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Commissioner William P. Doyle’s Prepared Remarks to the Intermodal Association of North America

May 16, 2016

Intermodal Association of North America
Operations & Maintenance Business Meeting
Chicago, Illinois
Remarks of Commissioner William P. Doyle

Good Morning:

I am going to discuss three topics and we’ll have plenty of time for questions. The topics are ocean carrier consolidations and alliances, container weight VGM under SOLAS, and chassis.

Consolidations and Alliances

We’ve all heard the recent announcements related to consolidations. For instance, CGM CGM and NOL-APL, and COSCO and CSCL.

We’ve all heard the announcement that Hapag Lloyd and UASC are in discussions on a possible merger.

We’ve all heard the recent announcement of the new Ocean Alliance being formed with CMA CGM (w with NOL-APL), China COSCO Container Lines, Evergreen and OOCL. It will take about a year before this alliance, if approved by regulators, goes into effect; parties are shooting for April of 2017. That timeline is good news and something that I subscribe to as a policy point because the supply chain, including shippers, ports, vendors, and other customers need time to adjust their operations and business models accordingly. This alliance is looking to achieve a goal of having each individual string of vessels placed in service be designated to one marine terminal per port call.

On the individual carrier front, yesterday, Hanjin Shipping announced that its creditor banks have approved its proposal for a voluntary restructuring agreement.

Hyundai Merchant Marine Co. (HMM) is currently engaged in negotiations with foreign ship owners to lower vessel lease costs.

Of the original alliances (2M, CKYHE, G6, and O3), that leaves 8 companies in the balance.

I can tell you that by the end of next week there is a likelihood that another new alliance will be announced. I will be meeting with ocean carrier representatives next. It may not include all of the remaining eight carriers, but it could eventually.

Container Weight VGM

The U.S. Coast Guard issued a declaration last week stating that there are more than two ways to comply with the verified gross mass (VGM) regulations for ocean containers. I support the Coast Guard’s directive.

This is a business-to-business dispute. In fact, the Coast Guard is clear that the ocean carriers and shippers can work together to develop a means of VGM compliance that works for both parties. I urge the carriers and shippers to get going on this. We have less than 2 months before this international regulation is triggered.

On the liability front. The ocean carriers own and maintain the containers. The shippers do not. Therefore, the carriers need to legalize their representatives’ spoken, written, and promised position to not hold the shippers liable for the inaccuracy of the actual TARE weight of containers. This can be achieved through a tariff filing and/or a legally binding type of "hold harmless" document between the carrier and the shipper. I do not know why the carriers have not taken this important step.

Chassis

We still have problems with chassis. A gray chassis pool is still not set up in NY/NJ. We still have chassis that are not in position in ports all over the country.

Canada does not have a problem with chassis. The truckers show up to the port with chassis. Port Metro Vancouver and Prince Rupert are growing with the land to expand and the rail lines to take the containers out of the ports.

Update (5/16/2016)

On May 12, 2016, OCEMA announced it would file a new tariff rule to release shippers from liability for inaccuracies in TARE weight. Commissioner Doyle's statement on the new rule is as follows, "I appreciate the ocean carriers taking the very important step of relieving shippers of liability for inaccuracies in the tare weight of ocean containers. The Ocean Carrier Equipment Management Association ("OCEMA") announced the decision by its membership to issue an OCEMA Tariff Rule that would confirm that shippers would have no liability for damages resulting from inaccurate carrier-provided tare weight to calculate Verified Gross Mass ("VGM"). Ocean carriers who are not members of OCEMA could individually adopt the same type of Tariff Rule."