Ocean cargo: The Shipping Act of 2010 signals end to cartels

As widely expected, the Federal Maritime Commission is likely to be given more authority next year to end ocean carrier pricing collusion.

The Shipping Act of 2010, introduced by Rep. James L. Oberstar, D-Minn., yesterday will abolish carrier antitrust immunity and prevent carrier executives from convening so-called “discussion groups” used to formalize rate strategy.

The bill also will empower the FMC to mediate contract disputes…something shippers have long waited for.

“The carrier’s freewheeling market share approach to contracts is what took rates down in the first place,” said Jon Monroe, president of Monroe Consulting in Shanghai. “But the real frustration was the lack of communication and the lack of a real partnership.”

As reported in LM, a draft of this bill had been endorsed by a large coalition of shippers this summer. U.S. exporters of agricultural goods had been especially vocal in their support of legislation that might also encourage carriers to provide more containers for westbound deployment.

Oberstar, chairman of the House Transportation and Infrastructure Committee, apparently had been listening.

“Even under the current regulatory scheme, immunity for agreements has long outlived its usefulness,” he said in a statement.

Michael Berzon, chairman of the National Industrial Transportation League’s ocean committee, told LM last month that U.S.shippers were making a compelling argument.

“If enacted, the end of the limited anti-trust immunity would follow the action taken by European regulators,” he said.  “Since the elimination of the EU Block Exemption, it prohibits consultation by groups of carriers to discuss rates in the European trades.”