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Signals™ Headlines - May 5, 2015

FMC Issues Report on Detention, Demurrage, and Free Time at U.S. Ports

The Federal Maritime Commission has issued a report on “Rules, Rates, and Practices Relating to Detention, Demurrage, and Free Time for Containerized Imports and Exports Moving Through Selected United States Ports.” Using publicly available data, the FMC staff prepared this 64-page report to assess and explain the rules and practices by a sampling of vessel-operating common carriers at each terminal in the Nation’s largest container ports. The rules tariffs of 6 carriers and 32 marine terminal operators (MTOs) were reviewed. These are summarized in the report’s Appendix A; comparison charts of demurrage and detention charges are provided in Appendix B. The report indicates steps that the industry may take to address their concerns and indicates the types of Commission authority that may be brought to bear where the facts and circumstances support Commission action.

This report was compiled after completion of the four congestion forums held by each of the Commissioners at major gateway ports in the fall of 2014 and subsequent contact from stakeholders. The report collects and conveys the concerns and frustrations expressed by importers, exporters, and drayage providers at the four public forums held by the Commission between September and November 2014. Many shippers advised FMC that demurrage charges are not serving to speed the movement of cargo, the purpose for which those charges were originally intended. The report notes, “Shippers feel they are in a ‘catch-22’ when they are not permitted to pick up their container because of MTO congestion, and yet are charged demurrage.”

In releasing this report, FMC Chairman Mario Cordero commented: “I am hopeful that the report becomes a discussion paper among industry stakeholders and helps stimulate solutions to problems that have arisen as a result of the severe port congestion experienced in the last year.” The report lists actions the FMC might take to help address these issues, but does not recommend any action, and the Commission has not authorized any to be taken. Chairman Cordero reminded industry stakeholders they may file complaints for adjudication by the FMC that involve alleged violations of the Shipping Act.

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William P. Doyle Confirmed as FMC Commissioner

The United States Senate confirmed President Obama’s re-nomination of William P. Doyle on March 23, 2015 as Federal Maritime Commissioner. Commissioner Doyle joined the Commission in January 2013 and is now serving a term as Commissioner, which will expire on June 30, 2018. Since joining the FMC, Commissioner Doyle has actively participated in many issues facing the FMC and the maritime industry, including efforts to relieve port congestion and ensure that goods move efficiently through the transportation chain. Internationally, Commissioner Doyle represented the FMC at the annual U.S.-China Bilateral Maritime Consultations. Prior to his appointment to the FMC, Commissioner Doyle spent his career in the transportation sector. He is a Coast Guard licensed engineer and served as an officer in the U.S. Merchant Marine. From 2011 to 2013, Commissioner Doyle served as the chief of staff for the Marine Engineers’ Beneficial Association (MEBA). Commissioner Doyle received a B.S. in marine engineering from the Massachusetts Maritime Academy and a J.D. from Widener University School of Law.

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Transpacific Eastbound Carriers Update General Rate Increases, and Peak Season Surcharges

Several carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223 serving the East Asia/USA trade lanes, implemented General Rate Increases (GRIs) effective April 9, 2015 and May 1, 2015. Members also updated their respective FMC tariffs to reflect new GRIs for June and July, and new Peak Season Surcharges (PSS) effective July 1, 2015.

Effective April 9, 2015, carrier members COSCO, Evergreen, Yang Ming, K Line, Hanjin, Hapag Lloyd, Hyundai, Maersk, and NYK Line implemented GRIs of USD 600 per FEU, with other container sizes as per formula. American President Lines (APL) reduced the GRI amount to USD 400 per FEU to US Pacific Coast Ports, IPI and MLB, except via PNW Ports; USD 500 per FEU to/via PNW Ports. OOCL cancelled this GRI. This was the fourth GRI of the year for the East Asia/USA trade lane.

Effective May 1, 2015, Evergreen implemented a GRI of USD 250 per FEU for cargo moving to the US Pacific Coast/Group 4 Locations, from all origins except India, Sri Lanka, Pakistan, and Bangladesh. Hyundai Merchant implemented a GRI of USD 1000 per FEU. Hanjin applied a GRI of USD 600 per FEU. Hapag Lloyd applied a GRI of USD 600 per FEU from all origins except India, Pakistan, Sri Lanka, and Bangladesh; for these origins, the GRI was USD 200 per FEU. APL withdrew this GRI for origins in the Middle East and West Asia. OOCL cancelled this GRI. All other container sizes as per formula. This was the fifth GRI of the year for the East Asia/USA trade lane.

Several carrier members filed additional GRIs in each of their respective FMC tariffs. Evergreen, Hyundai, K Line, CMA CGM, Hapag Lloyd, OOCL, and Yang Ming published two new GRIs in their FMC tariffs: GRIs effective June 1, 2015 will be USD 600 per FEU, and effective July 1, 2015 will also be USD 600 per FEU. COSCO and Hanjin published GRIs for USD 600 per FEU, effective June 1. APL’s GRI will be USD 600 per FEU, effective June 1, except for cargo moving from origin Japan. All other container sizes as per formula. These will be the sixth and seventh GRIs of the year for the East Asia/USA trade lane.

In additional to the GRIs, carrier members have updated their FMC tariffs to reflect Peak Season Surcharges. Yang Ming updated its FMC tariff to reflect a PSS of USD 600 per FEU, effective June 1, 2015. Hanjin will apply a PSS of USD 400 per FEU, effective June 1. COSCO will apply a PSS of USD 400 per FEU, effective June 15. CMA CGM, Evergreen, Hyundai, and OOCL will apply a PSS of USD 400 per FEU, effective July 1. All other container sizes 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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