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Signals™ Headlines - June 5, 2013

FMC Issues Proposed Amendments to OTI Regulations: Docket 13-05

The U.S. Federal Maritime Commission (FMC) recently voted to move forward with proposed amendments to its rules governing the licensing, financial responsibility requirements and duties of Ocean Transportation Intermediaries (OTI). These OTI rules regulate U.S. and foreign based non-vessel-operating common carriers (NVOCC) and ocean freight forwarders serving USA trades. Key changes in this proposed rule include a new two year renewal requirement for OTI licenses (for NVOCCs in the USA) and FMC registrations (for NVOCCs outside of the USA), increased bond requirements and new bond procedures, and new requirements for the use of agents by OTIs.

Under the Advanced Notice of Proposed Rulemaking, new OTI licenses and FMC registrations will be issued for two year terms. The rule also requires registered NVOCCs to submit updated registration forms to renew for sequential two year terms. A similar procedure will be required of licensed OTIs who will submit a license renewal application form sixty days prior to the expiration dates of their licenses. These renewals will be subject to a nominal fee to be announced by the FMC. This is a significant change from the current OTI regulations, which have no requirement to renew the NVOCC registration or OTI license once granted.

The license and registration renewal requirement is intended to ensure that information essential to the Commission’s oversight of OTIs is verified regularly. The proposed renewal process will require licensed OTIs to update their QIs identification (for licensed OTIs in the USA) and contact information, as well as document changes in business or organization, trade names, tariff publication information, physical address, and electronic contact data. Though the license and registration renewal process is not intended to result in a reevaluation of character, the Commission will have the option to use it to review a licensee or registered OTIs character at any time based upon information received from the OTI or other sources.

Another provision of the proposed rule increases the bond requirements and revises bond forms. The ocean freight forwarder bond amount increases from US$ 50,000 to US$ 75,000. The licensed NVOCC bond amount increases from US$ 75,000 to US$ 100,000. Registered NVOCCs outside the USA will be required to increase their bonds from US$ 150,000 to US$ 200,000. In addition, new procedures for notifying the Commission of claims against bonds, and payments of claims, will be established.

The FMC also proposes to amend its regulations to include specific requirements for the use of agents by both licensed OTIs and by NVOCCs outside the USA registered with the Commission. The regulations clarify that these entities are strictly responsible for the acts or omissions of their employees and agents, wherever they are located. Agents will be required to include the OTI or NVOCC principal’s name and its OTI license or FMC registration number on all shipping documents, invoices, and business correspondence issued on behalf of the licensed OTI or registered NVOCC. Consistent with the common law of agency, the regulations are also amended to provide that an entity that issues shipping documents in its own name is presumed to be operating in its own name and not on behalf of a licensed OTI or registered NVOCC.

FMC commissioners voted 3-2 in favor of this proposed rulemaking. Commissioners stressed the importance of industry input during the sixty day notice and comment period, which will be held before the final rule publication. After the comment period, the FMC will likely issue a revised and final rule and effective date. Comments may be submitted to FMC Secretary Karen Gregory at secretary@fmc.gov before July 31, 2013.

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Transpacific Eastbound Carriers Reduce Surcharges, Announce GRI Effective July 1

Carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223 serving the East Asia/USA trade lanes will reduce several surcharges effective July 1, 2013. TSA Carriers have also announced General Rate Increases (GRIs) effective July 1, 2013 as they pursue further revenue improvement that the group says is essential in achieving financial viability and maintaining service levels in the Asia-USA market.

The TSA’s New Formula Bunker Adjustment Factor (BAF) for the July to September 2013 quarter, which includes the low-sulfur fuel component, is reduced to US$ 527 per 40ft container (FEU) to U.S. West Coast Ports and US$ 980 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$ 891 per FEU. This IPI/MLB BAF includes the Inland Fuel Surcharge (IFC) component. The Currency Adjustment Factor (CAF) for the same period is 13% for shipments from Japan.

Several TSA member carriers have updated their FMC tariffs to provide a GRI effective July 1, 2013 of US$ 400 per FEU to the U.S. West Coast and US$ 600 per FEU to all other USA destinations. TSA executive administrator Brian M. Conrad stated that “transpacific freight rates are still not keeping pace with rising costs, and a meaningful increase from current levels is essential to achieve profitability for the benefit of the trade.”

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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TSA Westbound Carriers Reduce Surcharge Amounts for July to September 2013 Quarter

Members of the Transpacific Stabilization Agreement Westbound (TSA), FMC Agreement No. 011223, whose member carriers serve the USA/East Asia trade lanes will reduce several key surcharges for the July to September 2013 quarter.

TSA Westbound Bunker Adjustment Factors (BAF) for the July-September 2013 quarter, which includes the low-sulfur fuel component, will be US$ 1084 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$ 565 per 20ft dry container, US$ 703 per 40ft/45ft dry container, and US$ 984 per 40ft/45ft reefer container. The Inland Fuel Charges (IFC) for the same period will be US$ 364 per container for rail and intermodal rail/truck shipments and US$ 105 per container for local/regional truck shipments. Currency Adjustment Factors (CAF) for the same period will be 6% for Taiwan and 21% for Singapore.

The Westbound Transpacific Stabilization Agreement (WTSA), FMC Agreement No. 011325, whose member carriers served the USA to Asia trade lanes, is suspended as of May 1, 2013. TSA members finalized a proposal with the FMC on April 14, 2013 to expand the scope of the agreement to include the entire transpacific round trip, both eastbound from Asia to the USA, and westbound from the USA to Asia. For more information, visit www.tsa-westbound.org.

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