Home / Signals™ / Signals™ Headlines – July 5, 2011

Signals™ Headlines - July 5, 2011

FMC Welcomes Commissioner Mario Cordero

Mario Cordero of Long Beach, CA, was sworn in on June 3, 2011, as a Federal Maritime Commissioner for a term to expire on June 30, 2014. Commissioner Cordero was nominated by President Barack Obama on September 17, 2010, and confirmed by the Senate on April 14, 2011.

Prior to his appointment to the FMC, Commissioner Cordero was an attorney in private practice and served eight years on the Long Beach Board of Harbor Commissioners where he spearheaded the Port’s pioneering Green Port Policy. He served one term as Board President and two terms as Vice-President. Mr. Cordero also served as a professor of Political Science at Long Beach City College, sat on the Long Beach Community Development Commission, and served as Vice-Chair of the Long Beach Ethics Review Task Force.

Mr. Cordero received his BS in Political Science from California State University, Long Beach, and his JD from the Santa Clara University School of Law. Commissioner Cordero remarked “I am honored to have been nominated by the President and privileged by the Senate confirming the nomination. I look forward to my service on the Federal Maritime Commission and furthering the mission and goals of the Commission.” FMC Chairman Lidinsky stated, “I welcome Commissioner Cordero to the Commission, and I look forward to benefitting from his experience and perspective from the nation’s largest port complex, which is the primary West Coast gateway for our vital trade with Asia.”

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Ports of Los Angeles and Long Beach Increase PierPASS Traffic Mitigation Fee

The West Coast MTO Agreement (WCMTOA) recently announced it will increase its PierPASS Traffic Mitigation Fee (TMF) at the Ports of Los Angeles and Long Beach from US$ 50 to US$ 60 per TEU in order to sustain continued operation of PierPass OffPeak night and weekend port gate hours. The increased TMF is effective August 1, 2011.

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. Under the program, all international container terminals in the two ports established five new gate shifts per week. As an incentive to use the new OffPeak shifts and to cover the added cost of the shifts, a Traffic Mitigation Fee (TMF) is required for most cargo movement during peak hours (Monday thru Friday, 3 am to 6 pm). Shippers are not charged a TMF when moving cargo during off peak gate hours.

This is the first increase in the TMF since 2006. The Ports report that since then hourly labor costs have increased 31 percent. Terminal operators claim to have operated the off peak gate hours at a loss since the program’s start in 2005. The shortfall between TMF revenues and OffPeak gate costs was $52.3 million in 2010.

“It is clear that absent some action, TMF revenue will continue to fall short of OffPeak gate costs and endanger the program,” said Bruce Wargo, president of PierPass, the non-profit formed by WCMTOA in 2005 that runs the OffPeak program. “With 55 percent of non-exempt cargo movements taking place during OffPeak hours, the program has become an important element of port operations.” Beginning in mid-2012, the TMF will be adjusted annually based on changes in Pacific Maritime Association maritime labor costs. Visit the PierPass website at http://pierpass.org/ for more info.

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TSA Carriers Adjust Bunker Surcharge, Postpone PSS

Carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223, serving the East Asia/USA trade lane announced changes Bunker Adjustment Factors and Peak Season Surcharges, and issued an Equipment Availability fact sheet to alert shippers to a potential shortage in shipping containers. The fact sheet discusses reasons for the potential shortage and some “best practices” shippers can use to alleviate equipment concerns.

August 2011 Bunker Adjustment Factors (BAF) calculated using TSA’s old monthly formula will remain at the same levels in effect for the month of July 2011, viz: US$ 1048 per 20ft ctr, US$ 1310 per 40ft ctr, US$ 1474 per 40ft hi-cube ctr, US$ 1658 per 45ft ctr, and US$ 29 per WM (LCL). However, most cargo moved by the TSA Carriers is subject to its New Formula BAF, which is updated on a quarterly basis, and there are unusual changes to report on this.

On June 1, the TSA Carriers updated their tariffs to reflect New Formula BAF for the July-September 2011 quarter as follows: US$ 568 per 40’ ctr to US West Coast Ports and US$ 1107 per 40’ ctr to US East and Gulf Coast Ports, with other sizes as per TSA’s BAF formula. In a surprising development, one of the leading members of the carrier group, American President Lines (APL) announced on June 24 it was adopting a new surcharge formula to reflect the cost savings as well as the added capital costs associated with slow-steaming. Under APL’s new formula, the BAF for a standard 40ft container shipped from Asia to US West Coast Ports is reduced from the TSA-recommended US$ 568 to US$ 538, and for shipments to the US East and Gulf Coast Ports it is reduced from US$ 1,107 to US$ 1,059 per 40ft container. Other TSA member carriers quickly followed suit, and updated the BAF in their tariffs to match APL’s BAF.

The TSA Carriers have postponed the effective date of the Peak Season Surcharges (PSS) from June 15 until July 15, 2011. Further postponement until August 1 is quite possible, but once these surcharges take effect they will apply as follows: US$ 320 per 20’ ctr, US$ 400 per 40’ ctr, US$ 450 per 40’ hi-cube ctr, and US$ 505 per 45’ ctr. The 15 carrier members of the TSA 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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FMC Solicits Views on China’s Proposal to Increase Optional Bond Rider

The People’s Republic of China has asked the Federal Maritime Commission to revise Commission regulations for the Optional Rider for Additional NVOCC Financial Responsibility. In April 2004, under FMC Docket 04-02, the Commission issued a rule that gave NVOCCs in the U.S. who also operate in China the option to increase their FMC bonds from US$ 75,000 to US$ 96,000 and use these bonds to satisfy part of the Chinese NVOCC licensing requirements. China has now requested that the Commission review its financial responsibility regulations set forth in 46 C.F.R. § 515.21 et seq. to increase the total amount of financial responsibility required for NVOCCs doing business in China from US$ 96,000 to US$ 122,000. China asserts that at the present exchange rate this increase is necessary to cover the RMB 800,000 required by Chinese regulations. China also requests that FMC regulations be revised to include a provision that would allow for adjustments to the USD amount required for the NVOCC optional bond rider when the USD and the RMB exchange rate fluctuates 20 percent higher or lower than that of the last adjustment. China also proposed that the adjustments be jointly approved by the U.S. and China at annual bilateral maritime consultative meetings.

In response to these requests, the FMC is seeking comments from the shipping community regarding how such amendments will affect business operations. Comments should be submitted by July 15, 2011 to Karen Gregory, Secretary 800 North Capitol Street, N.W. Room 1046, Washington, D.C. 20573-0001. Confidential comments may also be submitted via email attachment to secretary@fmc.gov

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