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Signals™ Headlines - February 5, 2013

William P. Doyle Confirmed as FMC Commissioner, Replaces Commissioner Joseph Brennan

The United States Senate has confirmed William P. Doyle of Pennsylvania to be a Federal Maritime Commissioner for the term expiring June 30, 2013. Commissioner Doyle was nominated by President Barack Obama on February 10, 2012, confirmed by the Senate on January 1, 2013 and sworn in on January 10, 2013.

Doyle, a Democrat, will replace Former Commissioner Joseph E. Brennan. Once Doyle’s term ends in June, he could then be reconfirmed for a five-year term or would retain the seat until a replacement is confirmed. Commissioner Doyle joins Chairman Richard A. Lidinsky, Jr., Michael A. Khouri, Rebecca F. Dye, and Mario Cordero as a member of the Federal Maritime Commission (FMC).

Doyle joins the FMC from the Marine Engineers’ Beneficial Association (MEBA) where he served as Chief of Staff. From 2002 to 2008, Mr. Doyle was the Deputy General Counsel and the Director of Government and Legislative Affairs of MEBA. Since April 2008, he has also served as the Director of Permits, Scheduling, and Compliance at the Office of the Federal Coordinator for Alaska Natural Gas Transportation Projects. Prior to joining MEBA, Doyle served as a U.S. Coast Guard Licensed Marine Engineer from 1992 to 2001. Mr. Doyle received his J.D. from the Widener University School of Law and his B.S. in Marine Engineering from the Massachusetts Maritime Academy.

While appearing before the U.S. Senate Committee on Commerce, Science and Transportation last May, Doyle identified his priorities once his tenure begins: promote a fair, efficient, and reliable international ocean transportation system; protect the public from unfair and deceptive practices; protect the U.S. maritime industry against harmful foreign shipping practices; help to increase the export of goods through cooperation between the government and private sector; provide regulatory relief to support job growth and the economic recovery; and reduce court litigation.

Joseph Brennan, who retired in January 2013 after serving as an FMC Commissioner since 1999, contributed to many important FMC investigations and accomplishments. He was the fact-finding officer in the 2003 FMC investigation into the service contract practices of the Transpacific Stabilization Agreement (TSA). This investigation led to an extensive compromise agreement with the TSA, and prompted changes in the Commission’s regulations of service contracts.

Brennan is also well known as a vocal and colorful critic of many FMC decisions. He was a strong supporter of the Los Angeles/Long Beach Clean Trucks Programs, and called the FMC’s decision to block the programs a “colossal mistake.” In mid-2008, in response to congressional criticism, he called the agency a “four-headed monster.” In 2011 he criticized proposed-FMC action that would increase cruise passenger financial protections stating it would be perceived as industry-friendly regulation. Brennan believes that “the shipping statutes and regulations are meant to ensure fair competition and consumer protection,” and has often also criticized the Commission’s deregulatory efforts as outside the scope of the agency’s powers.

Brennan’s attitude reflects his long and distinguished record of public service. He was elected governor of the State of Maine in 1978 and served from 1979 to 1987. He also served in the U.S. House of Representatives representing Maine’s 1st District from 1987 to 1991. Prior to his governorship, Brennan served as the minority whip in the Maine House of Representatives from 1965 to 1971 and as district attorney of Cumberland County from 1971 to 1972. He served as the minority floor leader in the Maine State Senate from 1973 to 1974 and became Maine’s attorney general in 1975. Brennan earned a B.S. in economics from Boston College in 1958 and a J.D. from the University of Maine, School of Law in 1963.

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Transpacific Stabilization Agreement Maintains Surcharge Levels Through March 2013

Carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223, serving the East Asia/USA trade lane will maintain surcharges at current amounts through the January to March 2013 quarter.

The TSA’s New Formula Bunker Adjustment Factor (BAF) for the January to March 2013 quarter, with adjustment for slow steaming, is US$ 553 per 40ft container (FEU) to U.S. West Coast Ports and US$ 1050 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$ 933 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 22% for shipments from Japan.

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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American President Lines, OOCL File GRIs on Transatlantic Rates

Select ocean carriers have announced General Rate Increases (GRIs) in the transatlantic trade lanes between the United States and Europe. These GRIs will become effective between March 1 and April 1, 2013.

American President Lines, Ltd (APL) has announced a General Rate Increase effective April 1, 2013 for all westbound cargo from Northern Europe and Mediterranean ports to the United States of US$ 500 per 20ft container, applicable on all standard dry equipment. The carrier notes that transatlantic service in 2012 experienced a significant decline in freight rates while costs have increased. According to APL’s announcement this has resulted in unsustainable financial performance and a transatlantic GRI is the carrier’s response.

OOCL has also announced a General Rate Increase on its transatlantic trades effective March 1, 2013. OOCL’s GRI is filed at US$ 300 per 20ft container and US$ 400 per 40ft and 45ft container for westbound dry cargo on all trade lanes offered from Europe to the United States and Canada. View specific carrier FMC tariffs for more information.

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WTSA Carriers Retain Surcharge Amounts for January to March 2013 Quarter

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

WTSA Bunker Adjustment Factors (BAF) for the January-March 2013 quarter, with adjustments for slow steaming, are US$ 1150 per 20ft dry container, US$ 1437 per 40ft/45ft dry container, and US$ 1901 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$ 589 per 20ft dry container, US$ 736 per 40ft/45ft dry container, and US$ 1035 per 40ft/45ft reefer container. The Inland Fuel Charges (IFC) for the same period are US$ 380 per container for rail and intermodal rail/truck shipments and US$ 110 per container for local/regional truck shipments. Currency Adjustment Factors (CAF) for the same period are 8% for Taiwan and 23% 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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FMC Delays Expansion of TSA Carrier Agreement, Requests More Information

The Federal Maritime Commission (FMC) has requested additional information from the Transpacific Stabilization Agreement (TSA) regarding the proposal to expand its scope of this carrier agreement to include the entire transpacific round trip, including the westbound trade.

The original amendment filing of the TSA carriers was announced by the FMC on December 28, 2012. This amendment would expand the geographic scope of the agreement to include the full round trip transpacific trade, adding the trade from the United States to the Far East. It is expected that once the amendment becomes effective, the lines would suspend activities of the existing United States-Asia carrier group, the Westbound Transpacific Stabilization Agreement (WTSA).

The FMC formally requested additional information on February 5, 2013. The FMC’s request delays the filing until the additional information is provided by TSA carrier members. An additional forty-five days will then be required for the FMC to review the proposed agreement amendment. The TSA carriers originally filed the amendment for a twenty-four month trial period, subject to review at the end of that time.

According to published reports, the TSA carrier members represent over 90 percent of the container capacity in the eastbound transpacific market, while the current WTSA, which has only eight members, represent a significantly smaller share in the westbound transpacific market. A merged TSA/WTSA would have fifteen carrier members serving the transpacific westbound trade; these carriers would control about 90 percent of this trade lane’s container capacity. This expansion may give some shippers and the FMC cause for concern.

The TSA carriers cite the need to streamline agreements and cut administrative costs as the primary purpose of the amendment filing. The National Industrial Transportation League, the nation’s largest shipper organization, urged the FMC to “closely examine the ramifications and impacts” of the proposed plan. The NIT League notes that carrier agreements such as TSA and WTSA are permitted limited antitrust immunity to engage in certain collective activities. Bruce Carlton, president and chief executive officer of the group, said the FMC needs to review the amendment carefully to “ensure that it fully serves the interests of shippers as transportation buyers, in addition to the carrier members of the TSA.”

Interested parties may file comments within fifteen days after the publication date of the notice. Comments may be submitted in hard copy or by e-mail as an attachment addressed to secretary@fmc.gov on or before February 20, 2013. For more information, contact FMC Secretary Karen Gregory at secretary@fmc.gov.

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