Initial Responses to Carriers - 19 May 08.pdf

INITIAL GOVERNMENT RESPONSES TO CARRIER COMMENTS ON DRAFT USC-6 RFP 19 May 2008

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LOCATION

PARA TOPIC CARRIER COMMENT / RECOMMENDED LANGUAGE GOVERNMENT RESPONSE

1 6 of 61 1.1.1.6.

Refrigerated Container Formula

Inadequate compensation. Carriers should bid all reefer rates.

Description of issue: Commercially, carriers price refrigerated cargoes on a market specific basis and shippers recognize that one size does not fit all. As such formulas are applied in the commercial market Proposed language - 1.1.1.6.2 Refrigerated Container Formula For routes where refrigerated rates are not solicited, 20 foot and 40 foot reefer container ocean rates shall be calculated at 300% of the applicable 20 or 40 foot dry container rate and rounded to the nearest dollar. This formula is not applicable to single factor rates.

Second Proposed Language - 1.1.1.6.2 Refrigerated Container Formula For routes where refrigerated rates are not solicited, 20 foot and 40 foot reefer container ocean rates shall be requested through an OTO.

Agree with carriers’ recommendation to remove the formula and request OTO rates for 20’ and 40’ reefers where rates were not previously solicited.

2 7 of 61 1.1.2.2.

3.1

Out of gauge Flat racks inlands - Afghanistan

Need to clarify that this only applies in Afghanistan, and not in US

Proposed language - 1.1.2.2.3.3 Port transload. The Contractor shall be paid the transload surcharge for Karachi to transfer cargo from flatrack to truck and to flatrack from truck at rates in Schedule of Rates Table 6. The port transload applies to all flatrack bookings where the cargo height exceeds 100" but is less than 120".

Believe this is clarified by the paragraph that this is a sub-paragraph of. Paragraph 1.1.2.2.3 states the subsequent subparagraphs apply to shipments to and from Afghanistan via ports in Pakistan.

3 1 of 65 2.A Scope The carriers object to the last sentence of the first paragraph. As drafted, there is no control over contract changes imposed by individual shipping orders.

2.A Scope This contract is to provide international cargo transportation and distribution services using ocean commonor contract carriers offering regularly scheduled commercial liner service for requirements that may arise in any part of the world. Service exempted from the Jones Act is included in the scope of this contract.Contractors shall be capable of providing ocean, intermodal, and related transportation and distribution services to support their offered services as required herein. This contract is primarily for requirements sponsored by the DoD. Other organizations may fill their requirements through this contract only as designated by the Contracting Officer (CO). This contract shall apply to services performed in peace time and contingencies as defined herein. This contract is not subject to terms or conditions of Contractors'tariffs except for war risk or as otherwise specified in this contract. The accepted booking, in conjunction with the terms contained in this contract, constitutes the contract of carriage. This contract applies to Unit Movement Cargo and Other Than Unit Movement (OTUM) Cargo. Unit Movement Cargo is described by Unit Line Numbers (ULNs) and Plan Identification Numbers (PIDs) in the Joint Operation Planning and Execution System (JOPES) - whether contingency, exercise or administrative in nature – whether characterized as deployment, redeployment or retrograde cargo.

Agree with carriers’ recommendation. RFP will reflect new language.

4 9 of 65 3.A.7 Schedule Maintenance

The Government needs to provide an automated process which carriers can create IBS schedules in and update those schedules.

Description of issue: The current manual IBS schedule process is tedious and time consuming. Requiring carriers to maintain a schedule in IBS for one shipment per month is unrealistic. As discussed at the IPT, IBS schedules should be maintained when there is cargo moving on a weekly basis. Further, the government requirement to provide a forecast for port pair or trade route locations was not provided.

Proposed language:

3.A.7.1 For service between countries or ports for which there is more than one shipment forecast per week, the Contractor shall provide and maintain schedules in IBS at least 45 days prior to the earliest sail date. For “Short Sails” of 3 days or less, the Contractor shall provide schedules in IBS 15 days in advance of vessel sailing.

3.A.7.1.1 The list of ports/countries that are forecast to have one or more shipments per week will be updated quarterly and

Will continue with USC05 language.

posted to the SDDC website.

3.A.7.2 The U.S. Government will request routing proposals for service between ports for which there is less than one shipment per week.

3.A.7.3 The Contractor shall accept, reject, or counter on the same working day to a request for routing proposals received prior to 1430 local time. For a request received after 1430 local time, the Contractor shall respond by 1200 local time of the next working day.

3.A.7.4 Contractor proposal shall include the military voyage number obtained from IBS. Request for routing proposals shall be by email until such time as this information can be requested and replied to via EDI.

5 11 of 65 3.A.14.

Reefer Equipment

Modify the language from RDD plus 21 days to 90 days in order to provide consistent reporting and equipment supply.

3.A.14.2 The Contractor shall provide continuous measurement of internal temperature using a Ryan-type recorder or equivalent capable of continuous recording from availability date for a period minimum of 90 days to provide consistent reporting and equipment supply. Contractor shall provide measurement data upon request from the Government.

Agree with carriers’ recommendation. RFP will reflect new language.

6 14 of 65 3.B.1.4 Automated Booking

.B.1.4 Automated Booking Language should read that this applies only to container and not applicable to breakbulk cargo. Agree. Additional language will be added to

RFP.

7 17 of 65 3.E.1.4 Exceptions for Shipments to Japan

Reinsert language from USC05 relating to USFJ Form 380EJ. Carrier entitled to proper compensation.

3.E.1.4 Exceptions for shipments to Kobe, Hakata and Nagoya, Japan. Due to the absence of Transportation Movement Offices (TMO) at Kobe, Nagoya and Hakata ports, the following ancillary service shall be provided by the carrier for these specific ports. In addition to the carrier's basic service, the carrier shall provide courier service to be performed by a licensed customs broker for each port. The carrier will present the certified and authenticated Customs Free Import or Export of Cargo or Customs Declaration of Personal Property, USFJ form 380EJ together with the Ocean Carrier Arrival Notice (OCAN) to the customs office. The courier service charge will be ordered and certified by the COR of the cognizant military terminal for USFJ Form 380EJ prepared per vessel arrival. The Government shall pay a flat rate of $70.00 per USFJ form 380EJ per clearance for the vessel in a port.

Since the $70.00 is a known cost per container for these locations, carriers should roll up this cost into the rate for each container.

8 17 of 65 3.E.1.5 Customs Clearance Additional Service

While language is the same as USC05, Attachment 6 contains no provisions for payment of these types of services. Carrier is entitled to full reimbursement of taxes, dues, fines and other charges customarily levied on the cargo.

During the effective period of this contract, the U.S. Government may obtain additional customs clearance service not specifically identified in Paragraphs 3.E.1.1 or 3.E.1.2 above. Examples of these services are payments for taxes, dues, fines, and other charges customarily levied on the cargo. Such service may be obtained from the Contractor as necessary. Services and the price for the Contractor’s performance of such services shall be obtained as mutually agreed by the Contractor and the U.S. Government. Contractor will be reimbursed for the payment of taxes, duties, fines, and other charges levied on the cargo in accordance with Attachment 6 – Additional Charges.

Agree with carriers’ recommendation. RFP will reflect new language.

9 18 of 65 3.F.4 Container Pick Up/Return

The Government’s attempt to bill the Carrier for pickup delays is not practical. Government CMST notices are often incomplete and inaccurate. The Government language fails to recognize locations that require transit times that are longer than 3 days.

Unless otherwise agreed The Contractor shall remove empty containers within three business days after receiving notice from the U.S. Government that the container is available. The U.S. Government may submit to the Contractor documentation for payment of additional costs incurred as a result of Contractor’s delay. Exception: The 3 business day rule does not apply for empties in Iraq, Afghanistan, Pakistan, Uzbekistan, Kyrgyzstan, Tajikistan, and Kazakhstan.

Based on carrier input and customer needs The RFP will contain the following language:

“Except in Iraq, Afghanistan, Pakistan, Uzbekistan, Kyrgyzstan, Tajikistan, and Kazakhstan, the Contractor shall remove empty containers within three business days after receiving notice from the US Government that the container is available. The US Government may submit to the Contractor documentation for payment of additional costs incurred as a result of Contractor’s delay. In Iraq, Afghanistan, Pakistan, Uzbekistan, Kyrgyzstan, Tajikistan, and Kazakhstan the Contractor shall remove empty containers within 7 business days after receiving notice from the US Government that the container is available.”

10 23 of 65 3.G.2.5 Airlift Clause as expanded is not practical. It imposes unreasonable penalty on the carrier.

3.G.2.5 Description of issue: The carriers are not aware of any instance where under commercial practices cargo is required to be airlifted for failure to perform. Also the carriers are not aware of any instance where the USC05 clause was utilized and the expansion to cover additional commodities is unnecessarily punitive.

Proposed language: The Contractor shall arrange, at contractor expense, airlift of any mail shipments that miss two consecutive sailings to include the booked sailing due to the Contractor’s failure to perform.

Agree with carriers’ recommendation. RFP will reflect new language.

11 24 of 65 3.G.4.4 Reefer Maintenance

Cannot be reasonably applied as written. Delete clause and reinsert USC05 reefer maintenance compensation provisions.

G.4.4 Reefer Maintenance- When onward movement has been delayed due to the fault of the Government and free time has expired, the carrier will be reimbursed for additional expenses incurred in maintaining the operations of the refrigerated container. These maintenance charges will not apply while containers are in transit status in accordance with the booking terms of this contract. The parties recognize that while the refrigerated containers are in the possession of the carrier, the carrier normally incurs costs in maintaining their operation. Accordingly, for maintenance costs incurred after the expiration for free time, while the refrigerated container is in the carrier's possession the carrier will be reimbursed for such costs pursuant to the per diem rates in Columns A and B below. When the container is in the possession of the Government, the carrier will be reimbursed its actual expenses for maintenance services ordered and performed. The carrier must certify to the CO that it in fact incurred these costs and submit an invoice in accordance with Attachment 6 of this contract. When the Government retains/orders (see accessorial for genset rental) the genset after the delivery of the reefer to the consignee, the carrier will be entitled to a genset rental charge from the date of delivery to the date the Government returns the genset to the carrier or purchases the gensets in conjunction with purchasing a reefer. (1) Column A- per diem or part thereof charge when refrigerated containers are delayed at those facilities where power is available for direct connection to the Carrier's container.

(2) Column B- per diem or part thereof charge when refrigerated containers are delayed at those facilities where the Carrier is required to maintain operation of refrigerated container without the use of electrical power.

Language as currently written in Draft RFP is identical to USC05.

12 28 of 65 3.g.11.1 Port Storage (Demurrage)

Add "or cargo" to the end of 3.G.11.1 to include port storage for breakbulk. Delete the submission requirements of 3.G.11.2.

Carrier will provide copy of the tariff and port invoice in order to receive payment. Delete the term Demurrage

3.G.11.1 When onward movement has been delayed due to the fault of or at the specific request of the U. S. Government, the Contractor shall be reimbursed for actual expenses incurred in the storage of containers or cargo. 3.G.11.2 The carriers will submit an invoice in accordance with Attachment 6 of this contract and will include the following attachments to the invoice:

(1) Copy of the Port Invoice indicating proof of incurred costs

(2) Copy of the applicable port tariff citing the applicable rate

Agree with carriers’ recommendation. RFP will reflect new language.

13 28 of 65 3.H.1 Stop Offs Reinsert clause as stated in USC05. Government changes to the clause will allow shippers to revert to past practices of illogical, impractical sequential geographical routing, causing carriers to incur additional unreasonable and uncompensated costs.

3.H.1.3.1

Agree with carriers’ recommendation. RFP will reflect new language.

Description of issue: The proposed change to the USC05 clause allows the shippers to return to the past practices of routing cargo using stopOff sequences that are not logical. Also if the additional stopOff require the trucker to travel large distances then they must be compensated.

Proposed language: A “per container” stopoff charge of $150 CONUS and $225 OCONUS shall be paid for each stopoff after the first stop off. After the third stop, and if the inland service provider shall go into overnight to make the next delivery, the stopoff payment shall double. If the inland service provider shall go overnight on Saturday and/or Sunday to make delivery, then the stopoff payment shall triple.

3.H.1.3.2 When total distance traveled in excess of any one-way mileage between the contractor's terminal and either origin or destination exceeds 50 miles, an additional stop-off charge will be paid for each 50 miles or fraction thereof.

14 29 of 65 3.H.3 Leasing Containers

Carriers see no valid economic reason for the arbitrary reduction of USC05 leasing rates.

Leasing of Containers -- The draft USC-06 solicitation seeks to reduce the mandated equipment leasing rates by 30 to 50 percent. The Leasing of Container provisions are rarely if ever used under previous USC contracts. Rather than debate the reasonableness of rates without any context of volume, duration, market conditions, equipments types and other factors that impact pricing, the Carriers recommend deleting the container leasing provisions. If and when the Government seeks to lease containers, the parties can negotiate an agreement on a "one-time only basis." In the alternative, the USC-06 contract should allow Carriers to propose leasing rates.

After careful consideration, we have decided to remove the container leasing provisions.

15 30 of 65 3.H.7 Cargo Rinsing Service

Will this be an accessorial in CARE?

Suggest the language for Cargo Washing and Cargo Rinsing be better defined to determine if there is a difference between rinsing and washing of the cargo. Also, when ordered the rates for the services once described by the Government will be in accordance with the Table of Accessorial rates.

Yes, this will be an accessorial in CARE.

Agree with carriers’ recommendation. RFP will reflect new language.

16 32 of 65 3.I.6.4 Stowage prestow plan

For BB/unit cargos need to receive load list minimum of 5 business days prior to vessel arrival to create prestow plan Concur with need to provide load list to carrier prior to vessel arrival. Will add language to

RFP.

17 32 of 65 3.I.6.6 Acceptable Cargo Space

BB/Unit cargos- accurate cargo details( dims and quantity) needed to be provided upon cargo validation

3.I.6.6 Acceptable Cargo Space The Contractor shall provide acceptable space for the cargo. The Contractor shall bear all expense of providing acceptable space. If at the time for loading the cargo, the space provided is not acceptable, the Contracting Officer may reject the space; except that the Contractor and the Contracting Officer may agree that the U.S.

Government shall properly prepare, clean, ready or provide normal access to the space at the Contractor's expense. If space otherwise acceptable is so situated in the vessel that in order to discharge cargo stowed therein it shall be necessary to first discharge, move or otherwise handle cargo, the costs of discharging, moving or handling and reloading such cargo shall be borne by the Contractor unless the Shipping Order shall provide otherwise. Any questions as to what constitutes acceptable space which cannot be disposed of by mutual agreement between the Contractor and the Contracting Officer shall be a dispute within the meaning of that term as referred to in the Disputes Clause of this contract. If, at the time for loading the cargo, the specifications and/or description of the cargo vary from that of the booked or otherwise communicated data, the contractor shall not bear the burden of preparing, cleaning or making readily available sufficient space to load the cargo, The government shall bear all expense necessary to first discharge, move or otherwise handle cargo to create such sufficient space for loading.

Agree with carriers’ recommendation. RFP will reflect new language.

18 45 of 65 NA Reefer Maintenance

Reefer clause was not included in the exigency area - G.4.4 Reefer Maintenance- When onward movement has been delayed due to the fault of the Government and free time has expired, the carrier will be reimbursed for additional expenses incurred in maintaining the operations of the refrigerated container. These maintenance charges will not apply while containers are in transit status in accordance with the booking terms of this contract. The parties recognize that while the refrigerated containers are in the possession of the carrier, the carrier normally incurs costs in maintaining their operation. Accordingly, for

The earlier Reefer maintenance clause (at paragraph 3.G.4.4) is applicable to the exigency areas in the same fashion as non-exigency. As stipulated in the Exigency Area section (at paragraph 6.B), “All other terms and conditions maintenance costs incurred after the expiration for free time, while the refrigerated container is in the carrier's possession the carrier will be reimbursed for such costs pursuant to the per diem rates in Columns A and B below. When the container is in the possession of the Government, the carrier will be reimbursed its actual expenses for maintenance services ordered and performed. The carrier must certify to the CO that it in fact incurred these costs and submit an invoice in accordance with Attachment 6 of this contract. When the Government retains/orders (see accessorial for genset rental) the genset after the delivery of the reefer to the consignee, the carrier will be entitled to a genset rental charge from the date of delivery to the date the Government returns the genset to the carrier or purchases the gensets in conjunction with purchasing a reefer. (1) Column A- per diem or part thereof charge when refrigerated containers are delayed at those facilities where power is available for direct connection to the Carrier's container. (2) Column B- per diem or part thereof charge when refrigerated containers are delayed at those facilities where the Carrier is required to maintain operation of refrigerated container without the use of electrical power.

of this contract not in conflict with this section shall apply to Exigency Areas.”