Subscribe to our free, weekly email newsletter!


Federal Maritime Commission to examine confidential ocean cargo service contracts

The FMC is keen to explain to shippers the benefits of the proposed “Freight Index”
By Patrick Burnson, Executive Editor
April 11, 2012

Peter Friedmann, executive director of the Agriculture Transportation Coalition met with Federal Maritime Commisssion Chair, Richard A. Lindinsky, last week to discuss confidential service contracts and their negative impact on U.S. exports.

According to Friedmann, the FMC is keen to explain to shippers the benefits of the proposed “Freight Index.”

Supporters of a freight rate index claim two benefits, he added.

• First, it provides a “benchmark” as to the rates in a particular trade lane. If it was commodity specific, it would provide a benchmark for rates of that commodity in a particular trade lane. 
• Second, to provide a basis by which a shipper could “hedge” freight rates, and thus avoid surprise increases for a period of time, say, 6 months.  Various investment firms, are very interested, in participating in this initiative. They would create a new trading vehicle that would be available for hedging purposes.

Friedmann said there are still many questions, however. Would such a benchmark be useful? Is it appropriate to use confidential service contract data to create a public index? What if someone doesn’t want his or her information included? Might publication of rates in specific trade lanes for specific traffic might enable third parties to identify the shipping patterns and rates of certain shippers, and thus create a competitive problem?

“This proposal deserves careful consideration, if only because Lidinsky is the first Chairman of the FMC who has been willing to say, publically and repeatedly, that his overriding objective is to assure an ocean transportation system that serves the needs of U.S. exporter,” said Freidmann. “He is genuinely interested in understanding if the shipping public would find freight rate indexing useful, and if the Commission should extract the rate information from contracts, for a broad freight index?”
 
Lidinsky is scheduled to address the annual conferences of the National Customs Brokers and Forwarders Association of America April 24 in Hollywood, Fla. and at the and the Agriculture Transportation Coalition June 21 in San Francisco,

 

 

 

 

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Many companies are turning to Global Trade Management (GTM) as a viable solution to address the complexities associated with international trade. But how do you successfully build a business case for GTM software?

Various media outlets reported this week that UPS will pay $25 million to settle allegations that it filed false claims to the federal government over guarantees it made related to delivery of Next Day air overnight packages.

While the dust continues to settle at West Coast ports after a nine-month labor dispute that saw the two main parties involved–the Pacific Maritime Association (PMA) and the International Longshore & Warehouse Union–reach a tentative labor agreement on February 22, the PMA said yesterday that its members voted to ratify a new contract with the ILWU.

The United States House of Representatives yesterday passed legislation, entitled H.R. 2353, the Highway and Transportation Funding Act of 2015, by a 387-35 margin that extends current law and authorizes surface transportation programs through the end of July.

As the supply chains of high-tech shippers continue to mature and innovate, coupled with rapid growth, it is not a huge surprise to see them further leverage current strategies and lay the groundwork for newer ones, when it comes to further expanding their manufacturing supply chain capabilities. That was a key theme in the fifth Annual UPS Change in the (Supply) Chain (CITC) survey that was rolled out today.

Article Topics

News · Ocean Freight · Ocean Cargo · Trade · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA