League urges house review of shipping act

NITL (The National Industrial Transportation League) -- Logistics Management, 6/24/2008

The League told members of the House Transportation and Infrastructure's Coast Guard and Maritime Transportation Subcommittee yesterday (June 19) that Congress should conduct a comprehensive review of the Shipping Act as there are serious questions on whether carrier liner immunity should be continued in the U.S. trades.

Appearing on behalf of the League was Michael Berzon, chairman of the Ocean Transportation Committee and President of Mar-Log, Inc. He told the subcommittee that a review of liner immunity was warranted since: the shipping industry has changed substantially over the past ten years when the Act was last reviewed culminating in the enactment of the Ocean Shipping Reform Act of 1998 (OSRA); that Europe will soon eliminate the ability of carriers to fix prices and that will give European industries a distinct advantage over their U.S. counterparts; that an independent commission (Antitrust Modernization Commission) told Congress last year that the antitrust immunity afforded to liner carriers has outlived any utility and should be repealed; and, that antitrust immunity for the aviation and motor carrier industries was recently removed by two executive branch agencies.

Assuming that Congress agrees with this conclusion, the League said other reforms will be necessary. For example, service contracts that must now be filed with the FMC are an expensive administrative burden and cost to the carriers that ultimately falls on their customers. Mr. Berzon told the subcommittee members that the League believes this requirement is a "make work project" that has little or no value and could be easily eliminated or modified.

Among the changes that Congress should consider, the League said, are:

eliminating the fixing of price and service terms among carriers;
eliminating the filing of service contracts and NVOCC service arrangements with the FMC;
retaining the concept of common carriage;
eliminating the "filed-rate doctrine"; and,
retaining the Department of Justice authority to review ocean carrier mergers.

For a complete copy of the League's testimony click here: http://www.nitl.org/testimony6-19-08.pdf. Joining Mr. Berzon on the industry panel were: Peter Freidmann, executive director of the Agriculture Transportation Coalition; Win Froelich, for the National Association of Waterfront Employers; Mary Jo Muoio, National Customs Brokers and Forwarders Association of America and Stanley O. Sher, World Shipping Council (WSC).

With the exception of the WSC the other industry witnesses shared common views on questions regarding the retention of liner antitrust immunity, its impact on the current shortage of ship capacity and equipment for exports; as well as the questionable value of liner immunity with regard to the carriers' ability to benchmark rates, services and ancillaries as a foundation for contract negotiations.

Mr. Sher of the WSC cautioned committee members that several factors warrant the retention of liner immunity, including the great success that the industry has experienced under OSRA. Unforeseen future changes, he said, will require the industry to be flexible and that the Congress needs to provide the FMC with the tools to craft responses.

The hearing was titled, "Federal Maritime Commission Management and Regulation of International Shipping." It came as a follow-up to a hearing held in April at which the subcommittee told the standing FMC commissioners they did not collectively make decisions and were not effectively overseeing the administration of the Commission. The congressional panel also charged that the FMC rarely met in public session to consider either administrative or regulatory issues (Notice, April 18).

The Commissioners said that since the April congressional hearing they have instituted several changes including public and private sessions to make decisions on both pending business as well as administrative matters.

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