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Signals™ Headlines - March 3, 2006

FMC Reduces Penalty: Sea-Land Service Ordered to Pay $820,000

The Federal Maritime Commission announced Feb. 8, 2006 its decision to reduce Sea-Land
penalty for Shipping Act violations from $4,082,500 to $820,000. Before this
reduction Sea-Land’s penalty was the highest FMC penalty to date. In January 2003 the
Administrative Law Judge
Frederick M. Dolan, Jr. ruled in the Initial Decision of
Docket 98-06
that egregious violations of the Shipping Act by Sea-Land warranted the
high penalty. According to Docket 98-06 Sea-Land was found in violation of the Shipping
Act on 149 shipments for deliberately undercharging selected Non-Vessel Cargo Carriers
(NVOCCs) based in the Los Angeles area for shipments to the Far East. These shipments
were made in 1996, 1997 and 1998, before Sea-Land’s international services were acquired
by the A.P. Moller Group. Judge Dolan assessed the maximum civil penalty for each
shipment to reach the $4,082,500 penalty amount. In comments made with this ruling
Judge Dolan wrote that “Sea-Land’s attitude clearly demonstrated that it willfully and
knowingly violated (the Shipping Act) by being plainly indifferent to the requirements
of the statute and disregarding its strict requirements.” With regard to the penalty
amount, Judge Dolan wrote “it is important for deterrent purposes to send a strong signal
to the industry.”

Sea-Land filed exceptions to Judge Dolan’s Initial Decision on

March 24, 2003
. FMC Commissioners ruled by majority on Feb.
8, 2006
to lower the penalty amount as well as
strike some contested statements from the hearings record, but ruled not to grant
Sea-Land’s request to present oral arguments. FMC Commissioners found that Judge
Dolan’s ruling did not take into full consideration the

Ocean Shipping Reform Act of 1998 (OSRA)
which made confidential service contracts between
carriers and NVOCCs legal. Sea-Land’s violations occurred before OSRA went into effect in
May of 1999. However, the Commission, citing penalties role as a deterrent to future unlawful
violations, found that with the passage of OSRA, Sea-Land’s actions would not be
considered violations today and accordingly a penalty is not needed to act as
deterrent to the actions.

Commissioner Joseph Brennan
wrote dissenting comments in opposition
of the decision and in favor of hearing oral arguments. Brennan wrote, Sea-Land “was
essentially thumbing its nose at the Commission and the federal laws under which the
Commission operates.” He further stated “Today’s order, which fines Sea-Land a mere
$220,000 more than Sea-Land’s suggested maximum fine of $500,000 – $600,000, will likely
represent just…a mere cost of doing business.” Brennan stressed “the Commission needs
to show that real consequences will follow from intentional and knowing violations of
the Shipping Act of 1984.”

TSA Carriers Reduce Bunker Surcharge: Effective April 1, 2006

The carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement
No. 011223, serving the East Asia/USA trade lane have amended their FMC tariffs to provide
for reductions to Bunker Adjustment Factors (BAF), effective April 1 to April 30, 2006.
As of May 1, 2006, TSA will announce BAF surcharges monthly, instead of quarterly, in
order to respond quickly to changes in fuel prices. Details of BAF effective April 1
are as follows: US$ 410/PC20, US$ 545/PC40, US$ 615/PC40 hi-cube, US$ 690/PC45 and US$ 12/WM.

Inland Fuel Charges (IFC) will also be reduced from April 1 to April 30, 2006 to US$ 169 per
container for mini-land bridge and inland point intermodal shipments moving via rail, and US$ 49
per container for local and regional “Group 4” truck transport within California, Oregon and
Washington, and for East Coast local store-door truck moves. The current Currency Adjustment
Factor (CAF) of 3 percent for shipments from Japan will remain in effect thru June 30, 2006.

TSA member carriers are American President Lines, COSCO Container Lines Ltd., Evergreen
Marine Corp., Hanjin Shipping, Hapag-Lloyd Container Line, Hyundai Merchant Marine, “K” Line,
Mitsui O.S.K. Lines, NYK Line, OOCL
and Yang Ming Marine. Additional information on
applied by the TSA Carriers is available at http://www.tsacarriers.org.

WTSA Adjusts Currency Factors, Increases Bunker and Inland Fuel Surcharges

The members of the Westbound Transpacific Stabilization Agreement (WTSA), who serve the
trade from the USA to East Asia, have amended their FMC tariffs to reduce Bunker Adjustment
Factors (BAF) and Currency Adjustment Factors (CAF). New BAF surcharges will be effective
for the month of April 2006. As of May 1, 2006 WTSA will announce BAF surcharges monthly,
instead of quarterly, in order to respond quickly to changes in fuel prices. Amendments
to CAF will be effective April 1 to June 30, 2006.

Bunker (BAF) April 1 – April 30, 2006 Currency (CAF) April 1 – June 30, 2006 US$ 436 per 20′ container Japan 42% (decrease from 47%) US$ 545 per 40’/45′ container Korea 0% (no change) US$ 28 per WM Taiwan 4% (decrease from 5%) Singapore 10% (no change)

Inland Fuel Charges (IFC) will also be reduced for the month of April 2006 to US$ 169
per container for rail, intermodal rail/truck and US$ 49 per container for local/regional
truck. The 11 members of WTSA are American President Lines, China Shipping Container
Lines, COSCO Container Lines, Evergreen Marine Corp., Hanjin Shipping, Hapag-Lloyd
Container Line, Hyundai Merchant Marine, “K” Line, NYK Line, OOCL
and Yang Ming
For more information visit

TACA Conference Increases Surcharges, Maintains Current Bunker Surcharge

The Trans-Atlantic Conference Agreement (TACA), whose member carriers serve the trade
between the USA and North Europe, United Kingdom and Ireland, Scandinavia and Baltic
Ports, have recently announced an increase in their Currency Adjustment Factor (CAF).
The CAF will be raised from the current 4 percent to 6 percent as of March 16, 2006
and be effective until at least April 15, 2006. TACA will maintain its current Bunker
surcharge (BAF) as follows:

Effective March 16 – April 15, 2006 Atlantic/Gulf Coast Ports Pacific Coast Ports US$ 423 per 20ft container US$ 635 per 20ft container US$ 846 per 40/45ft container US$ 1270 per 40/45ft container US$ 42 per WM US$ 64 per WM

TACA has made no changes to the BAF surcharge since Oct. 16, 2005. TACA surcharges
for the period of April 16 to May 15, 2006 will be announced by March 15.

The TACA Carriers will implement another General Rate Increase (GRI) effective on
April 1, 2006. This GRI for Eastbound and Westbound, dry and temperature controlled
containers will be US$ 240/20′ and US$ 300/40′. Additional GRIs will be implemented
July 1 and Sept. 1 as part of TACA’s Tariff Business Plan for 2006. TACA members are
Atlantic Container Line, Maersk Line, Mediterranean Shipping Co., NYK Line and
Revisions to surcharges for transportation services are published in TACA’s relevant
FMC tariffs and on its website: www.tacaconf.com.

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Vol. 10, No. 3, March 3, 2006

The information contained herein is obtained
from reliable sources.
It is subject to change at any time, however, depending on changes in
laws and regulations. While we continually attempt to monitor this
information, we do not guarantee its accuracy and are not responsible
for any damages suffered by any party in reliance on it.
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