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Signals™ Headlines - October 3, 2013

FMC Chairman Cordero Testifies to Congress Regarding Regulatory Review

FMC Chairman Mario Cordero testified before the House Subcommittee on Coast Guard and Maritime Transportation on September 10, 2013. In his remarks, Chairman Cordero said the FMC has taken a systematic approach in reviewing its regulations in order to minimize unnecessary burdens while ensuring a cost-effective regulatory regime that ensures economic security, both for parties involved in international oceanborne commerce, and the consumers that rely on it. Much of Chairman Cordero’s remarks focused on a review and defense of the proposed changes to OTI licensing and bonding requirements that are provided in FMC Docket 13-05, Advance Notice of Proposed Rulemaking (ANPRM). The FMC received over 90 public comments on this proposal, most of these opposing it, and FMC is now evaluating whether it is appropriate to make adjustments to its proposed amendments and seek further public participation.

In his remarks before the House Subcommittee, Chairman Cordero highlighted the actions taken by the Commission to help U.S. ocean transportation intermediaries (OTIs) who do business in the People’s Republic of China (PRC). The China Bond Rider authorized jointly by the FMC and the Chinese Government allows NVOCCs to satisfy requirements of the PRC for pennies on the dollar that would otherwise have to be deposited in Chinese financial institutions. He also reviewed the recent update to the Commission’s Rules of Practice and Procedure, which make it easier for parties to participate in proceedings and rulemakings, and also streamlines document filings. Another important recent update is the increase to the financial responsibility nonperformance cap for Passenger Vessel Operators (PVOs) from USD 15 million to USD 30 million. Cordero also noted the rules exempting NVOCCs that enter into negotiated rate arrangements (NRAs) from the tariff rate publication requirements of the Shipping Act, and the potential cost savings this makes possible for NVOCCs.

Much of Chairman Cordero’s remarks were a review and defense of the proposed changes to OTI licensing and bonding requirements that are provided in FMC Docket 13-05. He noted this review has been an open and transparent process and summarized the outreach efforts made by the Commission to the OTI community. A key element in this proposal is the first increase to bonding minimums since 1999. It will increase NVOCC bond minimums from USD 75,000 to USD 100,000; ocean forwarder bonds will increase from USD 50,000 to USD 75,000; NVOCCs outside the USA who are registered with the FMC will be required to increase their bonds from USD 150,000 to USD 200,000. Chairman Cordero noted that these adjustments to bond levels set in 1999 would not, for the most part, fully reflect an inflation-adjusted increase. For example, the NVOCC bond adjusted for inflation according to federal guidelines would be calculated at USD 105,000. He also explained that in the past three years alone, there have been over 40 federal lawsuits against OTIs, of which nearly 20 cases involved claims where the bond amount did not approximate the claims that would have been covered by the OTI’s bond.

Docket 13-05 also proposes that licensed OTIs be required to renew licenses every two years. This is a new requirement that has been widely criticized by commenters. Chairman Cordero explained the FMC’s experience has shown that too many OTIs cannot be found at their address of record, operate without a current Qualifying Individual, with new or different branch offices, new or different officers, or with unlicensed trade names. Out of date information results in futile attempts by the FMC to locate licensed OTIs in investigations, enforcement actions, and private complaints. The license renewal requirement is intended to remedy this.

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Transpacific EB Carriers Adjust Surcharges, File Another GRI, Increases AMS Fee

Carrier members of the Transpacific Stabilization Agreement (TSA), FMC Agreement No. 011223 serving the East Asia/USA trade lanes, have adjusted bunker surcharges, inland fuel charges, and currency adjustment factors effective October 1, 2013 thru December 31, 2013. Several of the group’s member carriers have filed General Rate Increases (GRIs) that will take effect on October 15, 2013. Many of the carrier members of the group have also increased the Automated Manifest System (AMS) fee to USD 30 per B/L.

The Currency Adjustment Factor (CAF) on shipments from Japan was reduced from 13% to 12% effective October 1, 2013. Bunker Adjustment Factors (BAF) effective October 1, 2013 are as follows:

To US Atlantic/Gulf Coast Ports * (decreased)
To US Pacific Coast Ports * (increased)
To IPI/MLB via US Pacific Coast */** (decreased)
USD 975 per 40ft ctr ( ↓ )
USD 530 per 40ft ctr ( ↑ )
USD 883 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.

General Rate Increases (GRIs) have been recently filed by several TSA Carrier members in their FMC tariffs to become effective October 15, 2013. The filed GRIs will increase rates by USD 400 per forty-foot equivalent unit (FEU) with other container sizes to increase as per a standard formula.

Many of the carrier members of the group quietly amended their FMC tariff rules to increase the Automated Manifest System (AMS) fee in September 2013 from USD 25 to USD 30 per B/L. The AMS fee is also called Cargo Declaration Data Charge (CDDC) or Security Manifest Documentation Charge (SMDC) by some carriers. Another fee that increased without much notice is the Carrier Security Charge (CSC/CSS/CSF); the amounts for this fee now range from USD 10 to USD 13 per container for most TSA carrier members, depending on which carrier is used. There has been no general announcement of increases to these fees on the group’s website at www.tsacarriers.org

The TSA’s fifteen 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; 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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