Home / Signals™ / Signals™ Headlines – February 3, 2011

Signals™ Headlines - February 3, 2011

Special Monitoring Requirements for Three Carrier Alliances Ordered by FMC

The New World Alliance, the Grand Alliance, and the CKYH Alliance have been ordered by the Federal Maritime Commission (FMC) to comply with special monitoring requirements. These carrier agreements authorize their members to discuss and collectively implement capacity rationalization. As a result of its recent Fact Finding Investigation on Capacity and Equipment Issues, the Commission has decided to order these three carrier agreements to file monitoring reports on a monthly basis, instead of quarterly. The Agreements are also ordered to provide the Commission with copies of minutes of all meetings or discussions by their carrier members relating to agreement business. Furthermore, the Agreements are ordered to provide advanced notice to FMC of planned changes in capacity, whether temporary or permanent in duration, which changes their pro forma weekly capacity by five percent or more. This significantly expands the existing reporting requirements for these Agreements.

The Grand Alliance consists of Hapag-Lloyd, NYK Line, and OOCL. The New World Alliance members are American President Lines (APL), Hyundai Merchant Marine, and Mitsui O.S.K. Lines (MOL). The CKYH Alliance consists of COSCO Container Lines, “K” Line, Yangming Marine, and Hanjin Shipping.

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FMC Issues Notice of Inquiry to Solicit Comments on Slow Steaming

Following its meeting on January 26, 2011, the FMC issued an official Notice of Inquiry (NOI) to solicit comments on the Impact of Slow Steaming on U.S. ocean liner commerce. Generally, the Commission seeks public comment as to how the practice of slow steaming has: 1) impacted ocean liner carrier operations and shippers’ international supply chains; 2) affected the cost and/or price of ocean liner service; and 3) mitigated greenhouse gas emissions.

In February 2010, the FMC allowed the Transpacific Stabilization Agreement (TSA) to add authority to its basic agreement which allowed its member carriers to discuss and reach agreement on slow steaming, viz: programs to reduce sources of environmental pollution caused by ocean liner operations. The Commission noted slow steaming is now prevalent in the trans-pacific trade lanes, with more than half of carrier services in the trade utilizing slow steaming.

The NOI includes 13 specific questions directed as cargo shippers, 18 questions for ocean carriers, 5 questions for carrier rate agreements about bunker surcharges, and 5 questions for all interested parties. Responses are due on or before April 5, 2011, and must be submitted to the FMC Secretary, email: secretary@fmc.gov Respondents are requested to include in the subject line: “FMC Slow Steaming – Response to NOI”.

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FMC’s 50th Anniversary Events Underway

During 2011, the Commission will celebrate the 50th Anniversary of its creation as an independent agency. The Commission plans to hold a series of events looking at trends in the maritime industry and the FMC’s role as a leader in developing the efficient intermodal practices that revolutionized global trade. As part of this celebration, the Commission has made available Annual reports from 1917 thru 1999 on its website at www.fmc.gov This includes scanned copies of annual reports of all of the FMC’s predecessor agencies, the United States Shipping Board (1917 -1935), the United States Maritime Commission (1936-1950), and the Federal Maritime Board (1951-1961).

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President Obama Nominates FMC Commissioners

President Barack Obama has resubmitted his nomination for Commissioner Rebecca F. Dye to serve another term as Federal Maritime Commissioner, and his nomination of Mario Cordero for Federal Maritime Commissioner. Both nominations were originally submitted to the US Senate in September 2010, and both Dye and Cordero appeared at Senate hearings in November 2010, but the Senate did not complete the confirmation process – it requires a hearing, report, and vote. The White House announced these re-nominations on January 26, 2011 in a press release advising it was re-submitting 38 nominations for various federal agencies and ambassadorships that were still pending the end of last session of Congress. Mario Cordero is currently a Harbor Commissioner at the Port of Long Beach, and a workers’ compensation defense attorney. He has been a strong advocate for cleaning up the port environment. Because his nomination has not yet been approved by the US Senate, he has not yet taken a seat at the FMC. Commissioner Dye has served on the Commission since November 2002, and is now nominated for a third four-year term. Dates have not yet been set for Senate confirmation hearings, reports or votes on these nominations.

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FMC Notice of Inquiry on EU Regulations Draws Comments

The Federal Maritime Commission has received many comments in response to its recent Notice of Inquiry (NOI) concerning the effects on international liner shipping of the European Union’s repeal of the liner exemption from competition laws. In October 2010, the FMC asked for comments from interested parties on the impacts of the E.U. repeal of the liner conference block exemption, Regulation (EEC) No. 4056/861 on the performance of liner shipping in U.S. trades. Comments from 18 ocean carriers or carrier groups were received; these can be viewed on the FMC website under its Electronic Reading Room links to Activity Logs This information will be used by the Commission in its identification, analysis and evaluation of consequences of the E.U.’s policy decision on the U.S. trades. Comments will also be incorporated into the Commission’s five-year-long research on the E.U. repeal of the conference block exemption. The Commission plans to release its findings in a report to be completed in late 2011.

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TSA Carriers Increase Old Formula BAF

Carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223, serving the East Asia/USA trade lane will increase several surcharges and terminal related charges. Bunker Adjustment Factors (BAF) calculated using TSA’s old monthly formula will increase on March 1 to US$ 832 per 20ft ctr, US$ 1040 per 40ft ctr, US$ 1170 per 40ft hi-cube ctr, US$ 1260 per 45ft ctr, and US$ 23 per WM (LCL).

The group’s New Formula BAF for the January – March 2011 quarter is US$368 per 40’ ctr to US West Coast Ports and US$ 727 per 40’ ctr to US East and Gulf Coast Ports, with other sizes as per formula. Inland Fuel Charges (IFC) for the Jan–Mar 2011 quarter are US$248 per ctr for shipments to IPI destinations served via West Coast Ports, US$ 124 per ctr for shipments to RIPI destinations served via East Coast Ports, and US$ 72 per ctr for shipments to Group 4 Points and to East Coast local store door points. Given the recent increases to fuel prices, New Formula BAF and Inland Fuel Charges (IFC) are expected to increase significantly on April 1, 2011. Those increases will be filed in the FMC tariffs of the member carriers by March 2, 2011.

The TSA’s 15 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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Celebrating 45 Years of Navigating the Regulatory Seas

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