FMC INTERIM OSRA REPORT HIGHLIGHTS SHORT-TERM EFFECTS
Confidential service contracts and the declining power of ocean conferences under a new shipping environment created by the Ocean Shipping Reform Act of 1988 are benefiting ocean carriers and shippers, according to an interim statuts report released by the Federal Maritime Commission.
Though more definitive results of OSRA will become known when the FMC issues its final report next summer, preliminary indications show that rates and services “increasingly are being driven by market forces.”
From May 1, 1999 through May 2000, the FMC has received 46,035 new service contracts and 95,627 contract amendments.
Almost all of the contracts were confined to a single U.S. trade lane, and generally carried a one-year duration, according to the FMC study. The commission said it expects to see global contracts become more popular as large shippers and carriers reconfigure their transportation logistics.
Seventy-five percent of the service contracts were signed by beneficial owners of the cargo, while 20 percent were signed by non-vessel-operating common carriers, and 5 percent by shippers’ associations.
The number of liner conferences has slipped from 32 in 1997 to 22 today, while the FMC received 11 sets of voluntary service guidelines, mostly filed by discussion agreements.
The FMC’s preliminary analysis shows that rate and service contract guidelines are being followed most closely by agreements whose members are operating closest to vessel capacity.
“We at the commission believed that it was important to look at the industry one year after enactment of this major legislation,” said Hal Creel, FMC chairman. “While our status report recognizes that it is too early to draw definitive, long-term conclusions, it does provide preliminary views on the short-term effects OSRA has had on U.S. shipping.”