Carriers donÆt need H.R. 6167 special treatment
I saw your editorial ('Carrier immunity should set sail, November American Shipper, page 80), and while can't disagree about the price-fixing aspect, you missed a far more important aspect, the continuation of alliances, how they can operate and the oversight issues.
If your position is 'antitrust immunity should go, period,' you've thrown out the baby with the bath water. Alliances are far more important to shippers and carriers today than the pricing angle. Shippers benefit greatly with alliances providing services to places they would never otherwise serve, more competition for shippers to negotiate, with services provided today at 1988 rate levels!
As we know, price-fixing never worked even when the carriers had full authority and no ability to wander. First it was cash rebates by the Asian and European carriers causing U.S.-flag carriers (yes, there used to be U.S.-flag carrier base) to move for 'independent action' to counter those activities. Eventually the Ocean Shipping Reform Act of 1998 replaced it all with service contracts that move 70 percent of the freight.
But look at H.R. 6167 carefully and the shippers have crafted language to allow alliances, but with virtually no ability to control capacity within the alliance. Once the alliance is in place and approved, they cannot reduce capacity when the slow season comes into play. They can increase capacity to meet market demands, but they cannot remove capacity to meet market demands. Someone creative could argue that if they slow ship speeds to save on fuel, it affects capacity and can't be done!
Some would argue this portion of H.R. 6167 is a giveaway ' they have to negotiate eventually, so ask for this and give it
back when the time comes, just get rid of the ability to discuss price in any way shape or form.
That may be another step in the overall scheme of things, but I believe that H.R.6167 says exactly what the shippers want:
All rate discussions go away. Alliances cannot reduce capacity, there is government oversight into service contracts and almost everything else that was done away with under OSRA.
What is the outcome? A quasi-public utility with no 'profit guarantee' that public utilities have. And when supply/demand ratios get out of kilter, down come the rates.
The shippers have long said, 'put them on the same playing field as us; we can't talk price, why should they?' But H.R. 6167 goes far beyond that and I think it is purposeful. Will the Federal Maritime Commission will have hearings to tell carriers what they can and can't book? Where they have to position equipment? Who they have to accept equipment from? If a service contract is lenient enough? What industry has those types of requirements?
When a manufacturer has a complaint from a customer they either settle amongst themselves or go to court. That's the way OSRA set up service contracts. Shippers don't want a level playing field in dealing with carriers; they want the government to protect them in what should be a plain and simple commercial action, just as in all other industries. Why single out ocean carriers for such special treatment?
Garry Ferrulli
principal, Global Logistics & Transport Consulting LLC,
Chandler, Ariz.
Carriers don?t need H.R. 6167 special treatment
