Future of OSRA still uncertain

By Staff -- Logistics Management, 4/1/2000

OSRA-the Ocean Shipping Reform Act of 1999-may be less than a year old, but the law already is under fire. House Judiciary Committee Chairman Rep. Henry Hyde (R-Ill.) last month held hearings on a bill he filed last October, H.R. 3138, the "Free Market Antitrust Immunity Reform Act of 1999." That bill, often referred to as the "FAIR" Act, would repeal ocean carriers'antitrust immunity while retaining requirements for filing essential terms of service contracts and carrier discussion agreements.

Hyde started the proceedings by saying that he thought the changes made under the Ocean Shipping Reform Act were good, but not good enough. "The market that exists today is freer than what went before. But that is no excuse to stop improving the situation," he said. Hyde also said he believed that foreign carriers were benefiting from OSRA at the expense of U.S.-based consolidators and shippers.

The committee heard testimony from more than a dozen representatives of private industry and government agencies, some for and some against Hyde's bill. Harold Creel, chairman of the Federal Maritime Commission, defended OSRA, saying that there had been some "preliminary signs" that the law was bringing more competition into the marketplace. Creel also said that he believed antitrust immunity was an important prop for the economically shaky but vital liner trades. "[T]he ability to engage in some collective self-regulation apparently provides many carriers with some protection from risk, sufficient to justify their continuing to make enormous long-term investments in serving our trades," he said. "Without these protections, operating ships to serve U.S. shippers would look like an even riskier and less attractive investment for many of these carriers, one that some may well be unwilling to make."

Shippers'and intermediaries'groups contended that carriers'antitrust immunity had raised costs for businesses and consumers, making it more difficult for them to compete both internationally and at home. They said that elimination of antitrust immunity would still allow ocean carriers to engage in efficiency-enhancing activities, a statement that John Clancey of Maersk-Sealand and Timothy Rhein of APL disputed in a joint statement representing the views of 29 ocean carriers.

After listing benefits they said antitrust immunity provided to carriers and their customers, Rhein and Clancey ended by calling Hyde's proposal "illogical" and questioning the value of continuing to require tariff and agreement filing if antitrust immunity were eliminated. "Given that monitoring of competition impacts is the primary basis for FMC filing of service contracts, what purpose would be served by such filing in the absence of antitrust immunity?" they asked.

The outlook for Hyde's bill appears to be unfavorable, at least in this election year when legislators have plenty of other issues on their minds. Carrier antitrust immunity, however, is not a dead issue: Stakeholders will have another opportunity to air their views in early May in House Maritime Transportation Subcommittee hearings on OSRA's impact on the industry.