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Signals™ Headlines - August 5, 2014

United Arab Shipping Company (S.A.G.) Petitions FMC for Exemption

The Federal Maritime Commission (FMC) has received a petition filed by United Arab Shipping Company (S.A.G.) (UASC) for an exemption from provisions of FMC’s controlled carrier regulations. UASC is an ocean common carrier serving several U.S. trades. UASC was established in 1976 by the governments of the United Arab Emirates, the Kingdom of Bahrain, the Kingdom of Saudi Arabia, the Republic of Iraq, the State of Qatar, and the State of Kuwait. None of these government shareholders had a majority interest until recently when Qatar attained a 51.27% shareholding. FMC’s regulations in 46 CFR Part 565.2 define controlled carriers as follows:

“(a) Controlled carrier means an ocean common carrier that is, or whose operating assets are, directly or indirectly, owned or controlled by a government. Ownership or control by a government being deemed to exist for a carrier if: (1) A majority of the interest in the carrier is owned or controlled in any manner by that government, an agency of that government, or a public or private person controlled by that government; or (2) That government has the right to appoint or disapprove the appointment of a majority of the directors, the chief operating officer, or the chief executive officer of the carrier.”

In its Petition P1-14 UASC alleges that it is a controlled carrier as defined by the Shipping Act and subject to the requirements of FMC’s regulations for controlled carriers, but seeks an exemption from regulation that requires all tariff items to be filed thirty (30) days before they are effective, so that it can lawfully reduce its tariff rates, charges, classifications, rules or regulations effective upon publication. UASC notes that the requested relief, if granted, will permit it to operate in the U.S. trades on the same terms available to other ocean common carriers, including other controlled carriers that have previously been granted similar relief; for example, China Shipping Container Lines Co., Ltd. FMC provides a listing of controlled carriers on its website.

In order for the Commission to make a thorough evaluation of the exemption requested in the Petition, interested parties are requested to submit views or arguments in reply to the Petition no later than August 8, 2014. Replies shall be sent to the Secretary, Federal Maritime Commission, 800 North Capitol Street, N.W., Washington, D.C. 20573-0001, or emailed to secretary@fmc.gov, and be served on Petitioner’s counsel, Wayne Rohde, Esq., and Jawaria Gilani, Esq., Cozen O’Connor, 1627 I Street, NW, Washington, DC 20006.

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FMC Updates its Report on U.S. Cargo Moving Via Canada and Mexico Ports

FMC Commissioner Richard A. Lidinsky, Jr. has announced the publication of the second annual update of the FMC’s 2012 “Study of U.S. Inland Containerized Cargo Moving through Canadian and Mexican Seaports.”
This update contains statistical data underlining the challenges of U.S. ports and cross-border container traffic. Highlights of the report include the legislative progress of the Water Resources Reform and Development Act of 2014, as well as initial Congressional discussions over the Harbor Maintenance Tax. Additionally, the activities now allowed between the ports of Seattle and Tacoma in their new agreement are enumerated. The report was prepared through the joint efforts of the offices of Commissioner William P. Doyle and Commissioner Lidinsky. To view the 2014 Update, please click on this link. To view the original 2012 report, please click on this link.

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Transpacific Eastbound Carriers File Another General Rate Increase Effective September 1

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 (GRI) effective August 1, 2014, and have recently filed yet another GRI effective September 1, 2014.

The GRI that TSA carrier members had filed in their FMC tariffs in late-June became effective on August 1, 2014. For most carriers, the GRI amount effective August 1 is USD 600 per 40ft container (FEU) for cargo moving to all USA destinations, with the GRI amount for all other sizes as per usual formula. However, the GRI amount implemented by Hapag Lloyd is USD 800 per FEU, with all other sizes per formula. Evergreen reduced its GRI amount from USD 600 per FEU to USD 450 per FEU for cargo moving to the U.S. Pacific Coast and Group 4 locations, and to USD 200 per FEU for origins in India, Sri Lanka, Pakistan, and Bangladesh, with all other sizes per formula. OOCL cancelled its GRI that was scheduled to be effective August 1. Several carriers cancelled their August 1 GRIs for specific customers by amending service contracts to provide for this, or by filing new or amended tariff rates that are not subject to this GRI. This is a key reason why these carriers are now pursuing yet another GRI or assessing a Peak Season Surcharge (PSS).

According to TSA executive administrator Brian Conrad “it is essential for the trade to have a rate structure that encourages reinvestment, attracts equipment back into the market, covers rising inland transport and cargo handling costs, and enables carriers to broaden their service offerings. Given current rate levels, TSA members believe that USD 600 per FEU is the minimum needed to meet those objectives.”

Several TSA carrier members updated their FMC tariffs again in late-July to reflect a new GRI, effective September 1, 2014, in the amounts of USD 600 per 40ft container (FEU) for cargo moving to all USA destinations, with the GRI amounts for all other sizes as per usual formula. However, MOL filed its GRI at USD 800 per FEU, effective August 28, 2014. Hapag Lloyd filed two additional GRI rules in the amount of USD 600 per FEU effective August 20, 2014, and USD 600 per FEU effective September 1, 2014, with all other sizes per their usual formula.

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

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FMC Proposes Changes to Public Notice Procedures for OTI Licensing

The Federal Maritime Commission (FMC) has issued a direct final rule updating its procedure for providing public notification of Ocean Transportation Intermediary (OTI) license applications and license revocations. According to FMC Docket 14-08, in order to simplify the Commission’s business processes, reduce administrative costs, and provide more timely public notification, the Commission will amend its regulations to change the method by which it provides notice of OTI licensing matters by publishing this information on the FMC’s public web site at www.fmc.gov instead of publication in the Federal Register. This rule is effective on September 22, 2014 without further action, unless significant adverse comment is received by the FMC Secretary by August 22, 2014; email: secretary@fmc.gov

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