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Signals™ Headlines - March 3, 2011

FMC Issues Final Rule on Changes to NVOCC Tariff Regulations

The Federal Maritime Commission has issued the final rule for Docket 10-03, NVOCC Negotiated Rate Arrangements (NRA). This will create a new pricing option that NVOCCs in the USA may utilize instead of tariffs or NVOCC Service Arrangements (NSA). The final rule will be effective April 18, 2011. The final rule does not cancel the existing FMC tariff regulations; it modifies these regulations to establish the new NRA option. NVOCCs outside the USA, who are registered with FMC, but not licensed, are not eligible to utilize the new NRA option.

This final rule will establish an instrument called a “Negotiated Rate Arrangement” or NRA. An NRA is an ocean or intermodal rate quotation for a single or multiple shipments of a specific cargo quantity. Licensed NVOCCs who enter into NRA’s with their shipper customers will be exempted from the requirement of publishing rates in their tariffs for those shipments moving under these NRAs, provided they meet conditions that include:

1. Continue to publish rules tariffs containing all terms and conditions governing shipments;
2. Provide access to tariff rules to the FMC and the shipping public free of charge;
3. NRAs must be agreed to by shippers in writing by the date cargo is received for shipment;
4. NRA documentation must be retained for five years, and must be made available promptly to the FMC upon request.

Because an NRA is a binding arrangement between the NVOCC and NRA shipper once accepted by a shipper, an NRA cannot be changed or amended. There no provisions in the new regulations for amending an NRA. However, NRAs can be cancelled by agreement of both parties prior to receipt of the cargo. NRAs can allow for multiple shipments of the stated quantity of cargo, but cannot contain the kinds of minimum quantity commitment (MQC), or liquidated damages provisions that are used in service contracts and NVOCC Service Arrangements (NSAs).

The rate stated in an NRA may specify the inclusion of all charges (an “all-in” rate) or specify the inclusion of only certain tariff surcharges. Without specifying otherwise, the NRA would only replace the base ocean freight rate or published tariff rate. If the rate contained in an NRA is not an all-in rate, the NRA must specify which surcharges from the rules tariff will apply. To the extent surcharges published in the NVOCC’s rules tariff will apply, the NRA must state that the amount of such surcharges is fixed once the first shipment has been received by the NVOCC, until the last shipment is delivered. Rates stated in an NRA may not be increased via a GRI.

Licensed NVOCCs who prefer to use rate quotes that are not firm, and/or not agreed to by shippers in writing, must continue to file rates in their FMC tariffs, and comply with all the same tariff regulations that are currently in force. Licensed NVOCCs who prefer to use contracts which set minimum volume requirements, with rates and terms that may be amended during the contract duration, must continue to use NVOCC Service Arrangements (NSA), and file these with the FMC. No changes have been made to the NSA contract regulations. Licensed NVOCCs who plan to utilize NRAs will be required to amend their FMC-1 tariff registrations to indicate this; FMC will begin accepting these on April 18, 2011.

NVOCCs outside the USA who are registered with FMC, but not licensed, were not given the new option to use Negotiated Rate Arrangements (NRAs). They must continue to move all shipments to/from the USA under tariff rates, or they may utilize NVOCC Service Arrangements (NSAs). While the final rule approved by the Commission limits the exemption to U.S.-licensed NVOCCs, Commissioners in the majority said they would consider the possibility of extending the exemption to foreign, unlicensed NVOCCs at some future date.

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TSA Carriers Increase Fuel Surcharges Effective April 1, 2011

Carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223, serving the East Asia/USA trade lane will increase several surcharges and terminal related charges effective April 1, 2011.

Bunker Adjustment Factors (BAF) calculated using TSA’s old monthly formula will increase on April 1 to US$ 940 per 20ft ctr, US$ 1175 per 40ft ctr, US$ 1322 per 40ft hi-cube ctr, US$ 1428 per 45ft ctr, and US$ 26 per WM (LCL).

The group’s New Formula BAF for the April – June 2011 quarter is US$ 468 per 40’ ctr to US West Coast Ports and US$ 879 per 40’ ctr to US East and Gulf Coast Ports, with other sizes as per formula. Inland Fuel Charges (IFC) for the April – June 2011 quarter are US$ 295 per ctr for shipments to IPI destinations served via West Coast Ports, US$ 148 per ctr for shipments to RIPI destinations served via East Coast Ports, and US$ 85 per ctr for shipments to Group 4 Points and to East Coast local store door points.

The TSA’s 15 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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WTSA Carriers Increase Surcharges, Some Member File GRIs

The Westbound Transpacific Stabilization Agreement (WTSA), FMC Agreement No. 011325, whose member lines serve the U.S. export trades from the USA to East Asia, announced increases to bunker and inland fuel charges effective April 1, 2011 as follows:

WTSA Bunker Adjustment Factors (BAF), effective: April 1, 2011 – June 30, 2011
Traffic to/from and via:

US Atlantic/Gulf Coast Ports
US Pacific Coast Ports
US$ 971 per 20ft dry ctr
US$ 508 per 20ft dry ctr
US$ 1214 per 40ft/45ft dry ctr
US$ 635 per 40ft/45ft dry ctr
US$ 1615 per 40ft/45ft reefer ctr
US$ 894 per 40ft/45ft reefer ctr

The Inland Fuel Charge (IFC) for April 1, 2011 – June 30, 2011 will increase to US$ 295 per ctr for rail and intermodal rail/truck shipments, and US$ 85 per ctr for local/regional truck shipments. Currency Adjustment Factors (CAF) for the same period will increase to 7 percent for Taiwan and 20 percent for Singapore.

Some WTSA carrier members have also filed General Rate Increases (GRIs) effective April 1, 2011 for shipments from the USA to Asia. For dry cargoes, many of the Carriers will apply GRIs of US$ 320 per 20’ ctr and US$ 400 per 40’ ctr. For cargo moving in refrigerated containers, the GRI amounts are US$400 per 40’ reefer ctr from US West Coast Ports, and US$500 per 40’ reefer container from US Inland Points, East Coast and Gulf Coast Ports.

WTSA is a voluntary discussion and research forum of 10 container shipping lines serving the trade from ports and inland points in the U.S. to destinations throughout Asia. The WTSA’s 10 member carriers are American President Lines, COSCO Container Lines, Evergreen Marine Corp., Hanjin Shipping, Hapag-Lloyd Container Line, Hyundai Merchant Marine, “K” Line, NYK Line, OOCL and Yang Ming Marine. For more info visit www.wtsacarriers.org.

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