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

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

As was the case a month ago, the Global Port Tracker report from the National Retail Federation (NRF) and maritime consultancy Hackett Associates is calling for annual import cargo volume gains at United States ports, as retailers gear up for the holiday season.

More than nine months after saying it was not for sale, Long Beach Calif.-based non asset-based third-party logistics (3PL) services provider UTi Worldwide has apparently changed its tune, with the company saying it has entered into a definitive agreement to be acquired by Denmark-based global 3PL DSV for $1.35 billion and $7.10 per share.

September carloads—at 1,417,750—were down 4.9 percent—or 72,597 carloads— annually, and intermodal—at 1,365,980 trailers and containers—was up 1.2 percent—or 16,272 trailers and containers.

Slowing global trade and a bloated orderbook of large vessel capacity mean that container shipping is set for another three years of overcapacity and financial pain, according to the latest Container Forecaster report published by global shipping consultancy Drewry.

The NRF is calling for 2015 holiday sales to see a 3.7 percent annual gain to $630.5 billion, which comfortably outpaces the ten-year average of 2.5 percent.

Article Topics

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


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