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Signals™ Headlines - August 5, 2015

FMC Approves Port of Seattle/Port of Tacoma Alliance Agreement

The Federal Maritime Commission (FMC) announced that it has completed its competitive review and analysis of the Port of Seattle/Port of Tacoma Alliance Agreement, FMC Agreement No. 201228, and has voted unanimously to allow the Northwest Seaport Alliance (as it will be known) to become effective as scheduled on July 23, 2015. The Commission’s decision is based on a determination that the agreement is not likely at this time, by a reduction in competition, to produce an unreasonable increase in transportation cost or an unreasonable reduction in transportation service under section 6(g) of the Shipping Act.

The Northwest Seaport Alliance authorizes the ports of Seattle and Tacoma to meet, discuss, and reach agreement on the management, use, and operation of their marine cargo business, including joint business planning and marketing to further develop infrastructure and improve productivity. Under this alliance agreement, the ports will establish a Port Development Authority (PDA) to promote and assist economic development of the Alliance’s marine cargo operations. The PDA will focus on unified business retention and recruitment; coordinated enhancement of the value of marine cargo properties; improved intermodal rail service; improved freight capacities; the general promotion of maritime economic development; and other related port business activity.

The Alliance represents an effort by two ports address the new and intensified competition they face from ports in Canada and the USA. By jointly coordinating capital investments to enhance terminal facilities and rail connections the Alliance will improve its competitive position and attract the container vessels with a capacity of 15,000 to 18,000 TEU, which major ocean carriers will introduce to the Trans Pacific trade lane. FMC Chairman Cordero expressed his support for Alliance and noted it will become the third-largest trade gateway in North America, behind the Ports of Los Angeles and Long Beach and the Port of New York/New Jersey.

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Port Congestion Report Released by FMC

The FMC has released an 88-page report on U.S. port congestion and related supply chain issues prepared by its Bureau of Trade Analysis. The report organizes and further develops stakeholder discussion around six major themes that emerged at the 2014 FMC Port Forums held at major U.S. gateway ports – investment and planning; chassis availability and related issues; vessel and terminal operations; port drayage and truck turn-time; extended gate hours, PierPASS, and congestion pricing; and collaboration and communication.

The FMC sponsored forums provided a unique opportunity for industry stakeholders to gather around the country to share their views on the causes, consequences, and challenges surrounding congestion at ports and other parts of the intermodal system, as well as share ideas for possible solutions. The report addresses current and anticipated future challenges caused by congestion at U.S. port gateways, and comments on the causes and effects of congestion with the objective of facilitating further discussion on potential solutions. Appendices to the Report were also released by FMC; these provide 55 pages of charts on monthly container volumes moved though U.S. ports for the past ten years, and related data on average containership sizes during this time period.

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Transpacific Eastbound Carriers Implement General Rate Increases, Postpone PSS

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) of USD 600 per FEU, effective August 1, 2015, including CMA CGM, COSCO, Hanjin, Hapag Lloyd, Hyundai, K Line, Maersk, and Yang Ming; with GRI amounts for all other container sizes as per formula. However, Hapag Lloyd will apply GRIs in the amount of USD 200 per FEU for origins in the India Sub-Continent and the Middle East, effective September 1, 2015. Hyundai postponed the effective date of the GRI to August 15, 2015 for cargo moving from the India Sub-Continent and Japan to the US. American President Lines (APL) applied USD 600 per FEU to Atlantic Coast Ports (AWR/RIPI), but reduced the GRI amounts to USD 550 per FEU to Pacific Coast Ports (Local), to USD 250 per FEU to Pacific Coast Ports (IPI/MLB), and to USD 150 per container to Puerto Rico. APL will not apply the GRI to cargo originating in Japan. Evergreen also reduced the GRI amounts to USD 550 per FEU for cargo moving to USWC/G4, to USD 500 per FEU to USWC except G4 states, and to USD 550 per FEU for all other cargo. OOCL cancelled this GRI.

Carrier members postponed the effective date of the Peak Season Surcharge (PSS) from July 15 to August 15, 2015, including APL, CMA CGM, COSCO, Evergreen, Hanjin, Hyundai, K Line, OOCL, and Yang Ming. The PSS amount will be USD 400 per FEU; all other container sizes are as per formula. OOCL postponed the PSS for origins in India, Pakistan, Sri Lanka, and Bangladesh to effective September 1, 2015, and the amount will be reduced to USD 200 per FEU. However, Maersk implemented the PSS effective July 15, 2015.

Several carrier members have filed a new GRI, effective September 1, 2015, for USD 600 per FEU, with GRI amounts for all other container sizes as per formula. This will be the ninth 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. 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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West Coast Marine Terminal Operators Agreement Announce Increase to TMF

The West Coast Marine Terminal Operators Agreement (WCMTOA) announced an increase in the PierPass Traffic Mitigation Fee (TMF) at the Ports of Los Angeles and Long Beach. Effective August 1, 2015, the TMF increased from USD 66.50 per twenty-foot equivalent unit (TEU) to USD 69.17 per TEU or USD 138.34 per FEU. The TMF was last adjusted in August 2013, from to USD 61.50 per TEU to USD 66.50 per TEU. The announced change reflects increases in labor costs contained in the contract recently agreed to between the Pacific Maritime Association and the International Longshore and Warehouse Union (ILA). PierPASS is a not-for-profit company created by marine terminal operators at Los Angeles and Long Beach in 2005 to address multi-terminal issues such as congestion, security, and air quality. Shippers are not charged a TMF when moving cargo during off-peak gate hours. Visit the PierPass website at http://pierpass.org for more information.

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