EMMETT URGES OCEAN CARRIERS TO ABANDON RATE-SETTING AGREEMENTS

EMMETT URGES OCEAN CARRIERS TO ABANDON RATE-SETTING AGREEMENTS    Edward Emmett, former president of the U.S. National Industrial Transportation League, said ocean carriers should give up rate-setting conferences and work within collective organizations that address issues of common interests between shipping lines and shippers.
   Conferences are “a relic of the regulatory past,” while discussion agreements should “focus on matters other than rates,” Emmett told the Containerisation International conference in London.
   Emmett stepped down as head of the NIT League on April 1, and is now president of Houston-based consulting firm TranSystems Advisors. He expressed his views on conferences and discussion agreements at the London industry gathering as the European Commission begins its review of EC Regulation No. 4056/86, the European antitrust immunity law for liner conferences.
   “Collective action, particularly in the matter of rates, is counterproductive for the liner industry, because it creates a mindset of ‘us vs. them,’ with ‘us’ being the liner companies and ‘them’ being the customers,” Emmett said. “That mindset has got to change.”
   Emmett said a lot of young people have joined the shipper community after the trucking and railroad transport modes were deregulated.
   “These young people are asking: ‘Why should liner shipping be regulated differently?’ ” Emmett said.
   He conceded that shipping lines need collective organizations to promote their industry and protect their broad interests. Trade associations like the Washington-based World Shipping Council are necessary, he said. Alliances among container shipping lines also “make good business sense,” he said.
   Emmett denied that his call for the end of rate-setting among carriers represents a departure from the position of the NIT League, which has supported the Ocean Shipping Reform Act of 1998, including the retention of the ratemaking immunity of carriers.
   Emmett believes freight rates are not “artificially high” in the post-OSRA environment, and that carrier agreements have been unable to make proposed general rate increases “stick” since the regulatory reform. If carrier agreements were successful in forcing uniform rate increases, shippers would lobby for the removal of their immunity, he told American Shipper.
   The NIT League said last week it would survey its shipper members to find out whether all carriers of the eastbound Transpacific Stabilization Agreement and the Westbound Transpacific Stabilization Agreement were requesting the same rate increases in this year’s service contract negotiations.
   “The problem is that they (rates) don’t bear a relationship with the costs of the individual shipping line,” he said.
   Emmett said both conferences and discussion agreements are forms of collective action among ocean carriers. Discussion agreements may survive, he said, if they operate more like trade associations and don’t discuss freight rates.