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FMC green light for M2

WASHINGTON, DC: The U.S. Federal Maritime Commission (FMC) has approved the proposed Maersk/MSC Vessel Sharing Agreement (M2) between the U.S. and Asia, North Europe, and Mediterranean trades with effect from October 11, 2014.

The FMC concluded the agreement is not likely to produce an “unreasonable” increase in costs or reduction in service.

FMC chairman Mario Cordero said the approval is the result of a comprehensive review and takes into account questions by other FMC commissioners as well as comments from the European Shippers Council – the only public reaction to the agreement. “I am confident that the reporting requirements will ensure that the commission will have timely and relevant information to monitor activity under the agreement, and will enable the FMC to act quickly should it be necessary," added Cordero.

The FMC green light follows a decision by the 15 box line members of the Transpacific Stabilization Agreement (TSA) to implement contract rates for 2015-16 rather than scheduled general rate increases.

maerskmscThe group has also agreed new rates for 20-foot and high-cube 40-foot containers that more fully reflect the cost of loading and handling; full recovery of rising intermodal costs due to inland transport capacity and congestion issues; a revised bunker surcharge formula more accurately reflecting current vessel size and fuel consumption; and recovery of low-sulfur fuel costs as tighter emissions standards take effect in January 2015 for vessels operating in North American coastal waters.

TSA is recommending its members seek 2015-16 contract rates “at levels at or above US$2,000 per 40ft to the West Coast and US$3,500 to the East Coast from all North Asia ports” while for Southeast Asia rates should be at least US$2,150 to the West Coast and $3,650 to the East Coast.

“Carriers feel an urgent need in the current market environment to view pricing differently,” said TSA executive administrator Brian Conrad. “Rate minimums are an effort to better reflect actual costs of service, rather than simply recommending a specific increase to whatever baseline rate is in the tariff based on short-term supply-demand conditions.

“Rates will continue to fluctuate with the market according to origin-destination pairs, service requirements, routing and so on, but a common base guideline is essential for lines to maintain basic service levels and, beyond that, expand their offerings based on customers’ needs,” he added.

As already announced by Maersk, TSA says the new rates will also carry a low sulfur fuel surcharge following new MARPOL emission rules that will come into force next year: “The stricter 0.1 percent emissions mandate, requiring a shift to costlier marine gas oil (MGO), is of special concern because it will hit the trade all at once and no one can predict just yet where prices will settle,” said Conrad. “That in turn makes it difficult to adapt our existing formula, but we expect to have a clearer picture closer to January 01, in time to announce a charge with the necessary advance notice.”

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