Federal Maritime Commission (FMC) Chairman Mario Cordero made a formal appearance before the Subcommittee on Coast Guard & Maritime Transportation of the U.S. House of Representatives on March 15, 2016 to review the FMC’s fiscal year 2017 budget request. In short, the FMC seeks USD 27,490,000 in funding to support 134 full-time equivalent employees in fiscal year 2017. Chairman Cordero called this a “modest, and much needed, increase in funding and personnel for the agency.” He took the opportunity of this hearing to review the Commission’s mission to regulate the international ocean transportation system for the benefit of domestic U.S. exporters, importers, and consumers, and to explain how the FMC achieves its goals and objectives.

In his remarks before the House Subcommittee, Chairman Cordero emphasized the cost savings and efficiency measures the FMC has implemented, including sharing services with other federal agencies, and reducing office space, and delaying backfilling positions, and by using its website – www.fmc.gov – to post information and notices, instead of using the Federal Register. He noted increases to security costs mandated by the Department of Homeland Security (DHS) and the General Services Administration (GSA) have increased FMC’s costs, and these increases are not within the FMC’s control. In 2015, the Commission responded to at least 75 different annually mandated federal reporting requirements.

After reviewing the Commission’s accomplishments in 2015, Chairman Cordero commented on the FMC’s plan to implement a Supply Chain Innovation Project headed up by FMC Commissioner Rebecca Dye. The Commission’s Supply Chain Innovation Team Initiative will officially launch on May 3, 2016 at FMC’s Washington, DC offices with a two-day event that will bring together, by invitation, academia and industry leaders from across the international ocean transportation supply chain, including port officials, marine terminal operators, drayage truckers, ocean transportation intermediaries, ocean carriers, chassis providers, railroads, and U.S. exporters and importers. Team members will develop commercial solutions to supply chain issues that interfere with the effective operation of the U.S. international supply chain and cause port congestion. Commissioner Dye will issue a formal report on this initiative at a future date. Chairman Cordero expects the real value of this undertaking will be achieved by collaborative, practical solutions that will increase efficiencies and terminal throughput at port facilities.

Chairman Cordero also briefly commented to the House Subcommittee on the important analysis and monitoring work of the Commission, and pointed out significant consolidation among container carriers is likely this year. CMA-CGM S.A. is acquiring American President Lines Ltd. (APL) and China Ocean Shipping Company (COSCO) is merging with China Shipping Container Lines. CMA-CGM and COSCO will grow in size, capabilities, market share, and possibly market power. Chairman Cordero noted, “The FMC has the vital responsibility to monitor possible changes in the marketplace and analyze potential impact on shippers. The CMA-CGM and COSCO transactions are complex, and far-reaching. There is no question that if these two transactions are approved they will represent ‘game changing’ developments in the container shipping market that will require careful, on-going analysis for some time into the future.”

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Several carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223 serving the East Asia/USA trade lanes, have implemented General Rate Increases (GRIs), effective April 1, 2016, including CMA CGM, COSCO, Hanjin, Hapag Lloyd, Hyundai Merchant Marine, K Line, Maersk, NYK Line, and Yang Ming. GRI amounts were USD 600 per forty-foot equivalent unit (FEU); GRI amounts for other container sizes are as per formula. See exceptions below.

American President Lines (APL) reduced the GRI amounts based on scope: from USD 1000 per FEU to USD 250 per FEU for dry cargo to destination US Pacific Coast Ports/IPI/MLB, and USD 300 per FEU for dry cargo to destination US Atlantic Coast Ports/RIPI. APL cancelled GRIs for reefer containers. Evergreen also reduced the GRI amounts based on scope: from USD 600 per FEU to USD 275 per FEU for USWC/G4 cargo, to USD 100 per FEU for cargo delivered to other inland via USWC, except G4 states, and to USD 275 per FEU for all other cargo. Hanjin cancelled the GRIs for cargo for from Japan and Sub-Continent origins. Hyundai postponed the GRIs until April 15, 2016 for cargo from Japan. OOCL cancelled these GRIs.

Several TSA carrier members have filed a new GRI, effective May 1, 2016, for USD 1200 per FEU; with GRI amounts for all other container sizes as per formula. However, APL filed GRIs for USD 1300 per FEU, and Maersk for USD 600 per FEU. This will be the fifth GRI of the year for the East Asia/USA trade lane.

The TSA’s fifteen member carriers 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, and this website does not provide details of GRIs – those are filed in individual carrier tariffs and service contracts. The TSA Carrier group only issues recommended guidelines to its member carriers. Website addresses for all carriers are listed on www.fmc.gov.

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Several members of the Transpacific Stabilization Agreement Westbound (TSA), FMC Agreement No. 011223, whose member carriers serve the USA/East Asia trade lanes, implemented General Rate Increases (GRIs) effective April 1, including American President Lines (APL), CMA CGM, Evergreen, Hapag Lloyd, Hyundai Merchant, and Yang Ming. The GRI amounts for April were USD 20 per 20′ container and USD 25 per 40′ container for cargo from/via US West Coast Ports and Group 4 Points, USD 80 per 20′ container and USD 100 per 40′ container from US inlands via IPI/MLB, and USD 40 per 20′ container and USD 50 per 40′ container from all other US origins. K Line filed these GRIs for effective April 08, 2016. COSCO postponed the effective date until May 1, 2016. OOCL cancelled these GRIs.

For more information, visit www.tsa-westbound.org or review the tariffs of TSA Westbound member carriers. Like the TSA Eastbound carrier group, the TSA Westbound carrier group only issues recommended guidelines to its member carriers; each carrier maintains its own tariffs and controls its own pricing.

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