You point out that the 'industry rallied around' the attempt at having NSAs accepted by the FMC, yet relatively few have been filed. I would point out that only a certain portion of the industry rallied around the regulatory process, while another large portion of the industry was virtually silent on the matter. BDP, UPS and a few other U.S.-based companies led the charge. Where were the European-based companies – the truly large NVOs (non-vessel-operating common carriers)? Why weren't they involved? Didn't they have as much interest in this issue? Why not?
This goes back to the change in the law that created the regulations allowing VOCCs (vessel-operating common carriers) to enter into service contracts, and not NVOs. A few U.S.-based NVOs tried to no avail to gain that ability when the Ocean Shipping Reform Act of 1998 was being debated. The VOCCs opposed it then, but why not now?
The simple fact is that NVOs have thousands of 'contracts' with beneficial cargo owners and have had them for years, if not decades. They are not referred to as 'service contracts' or NSAs, rather they are called a variety of other things, such as 'contract for logistics services,' 'logistics contract,' 'supply chain contract,' or other names that don't say 'service contract.' They are filed nowhere, under no jurisdiction. Because they were used primarily by European-based companies long before OSRA passed, those entities said little or nothing when OSRA was being debated. These NVOs had their 'weapon of choice,' a non-filed agreement with their customers. And recall in those days VOCCs had to file select portions of their service contracts, or 'essential terms.' The European-based NVOs saw no reason to do that. Why make them subject to any scrutiny?
It was only when UPS, FedEx and a few others became really involved in the markets that they decided they needed this facility to compete with VOCCs. Their lawyers told them that they couldn't enter 'contracts' with shippers the way VOCCs did. Just look at the record and testimony when OSRA was passed. The word was 'no' to NVO contract filings. What they didn't consider was that the Kuehne + Nagels and Schenkers of this world had contracts, filed with no one. That's the real issue, not the market or the economy, or the changing times. It is purely because the large NVOs have their own contracts with customers that are filed nowhere and under no scrutiny.
Gary Ferrulli
principal, Global Logistics & Transport Consulting LLC
Chandler, Ariz.
