House Chairman Eyes Ocean Regulatory Review

NITL (The National Industrial Transportation League) -- Logistics Management, 8/19/2008 12:44:00 PM

The Chairman of the House Transportation and Infrastructure's Coast Guard and Maritime Subcommittee, Rep. Elijah Cummings (D-MD) said this week that the decision in Europe to ban carrier conferences from engaging in price collusion does raise the need for the U.S. to reexamine its own regulations regarding liner shipping. His remarks were made in Baltimore at a conference sponsored by the Containerization and Intermodal Institute.

Rep. Cummings said that while pro-market forces were introduced in the U.S. in 1998 as a result of passage of the Ocean Shipping Reform Act (OSRA) which brought about confidential service contracts between shippers and carriers—antitrust immunity for conference and discussion agreements were permitted to remain. He said if the result of Europe's action is a drop in shipping rates—it will require careful monitoring to determine if liner carriers attempt to recoup profits in the U.S. trades where price-fixing is permitted. He said it is clear that European authorities believe that removal of the block-exemption regulation (European term for antitrust immunity) would bring about benefits to consumers in terms of lower prices and improved service. Rep. Cummings said these "findings are significant and do deserve close examination" here in the U.S. He invited interested parties to share ideas on what steps might be taken to further enhance the United States' liner system of international carriage.

Rep. Cummings also said his committee will continue to evaluate the Federal Maritime Commission's (FMC) performance in carrying out its responsibilities and whether changes need to be made. Earlier this year, the Coast Guard and Maritime Subcommittee held a hearing on the Commission and were critical of several operating aspects of the agency (Notice, April 18). The Commission is scheduled to provide a follow-up report to Congress by mid-September.

Following Rep. Cummings remarks, there was a wide-ranging panel discussion from industry representatives on U.S. liner regulation, the impact of European changes in removal of the lock exemption as well as the current and future role of the FMC. Mr. Michael Berzon, chairman of the League's Ocean Transportation Committee questioned the need for maintaining price-fixing authority in conferences and discussion agreements stating that most carriers say that it is no longer in practice in light of confidential service contracts introduced under OSRA. Nevertheless, Mr. Berzon said in the case of discussion agreements, the posted guidelines offer clear benchmarks from which contract negotiations often begin.