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Signals™ Headlines - January 6, 2014

FMC Collects USD 2,325,000 in Penalties from NYK and K Line

The Federal Maritime Commission (FMC) announced compromise agreements reached with two vessel operating common carriers. Under these separate agreements, Kawasaki Kisen Kaisha Ltd. (K Line), paid $1,100,000 in civil penalties and Nippon Yusen Kaisha (NYK Line), paid $1,225,000 in penalties. Both carriers are headquartered in Tokyo, Japan, and operate diverse fleets trading in the U.S.-foreign trades and globally. However, these penalties relate only to the pure car carrier (PCC) and roll on/roll off (RO/RO) vessels operated by NYK Line and K Line in U.S. inbound and outbound trades.

The compromise agreements resolved allegations that K Line and NYK Line violated provisions of the Shipping Act, including section 10(a) of the Shipping Act, 46 U.S.C. § 41102(b), by acting in concert with other ocean common carriers with respect to the shipment of automobiles and other motorized vehicles by RO/RO or specialized car carrier vessels, where such agreements had not been filed with the Commission or become effective under the Shipping Act. The compromise agreements also addressed related activities and violations. Commission staff alleged that these practices persisted over a period of several years and involved numerous U.S. trade lanes, including from and/or to the Far East, Europe, the Middle East, and South America.

FMC Chairman Mario Cordero stated: “These penalties underscore the seriousness with which the Commission views the carriers’ obligation to file with the Commission any agreement with other carriers affecting working relationships in the U.S. trades, both for import and export traffic. The shipping public has a right to know the subject matter and scope of any such agreement, and the Commission is charged by Congress to oversee the parties’ operations and conduct under such agreements. Investigations by our Bureau of Enforcement as to additional carriers implicated in similar agreement activities are continuing at this time.”

In concluding the compromise agreements, K Line and NYK Line agreed to provide ongoing cooperation with other Commission investigations or enforcement actions with respect to these types of activities. The carriers did not admit to violations of the Act or the Commission’s regulations. Staff attorneys with the Commission’s Bureau of Enforcement negotiated the compromise agreements.

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P3 Network Vessel Sharing Agreement Delayed by FMC

The Federal Maritime Commission (FMC) has formally requested the P3 Network Vessel Sharing Agreement, FMC Agreement No. 012230, to provide additional information pursuant to 46 U.S.C. 40304(d). This action prevents the agreement from becoming effective. When the Commission is satisfied with the response of the P3 Network Agreement and its member carriers, CMA CGM, Maersk Line, and Mediterranean Shipping Company (MSC) the agreement will become effective 45 days later. On December 17, 2013, the FMC convened a unique Global Regulatory Summit with officials from China and the European Commission to consider the P3 Network Agreement and related matters. The officials discussed their differing regulatory frameworks and the potential effects of carrier cooperation on international trade. The FMC staff provided a general briefing on the FMC’s 45-day agreement review process and on-going monitoring program. The PRC and EU delegations also provided an overview of their respective regulatory regimes.

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Transpacific Eastbound Carriers Adjust Surcharges, File GRIs Effective January 15, 2014

Carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223 serving the East Asia/USA trade lanes adjusted several surcharges effective January 1, 2014. Several TSA Carriers have also announced a General Rate Increases (GRIs) of US$ 400 per FEU effective January 15, 2014. In addition to or in lieu of this GRI, three TSA Carriers have filed Peak Season Surcharges (PSS) with varying amounts.

The TSA’s New Formula Bunker Adjustment Factor (BAF) for the January to March 2014 quarter, which includes the low-sulfur fuel component, is reduced to US$ 525 per 40ft container (FEU) to U.S. West Coast Ports and is increased to US$ 980 per FEU to U.S. East and Gulf Coast Ports, with other sizes as per the formula. The BAF to IPI/MLB destinations moving via the U.S. West Coast is US$ 884 per FEU. This IPI/MLB BAF includes the Inland Fuel Surcharge (IFC) component. The Currency Adjustment Factor (CAF) for the Jan-Mar 2014 period is 12% for shipments from Japan.

TSA member carrier American President Lines (APL) reduced the PSS it had filed in its tariff last month to US$ 150 per 40ft container, and postponed its effective date to January 6, 2014. OOCL also postponed the effective date of its PSS to January 15, 2014, but left the PSS amount at US$ 400 per FEU. CMA-CGM filed a PSS of US$ 100 per FEU with effect from January 1, 2014.

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; 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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TSA Westbound Carriers File General Rate Increases (GRIs) Effective February 1, 2014

Several members of the Transpacific Stabilization Agreement Westbound (TSA), FMC Agreement No. 011223, whose member carriers serve the USA/East Asia trade lanes have updated their tariffs to provide for General Rate Increases (GRIs) in varying amounts effective February 1, 2014. All the TSA Westbound carriers have also adjusted Bunker and Inland Fuel surcharges for the January to March 2014 quarter.

TSA Westbound carrier members China Shipping Container Line (CSCL), Hapag-Lloyd Container Line, Hyundai Merchant Marine, OOCL, and Yang Ming Marine have filed GRIs effective February 1, 2014 in amounts ranging from US$ 100 to US$ 200 per FEU. Evergreen Marine also filed a GRI of US$ 100 per FEU on shipments from US West Coast and East Coast ports, and US$ 150 per FEU on shipments from US inland points, however, Evergreen’s GRI became effective on January 1, 2014.

TSA Westbound Bunker Adjustment Factors (BAF) for the Jan-Mar 2014 quarter, which include the low-sulfur fuel component, are US$ 1080 per 20ft dry container, US$ 1349 per 40ft/45ft dry container, and US$ 1785 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 will be US$ 559 per 20ft dry container, US$ 698 per 40ft/45ft dry container, and US$ 979 per 40ft/45ft reefer container. The Inland Fuel Charges (IFC) for the Jan-Mar 2014 quarter are US$ 359 per container for rail and intermodal rail/truck shipments and US$ 104 per container for local/regional truck shipments. For more information, visit www.tsa-westbound.org.

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