Article XI. Container Royalties PDF Print E-mail
Monday, 02 July 2007
ARTICLE XI
CONTAINER ROYALTIES
Section 1. First and Third Container Royalties.

The First and Third Container Royalties (effective in 1960 and
1977) each in the amount of $1.00 per weight ton of containerized
cargo not stuffed or stripped by ILA-represented labor (with lesser
amounts for containerized cargo carried on vessels that are not full
container vessels as determined in the Stein Award, a copy of which

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is appended to this Master Contract as Appendix E) shall continue to
be paid to the various local port and district container royalty funds
until the Container Royalty Cap is reached as provided in Section 4
of this Article XI. The First and Third Container Royalties, which
are subject to the provisions of the Stein Award and any
accommodation approved pursuant to Article XIV of this Master
Contract, shall be used by the various local port and district container
royalty funds to provide supplemental wage benefits to eligible
employees covered by this Master Contract.

Section 2. Second Container Royalty.

The Second Container Royalty (effective in 1971) in the amount
of $1.00 per weight ton of containerized cargo not stuffed or stripped
by ILA-represented labor (with lesser amounts for containerized
cargo carried on vessels that are not full container vessels as
determined in the Stein Award, which is attached to this Master
Contract as Appendix E) shall continue to be paid during the term of
this Master Contract to MILA to be used exclusively for the purpose
of funding the managed healthcare program administered by MILA
in accordance with the provisions of Article XII of this Master
Contract. The Second Container Royalty is subject to the provisions
of the Stein Award but not to the provisions of any accommodation
approved pursuant to Article XIV of this Master Contract.

Section 3. Limitation on Supplemental Wage Benefit.

The supplemental wage container royalty benefit paid to eligible
employees shall not exceed a maximum payout of $16,500 per
eligible employee per year. Employees who enter the industry on or
after October 1, 1996, will not be entitled to receive supplemental
wage container royalty benefits until they have at least three (3)
qualifying years and shall not receive more than $7,500 in any year
in which they receive a benefit, as such benefits are determined to
be payable by the local container royalty fund trustees. Any excess
remaining in a local container royalty fund each year after application
of the $16,500 and $7,500 limitations to the payment of benefits
shall be distributed to employees other than those who have been
paid the maximum benefits as determined by the local port or district
container royalty fund trustees, who shall adopt appropriate trust
amendments as may be required.

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Section 4. Container Royalty Cap.

(a) Cap Levels. The maximum contributions of the First and
Third Container Royalties in any contract year shall not exceed the
Container Royalty Cap level. During the term of this Master Contract
the Container Royalty Cap shall be at the following levels:
Effective Date Cap Level

October 1, 2004 58 million tons
October 1, 2006 63 million tons
October 1, 2008 68 million tons
October 1, 2009 73 million tons


The Container Royalty Cap levels exclude containerized tons in
the Port of Miami/Port Everglades upon which First and Third
Container Royalties are each paid at the rate of 55 cents per weight
ton.

(b) Port Benchmarks. The port benchmarks shall be
determined as follows:
(i) During the term of this Master Contract for each Contract
Year in which the Cap Level changes the port benchmarks
for the ports of New York/New Jersey, Hampton Roads,
Charleston, Savannah, Miami/Port Everglades, and the
West Gulf will be recalculated using the tons reported to
the local container royalty funds in the "Base Contract
Year." The "Base Contract Year" is the year which
commences two (2) years prior to the contract year in which
the Cap changes (e.g., the port benchmarks for the contract
year commencing October 1, 2004, will be calculated based
on the container royalty tons reported in the Base Contract
Year beginning October 1, 2002, and ending September
30, 2003). Individual port benchmarks for the ports of New
York/New Jersey, Hampton Roads, Charleston, Savannah,
Miami/Port Everglades, and the West Gulf will be
calculated using the following formula:
Base Year Applicable CR Cap Level
Local CR Tons x
Base Year CR Tons In
All Master Contract Ports

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(ii) During the term of this Master Contact with respect to the
ports of Boston, Philadelphia, Baltimore, Wilmington, NC,
Jacksonville and New Orleans, the port benchmark for each
of these ports shall be the lesser of (a) the port’s benchmark
as of September 30, 2004, or (b) the tons reported in the
port for container royalty purposes in the Contract Year
ending September 30, 2003.
(c) Distribution of Cap Excess. The payment of First and
Third Container Royalty assessments shall cease in every port when
the number of tons reported to the local container royalty fund in the
port exceeds the benchmark determined using the formula set forth
in Section 4(b)(i) of this Article XI as if that formula were applicable
to all Master Contract ports, and First and Third Container Royalty
assessments in excess of such benchmarks shall be paid to CCC
Service Corporation for distribution as follows:
(i) Forty (40) percent shall be refunded to the carriers;
(ii) Twenty (20) percent shall be paid to MILA; and
(iii) Forty (40) percent shall be paid to an escrow fund
established by a single local port or by a group of ports
("Local Escrow Fund") to pay local benefits.
(d) Benchmark Payments in Excess of Cap Level. In the
event the application of the provision in Section 4(b)(ii) of this Article
XI results in an obligation to pay Container Royalty Dollars Nos. 1
and 3 on tons in excess of the agreed upon Cap Level set forth in
Section 4(a) of this Article XI, such obligation shall be satisfied solely
from that portion of the container royalties in excess of the
benchmarks collected and set aside for distribution to the Local
Escrow Funds pursuant to Section 4(c) of this Article XI without
any allocation of the amount of that obligation to any particular port.
(e) Adjustment of Benchmarks. During the term of this
Master Contract, a port’s existing benchmark may be reviewed and
adjusted prospectively at the beginning of a Contract Year by the
parties to this Master Contract if such port experiences a dramatic
annual decrease in the tons reported for container royalty purposes.
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(f) Limitation on Use of Cap Refund to Local Escrow
Fund. The portion of the Cap refund paid to a Local Escrow Fund
pursuant to Section 4(c) of this Article XI shall not be used for
supplemental cash benefits (except as provided in Section 4(d) of
this Article XI), nor shall the use of this portion of the Cap refund
result in any carrier being considered an employer in relation to any
local port employee pension benefit plan within the meaning of the
Employee Retirement Income Security Act ("ERISA") except in any
port where the carrier already is an employer under ERISA.
(g) Interest Charges. Any carrier failing to pay to CCC
Service Corporation container royalty assessments in excess of the
benchmark in any port as required by Section 4(c) of this Article XI
shall become liable to pay interest thereon at an annualized rate of
eighteen (18) percent for each month or part thereof for which
payment is not received by CCC Service Corporation. With respect
to carriers continuing to pay to any local port or container royalty
fund assessments in excess of the benchmark in that port, any such
local port container royalty fund shall pay such excess to CCC Service
Corporation. Any port or district container royalty fund failing to
pay such excess to CCC Service Corporation shall pay interest thereon
at an annualized rate of eighteen (18) percent for each month or part
thereof for which payment is not received by CCC Service
Corporation. If all payments due in a Contract Year from any local
port container royalty fund for container royalty assessments in excess
of the benchmark in that port are not received by CCC Service
Corporation by the succeeding March 1, then all carriers that are
members of USMX or signatories to this Master Contract can cease
to make further First and Third Container Royalty contributions to
that port container royalty fund until the full amount due and owing
from the fund has been paid to CCC Service Corporation with interest.
Thereafter, all payments of container royalties, including monies
withheld, shall be resumed. Each port and district container royalty
fund shall be obligated to forward to CCC Service Corporation the
fund’s tonnages, payments, and all other information required by
CCC Service Corporation for each fund’s plan year not later than
sixty (60) days following the close of the plan year.
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Section 5. Carrier-ILA Container Freight Station
Trust Fund.

The Carrier-ILA Container Freight Station Trust Fund ("CFS
Fund") shall continue in effect during the term of this Master Contract.
The contribution to the CFS Fund shall be 30 cents per weight ton
during the term of this Master Contract. The periodic distribution of
the amounts to be paid from the CFS Fund and the purposes thereof
shall be determined solely by the trustees of the CFS Fund. The CFS
Fund shall continue to provide funding for training purposes to the
extent that any funds remain after payment for the support of container
freight stations. Training programs in each port or district shall be
operated under guidelines approved by the trustees of the CFS Fund
and shall be funded primarily by funds generated in each local port
or district before application is made to the trustees of the CFS Fund.

Section 6. Carrier-ILA Container Royalty Fund.

The 75 cents per weight ton Container Royalty No. 4 was
eliminated, effective October 1, 1996, and shall not be resumed during
the term of this Master Contract. USMX and the ILA shall amend
the Agreement and Declaration of Trust of the Carrier-ILA Container
Royalty Fund ("CR-4 Fund") to provide that the sole and exclusive
purpose of the CR-4 Fund shall be to provide funding for MILA.
Each port or district container royalty fund shall be required to report
to the trustees of the CR-4 Fund on a basis of not less than once each
quarter the total income from each port’s or district’s collection of
First and Third Container Royalty assessments on a tonnage and
dollar basis. Such information shall be supplied on uniform forms
made available by the trustees of the CR-4 Fund to each local port or
district container royalty fund. The required reports shall be supported
by annual certified public accountant reports in the form now issued
by such local fund’s certified public accountant.

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