 1, 2013. The reduced surcharge levels announced by the TSA Carriers have also entered into effect for the April to June 2013 quarter.

Several carriers have updated their FMC tariffs to provide a GRI effective May 1, 2013 of US$ 800 per 40-foot container (FEU) to the U.S. West Coast local points, US$ 1200 per FEU to inland points via intermodal (IPI) or via minilandbridge (MLB) service via the U.S. West Coast, and US$ 1000 per FEU to/via the U.S. East Coast via all water or reverse IPI service.

This GRI follows a previous GRI filed by TSA Carriers which entered into effect on April 1, 2013. TSA Carriers note that freight rates remain below compensatory levels despite previous rate increases and want to ensure that 2013-14 contract rates contain meaningful net increases relative to 2012 contract levels.

The TSA’s New Formula Bunker Adjustment Factor (BAF) for the April to June 2013 quarter, with adjustment for slow steaming, is US$ 536 per 40ft container (FEU) to U.S. West Coast Ports and US$ 1015 per FEU to U.S. East and Gulf Coast Ports, with other sizes as per the formula. The new BAF to IPI/MLB destinations moving via the U.S. West Coast is US$ 905 per FEU. This IPI/MLB BAF includes the newly established Inland Fuel Charge (IFC) component. The Currency Adjustment Factor (CAF) for the same period is 17% for shipments from Japan.

TSA is a research and discussion forum of major container shipping lines serving the trade from Asia to ports and inland points in the United States. The TSA’s fifteen 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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WTSA Carriers Implement Reduced Surcharge Amounts for April to June 2013

The Westbound Transpacific Stabilization Agreement (WTSA), FMC Agreement No. 011325, whose member carriers serve the U.S. export trades from the USA to East Asia will maintain surcharges at current amounts for the April to June 2013 quarter.

WTSA Bunker Adjustment Factors (BAF) for the April-June 2013 quarter, with adjustments for slow steaming, are US$ 1121 per 20ft dry container, US$ 1393 per 40ft/45ft dry container, and US$ 1843 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 US$ 570 per 20ft dry container, US$ 712 per 40ft/45ft dry container, and US$ 1002 per 40ft/45ft reefer container. The Inland Fuel Charges (IFC) for the same period is US$ 369 per container for rail and intermodal rail/truck shipments and US$ 107 per container for local/regional truck shipments. Currency Adjustment Factors (CAF) for the same period are 7% for Taiwan and 22% for Singapore.

The WTSA’s eight member carriers are COSCO Container Lines, Evergreen Marine Corp., Hanjin Shipping, Hapag-Lloyd Container Line, Hyundai Merchant Marine, “K” Line, OOCL, and Yang Ming Marine. For more information visit www.wtsacarriers.org.

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