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Signals™ Headlines - March 5, 2014

Mitsui O.S.K Lines and Affiliate Pay US$ 1.275 Million Penalty

The Federal Maritime Commission announced a compromise agreement reached with Mitsui O.S.K. Lines Ltd. (MOL) and its corporate affiliate, Nissan Motor Car Carrier Co. (NMCC). Mitsui O.S.K. Lines Ltd. is a vessel-operating common carrier based in Japan. As a separate line of commerce, MOL and NMCC operate pure car carriers (PCCs) and roll on/roll off (RO/RO) vessels in U.S. inbound and outbound trades. Under the agreement, MOL agreed to pay $1,275,000 in penalties.

The compromise agreement resolved allegations that MOL and NMCC violated 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 vehicles via RO/RO or PCC vessels, where such agreement(s) had not been filed with the Commission or become effective under the Shipping Act. The compromise also addressed related activities and violations arising under such carrier agreements. In announcing the agreement, FMC Chairman Mario Cordero stated, “This is the second public announcement in recent months of Commission enforcement action against parties who fail to file carrier agreements. We take seriously our statutory responsibility under the Shipping Act to protect the shipping public and to ensure that agreements affecting carrier working relationships in the U.S. trades are properly filed and reviewed by the Commission.” In concluding the compromise, MOL and NMCC agreed to provide ongoing cooperation with other Commission investigations or enforcement actions with respect to these activities. The carriers did not admit to violations of the Shipping Act.

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House Committee Leaders Introduce Bill to Increase Coast Guard and FMC Budgets

The Coast Guard and Maritime Transportation Act of 2014 (H.R. 4005) was recently introduced in the House of Representatives by the leaders of the House Transportation and Infrastructure Committee, Chairman Bill Shuster (R-PA), Nick J. Rahall, II (D-WV), and Duncan Hunter (R-CA). The bill increases funding for the U.S. Coast Guard and the Federal Maritime Commission for fiscal years 2015 and 2016, and would require the U.S. Maritime Administration to create a national maritime strategy to improve the competitiveness of the U.S. flag fleet, reduce regulatory burdens on U.S. flag shipping, increase the use of short-sea shipping, and enhance U.S. shipbuilding capacity.

While much of the bill is focused on supporting and strengthening the Coast Guard, it would also provide significantly increased funding for the FMC. The bill authorizes budgets for the FMC of USD 24.7 million for each of fiscal years 2015 and 2016. This is a significant increase over the Commission’s current budget of USD 22.8 million, and would enable the agency to meet its statutory responsibilities and continue its push to invest in new technology to improve efficiency, productivity, and transparency.

In addition to increased funding, H.R. 4005 also would set new limits on the terms for FMC Commissioners. The terms of each Commissioner would remain five years, but when a term ends, Commissioners could serve for only one additional five-year term, or for a temporary period not to exceed one year. Additionally, H.R. 4005 adds new conflict of interest provisions, and prohibits Commissioners from engaging in any other business, vocation, or employment.

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Transpacific Eastbound Carriers Adjust Surcharges, File Two General Rate Increases

Carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223 serving the East Asia/USA trade lanes, have adjusted a currency adjustment factor and bunker surcharges effective April 1, 2014 thru June 30, 2014. The inland fuel charges will remain the same at USD 359 per forty-foot equivalent unit (FEU). Several of the group’s member carriers have filed two General Rate Increases (GRIs). One GRI will take effect on March 15, 2014 for USD 300 per FEU, and a second will be effective May 1, 2014 for USD 300 per FEU, with other container sizes to increase as per a standard formula.

The Currency Adjustment Factor (CAF) on shipments from Japan was reduced from 12% to 10% effective April 1, 2014. Bunker Adjustment Factors (BAF) effective April 1, 2014 are as follows:

To US Atlantic/Gulf Coast Ports * (increased)
To US Pacific Coast Ports * (increased)
To IPI/MLB via US Pacific Coast */** (increased)
USD 985 per 40ft ctr ( ↑ )
USD 527 per 40ft ctr ( ↑ )
USD 886 per 40ft ctr ( ↑ )

BAF amounts shown with the asterisk (*) include the low-sulfur fuel component. For IPI/MLB destinations, the BAF includes both low-sulfur fuel component and the Inland Fuel Surcharge (IFC) component (**). BAF for other container sizes is as per formula.

The TSA’s fifteen carrier members are: American President Lines, China Shipping Container Lines, CMA-CGM, COSCO Container Lines, Evergreen Marine, Hanjin Shipping, Hapag-Lloyd AG, 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 in March 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) for USD 40 per 20ft dry container and USD 50 per 40ft/45ft dry container for U.S. Pacific Coast Ports, and USD 80 per 20ft dry container and USD 100 per 40ft/45ft dry container for all other U.S. origins, effective in March 2014. The exact effective date in March varies by carrier. CAF on shipments to Taiwan will increase from 6% to 7% and to Singapore from 21% to 22%, effective April 1, 2014. All the TSA Westbound carriers have also adjusted their bunker surcharges (BAF) for the April to June 2014 quarter.

TSA Westbound Bunker Adjustment Factors (BAF) for the Apr-Jun 2014 quarter, which include the low-sulfur fuel component, are USD 1091 per 20ft dry container, USD 1356 per 40ft/45ft dry container, and USD 1792 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 USD 565 per 20ft dry container, USD 703 per 40ft/45ft dry container, and USD 984 per 40ft/45ft reefer container. The Inland Fuel Charges (IFC) for the Apr-Jun 2014 quarter to remain the same at USD 359 per container for rail and intermodal rail/truck shipments and USD 104 per container for local/regional truck shipments. For more information, visit www.tsa-westbound.org.

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