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Signals™ Headlines - May 3, 2012

FMC Launches New User-Friendly Website to Increase Transparency and Participation

The FMC recently launched a redesigned website aimed at increasing transparency and accessibility. The redesign considered input from representatives of the shipping industry, intermediaries, the public, and the media in an effort to improve the quality, clarity, and accessibility of information that the Commission provides to the shipping public. In addition to a new layout and look, the new site incorporates recommendations for a more user-friendly structure and improved navigation pathways. Through this upgrade the FMC seeks to increase transparency, participation, and collaboration with the public it serves. The new site is also designed to be more user-friendly to consumers seeking information on such issues as how to locate a licensed, bonded international household-goods mover, or the services the Commission offers if problems arise with international ocean shipments. The new design also includes audience-specific pages providing one location where FMC-regulated entities, attorneys and litigants, and the public can quickly browse and locate information and services. Visit the new webpage at www.fmc.gov.

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Docket No. 12-05: FMC Seeks Comments on NVOCC Service Arrangement Regulations

In an effort to make Non-Vessel Operating Common Carrier (NVOCC) Service Arrangements (NSAs) more useful for NVOCCs, the Federal Maritime Commission is soliciting public comment on its NSA regulations. The Commission specifically requests comments and current information from the shipping public regarding (1) extending the exemption to allow two or more unaffiliated NVOCCs to jointly offer NSAs, and (2) how to make the NSA rules less burdensome and more effective in achieving the objectives of the Shipping Act.

In December 2004, the Commission issued a final rule exempting non-vessel-operating common carriers (NVOCCs) who enter into NVOCC service arrangements (NSAs) from certain tariff requirements of the Shipping Act of 1984. The rule allows NVOCCs to enter into NSAs with their customers in lieu of publishing those arrangements in a publicly-available tariff, as otherwise would be required by Sections 8(a) and 10 of the Shipping Act. The Commission’s rules define an NSA as written contract, other than a bill of lading or receipt, between one or more NSA shippers and an individual NVOCC or two or more affiliated NVOCCs in which (1) the NSA shipper makes a commitment to provide a certain minimum quantity or portion of its cargo or freight revenue over a fixed time period, and (2) the NVOCC commits to a certain rate or rate schedule and a defined service level. An NSA shipper is a cargo owner, the person for whose account the ocean transportation is provided, the person to whom delivery is to be made, a shippers’ association, or a non-vessel-operating common carrier. Specifically, the exemption allows individual NVOCCs (including corporately affiliated NVOCCs), who are compliant with the other requirements of the Shipping Act and the FMC’s regulations, to enter into an NSA with one or more NSA shippers. The ability of two or more unaffiliated NVOCCs to jointly offer NSAs was not included in the final regulations due to the Commission’s concerns that NVOCCs acting jointly through NSAs would create a potential for reduced competition.

At the end of 2011, the FMC announced its Plan for Retrospective Review of Existing Rules. In accordance with the FMC’s review plan, the Commission is now seeking comments and information from all members of the interested public (foreign and domestic), including ocean common carriers, ocean transportation intermediaries, exporters, and beneficial cargo owners, on ways to improve or change NSA regulations. The Shipping Act grants the Commission the authority to make rules exempting regulated entities from the requirements of the Shipping Act if it finds such an exemption will not result in substantial reduction in competition or detriment to commerce. Comments may be submitted in hard copy or by e-mail as an attachment addressed to secretary@fmc.gov on or before June 18, 2012. For more information, contact FMC Secretary Karen Gregory at secretary@fmc.gov.

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TSA Carriers Implement Recommended Guideline Rate Adjustments

Carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223, serving the East Asia/USA trade lane have implemented interim rate adjustments in the form of General Rate Increases (GRIs) and/or other revenue initiatives effective April 15 and May 1, 2012. These increases come on top of the March 15 GRI filed by several member carriers, and are aimed to further increase rates that have fallen steeply since last year.

The April 15 and May 1 GRIs reaffirm the resolve of TSA member carriers to improve Asia-U.S. market rates as they move forward in a new round of contract talks with shippers. These recommended rate adjustments have been implemented by many of the TSA member carriers in their FMC tariffs. It is highly unusual for carriers to implement three GRIs within such a short time frame, but there is no FMC regulation that prevents it. This third GRI recommends an increase of an additional US$ 500 per FEU for cargo to the U.S. West Coast and US$ 700 per FEU for cargo on intermodal services to interior destinations and on all-water services from Asia to the U.S. East Coast effective May 1, 2012. Each GRI must be filed in the carrier’s applicable FMC tariff 30 days prior to its effective date.

The TSA Carriers have indicated that further revenue and cost recovery initiatives would be considered for later in the year after a review of market conditions and the outlook for the second half of 2012. Rather than adopting formal guideline increases, TSA carrier members have individually pursued various approaches to interim cost recovery and revenue restoration through May 1, 2012. Most member carriers have filed GRIs, while others are using Peak Season Surcharges (PSS), Emergency Revenue Charges (ERC), or other mechanisms depending on each carrier’s unique situation.

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 Announce May 15 General Rate Increase for Dry & Refrigerated Cargo

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 an additional round of incremental rate increases to dry and select refrigerated commodities as a part of a comprehensive rate restoration effort throughout 2012.

This new round of rate increases is announced as part of the WTSA’s ongoing effort to stem revenue erosion in the U.S.-Asia cargo market. Effective May 15, WTSA is recommending a schedule of increases that will raise dry commodity rate levels by US$ 50 per 40-foot container (FEU) from Pacific Southwest ports (Los Angeles, Long Beach, and Oakland) to Asia, and by US$ 100 per FEU for all other cargo moving via all-water or intermodal service from Pacific Northwest ports, from inland U.S. points, and from the U.S. East and Gulf Coasts. WTSA member carriers are also recommending increases of $200 per FEU for select refrigerated cargo (French fries, frozen vegetables, and miscellaneous refrigerated cargo not covered under commodity-specific programs) for all USA origins and Asian destinations.

WTSA executive administrator Brian M. Conrad emphasized that successive rate adjustments taken in recent months have been modest and aimed at incrementally restoring rates in the trade to compensatory levels after a period of significant erosion. 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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