WASHINGTON— Persistence has finally paid off for ocean freight consolidators. Last month consolidators, or non-vessel-operating common carriers (NVOCCs) as they're usually known, won the right to sign confidential contracts with their shipper customers after five years of petitioning for that privilege.

In a 4-1 vote, the Federal Maritime Commission (FMC) agreed to allow NVOCCs to sign "NVOCC Service Arrangements" (NSAs) with shipper customers. That decision, effective January 19, places consolidators on a more equal footing with vessel operators. Carriers that operate ships have been allowed to sign confidential contracts under the Ocean Shipping Reform Act of 1998 (OSRA).

NVOCCs had asked for contracting authority while OSRA was being negotiated, but were rejected. They pressed their case again in 2003 and 2004, when several of the largest consolidators and some transportation industry organizations filed petitions requesting an exemption from that prohibition. In August 2004, most of the petitioners filed a joint agreement laying out proposed changes to the law; the World Shipping Council, which represents ocean carriers, said it would not oppose the group's request. Those actions opened the way for the FMC's decision.

Both shippers and consolidators stand to benefit from confidential contracting. For one thing, the ability to negotiate and sign contracts will take some uncertainty out of pricing. For another, NVOCCs that file contracts with the FMC will be exempted from filing their complete tariffs—a privilege extended to vessel operators under OSRA. Contracting will also give consolidators more flexibility in the kind of services they offer.

Not everyone is happy with the ruling, though. The American Institute for Shippers Associations (AISA), which represents groups of shippers that jointly purchase transportation services, plans to appeal the decision. AISA opposes a provision that prohibits shippers associations with NVOCC members from signing contracts with other ocean consolidators. The FMC included that rule to avoid unresolved antitrust issues in two ongoing court cases.