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

In this new world of Omni-channel—profitable and efficient anytime, anywhere fulfillment is the goal.

The 19 ocean carrier members of the Ocean Carrier Equipment Management Association (“OCEMA”) have joined with six major East and Gulf coast ports to develop a common streamlined “Terminal Weighing Approach.”

Rail carloads, at 238,353 were down 11.4 percent annually, and U.S. containers and trailers were off 7.2 percent annually at 260,026.

This network is comprised of a multifaceted approach that will mesh its global logistics network with 3D printers at more than 60 U.S.-based The UPS Store locations and a collaboration with SAP to foster an end-to-end industrial offering that will mesh SAP’s supply chain offerings with Big Brown’s on-demand manufacturing services and global logistics network.

As global supply chains grow in size, reach, and complexity, they become more vulnerable to a myriad of threats and hazards that can damage businesses and threaten the global economy: terrorist attacks, natural disasters, corruption, labor disputes, and more.

Article Topics

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

Comments

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


© Copyright 2016 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA