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Signals™ Headlines - November 4, 2004

FMC Votes to Authorize Confidential NVOCC Service Arrangements

The Federal Maritime Commission has decided to grant Non-Vessel Ocean Common Carriers
(NVOCCs) the option to enter into confidential service arrangements with their shipper clients.
Under proposed new rules reviewed at the Commission’s Oct. 27 meeting, NVOCCs would be
permitted to provide their shipper clients with individually-negotiated price and service
packages, entitled NVOCC Service Arrangements, providing the full details of these
arrangements are timely filed with the FMC. These new rules are not finalized,
however in the proposed rulemaking issued by the FMC,

Docket No. 04-12
, NSAs are subject to regulations similar to the current FMC
Service Contract Regulations for Vessel-Operating Common Carriers, as published
in the US Code of Federal Regulations under 46-CFR-Part 530. These regulations require filing of all service
contracts through the FMC’s SERVCON filing system, and the publication of five
essential contract terms in public tariffs. NVOCCs that do not wish to file NSAs
may continue filing all rates and rules in published tariffs in FMC approved electronic systems.

Over the past year the Commission has received eight petitions requesting various types of NVOCC
service contracting authority and relief from tariff filing. The FMC’s proposed new rules
provide most of the benefits sought by United Parcel Service (UPS) in its
Petition P3-03
filed in July 2003. The UPS petition was strongly supported by shippers, NVOCCs and nearly
200 members of the US Congress. However, the Commission took little action on the issue
until Sept. 2004 when many of the Petitioners filed a joint proposal which presented a
unified demand. Currently, only Vessel Operating Common Carriers (VOCCs) have the authority
to enter into confidential service contracts. Petitioners argued and the Commission agreed
that changes in the shipping industry since the Shipping Reform Act of 1998 have made service
contracting authority necessary for NVOCCs to compete with VOCCs. However, the language of
the Shipping Act, which specifically bars NVOCCs from entering into contracts, made it
difficult for the FMC to grant the request.

The Commission decided that allowing NVOCCs to enter into confidential service arrangements,
not contracts or agreements, would not violate the Shipping Act. The FMC further agreed that in
order for the agency to retain proper regulatory authority as required by the Shipping Act all
NVOCC Service Arrangements must be filed with the Commission. In its proposed new regulations
the FMC has created new Form, FMC-78 NSA Registration Form, to register all NVOCCs who plan
to use NSAs for ocean transportation to/from the US . Registered NVOCCs, or their authorized
tariff publishers, will be required to file all NSAs electronically via FMC’s
SERVCON system. The following
essential terms of each NSA must be published in public tariffs on the same day the NSA
is filed with the FMC: origin, destination, commodity, minimum volume, and duration.
Original signed NSAs and related records must also be retained by the NVOCC for five
years from the termination of each NSA. NVOCCs that do not wish to use NSAs are not
required to register using Form FMC-78, and will continue filing their selling rates
and rules in their published tariffs.

In his remarks after the meeting of Oct. 27 FMC Chairman Steve Blust said he is “very
optimistic that this proposal will give NVOCCs the kind of commercial flexibility they deserve,
and will lead to greater competition and efficiency in the shipping industry.” The FMC
is accepting comments on this proposed rulemaking until Nov. 19, 2004 . A final rulemaking
and implementation of NVOCC Service Arrangements is expected by Jan. 1, 2005 .

TACA Announces Increased Surcharges and GRIs for 2005

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 , announced increased surcharges and general rate increases (GRIs). Also, due to ongoing congestion at the ports of Long Beach and Los Angeles TACA filed a new Congestion Surcharge. TACA’s Currency Adjustment Factor (CAF) will remain at seven percent (7%) through at least Dec. 15, 2004 .

Bunker Admustment Fact(BAF), effection November 16, 2004 through December 15,2004. Traffic to/from and via:

US Atlantic/Gulf Coast Ports US Pacific Coast Ports
US$ 210 per 20ft containerUS$ 315 per 20ft container
US$ 420 per 40/45ft contain
US$ 630 per 40/50ft container
US$ 21 per W/MUS$ 32 per W/M

USA Inland Fuel Surcharge:

 Valid thru November 30, 2004:12 percent
 Effective December 1, 2004:16 percent

Congestion Surcharge at LA/LB, effective November 15, 2004. Traffic to/from and via the Ports of Los Angeles and Long Beach:

 US$ 200 per 20ft container
 US$ 400 per 40/45ft container

General Rate Increases (GRIs):

Eastbound from the USA to North Europe:

Tariff rates will be subject to increases totaling US$640/PC20 and US$800/PC40-45. These increases will be implemented over four phases, each of US$160/PC20 and US$200/PC40-45, effective from January 1, April 1, July 1, and October 1, 2005 .

Westbound from North Europe to the USA , effective January 1, 2005 :

 US$ 400 per 20ft containerUS$ 480 per 20ft container
 US$ 500 per 40/45ft containerUS$ 600 40/45ft container

Additional Westbound general rate increases are expected during 2005, and will be announced in due course. TACA members are Atlantic Container Line, Hapag-Lloyd Container Line, Mediterranean Shipping Co., A P Moller-Maersk Sealand, Nippon Yusen Kaisha (NYK) Line, Orient Overseas Container Line, and P&O Nedlloyd Limited. Tariff rates and surcharges are published in TACA’s relevant FMC tariffs and on its website: www.tacaconf.com.

Carriers Implement Security Surcharges

Many carriers have recently filed Carrier Security Surcharges in their FMC tariffs to cover the cost of compliance with new security regulations. Charges range from US$6 to US$10 per container, with effective dates ranging from early November to mid-December. The International Maritime Organization (IMO) and its members implemented an International Ship and Port Facility Security Code (ISPS code) in July 2004 to improve port and vessel security against international terrorism. The new regulations subject ocean carriers to increased costs for vessel security risk assessments and vessel certification. Carriers have implemented the Carrier Security Surcharges to cover the cost of compliance with these new regulations.

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