Ocean reform bill passes Senate

By Staff -- Logistics Management, 5/1/1998

A long-awaited step toward ocean shipping regulatory reform was taken last month when the U.S. Senate approved The Ocean Shipping Reform Act of 1998. The bill, which still must pass the House of Representatives, includes many provisions sought by the nation's largest shippers. After months of wrangling, the bill also gained support from most U.S. ports, labor groups, and ocean carriers.

Major components of the bill, according to a summary prepared by the National Industrial Transportation League, include:

* Permitting confidentiality of major provisions of service contracts, including rates, service commitments, and liquidated damages.

* Eliminating mandatory tariff filing with the Federal Maritime Commission. Privately posting tariffs will meet the bill's requirements.

* Eliminating the requirement that carriers match service-contract terms for similarly situated shippers.

* Adding exemptions from tariff and service-contract requirements for some commodities. The bill also provides greater flexibility for government agencies to grant general exemptions.

* Reducing the required notice of independent actions by carriers to five calendar days from 10 business days.

* Eliminating the right of conferences to veto independent actions for exempt commodities.

A key to winning Senate passage of the bill was rejection of an amendment proposed by Washington Republican Sen. Slade Gorton that would have allowed non-vessel operating common carriers (NVOCCs) to offer confidential contracts to their customers. Current law allows NVOCCs, which essentially function as freight consolidators, to have confidential contracts with ocean carriers, but not with their own customers. The Gorton amendment had strong support from the Transportation Intermediaries Association, which argued that the proposal was needed to allow small businesses to share in the benefits of the proposed law. The group claims that by not allowing confidential contracts between NVOCCs and their customers--primarily small shippers--the bill gives an unfair advantage to large shippers that can negotiate confidential contracts directly with ocean carriers. The group also contends that treating the NVOCCs differently is inconsistent with the rights of intermediaries in other modes and with the rights of freight forwarders in other nations.

Observers consider prospects for passage by the House to be good. Indeed, some of the bill's supporters say they hope to persuade House leaders to schedule a floor vote early this month, bypassing the committee process.