FMC: OSRA IMPACT STUDY A “TOOL” FOR CHANGE
FMC: OSRA IMPACT STUDY A “TOOL” FOR CHANGE
The 1998 Ocean Shipping Reform Act may have received a positive rating from the industry for its first two years in practice, but the U.S. Federal Maritime Commission believes there’s room for further improvements to the law.
On Wednesday, the agency released the results of its comprehensive study on the impact of OSRA on the U.S. liner business.
The study examined several key issues: service contract developments, agreement and voluntary service contract guideline activities, ocean transportation intermediary licensing and bonding, and tariff publishing. Other issues included in the study were controlled carriers, restrictive shipping practices by foreign governments, port trucking and e-commerce.
“My opinion is that OSRA is working just about right,” said FMC Chairman Harold Creel. “It is accomplishing the statutory objectives Congress set forth in its Declaration of Policy in the opening provisions of the statute, particularly the new objective ‘to promote the growth and development of United States exports through competitive and efficient ocean transportation and by placing a greater reliance on the marketplace.'”
“Carriers and shippers are tailoring service contracts to their specific market-place needs. Discussion agreements with non-binding ratemaking authority essentially have replaced traditional conferences as the primary forum for carriers to exercise their antitrust immunity with regard to pricing. And our findings regarding voluntary service contract guideline adherence by agreement carriers indicate that adherence generally depended on the overall market conditions of the particular trade examined,” Creel said.
While the four other FMC commissioners — Del Won, Joseph Brennan, John Moran and Antony Merck — generally agreed with the chairman’s conclusion, there were some differences of opinion on specific aspects of OSRA. Commissioners Won and Brennan, for example, expressed their dislike for OSRA’s continuance of carrier antitrust immunity.
“My biggest concern is that the continuation of antitrust immunity maintains a barrier to the realization of the full benefit of what I believe is a fundamental principle of a free market; and that is the existence of true competition among service providers,” Won said.
The commissioners believe that the OSRA impact study should be used as a “tool” to encourage some changes and enhancements to the law.
“I hope that its findings, analysis, and conclusions will help stakeholders to review their own experiences and seriously consider practical improvements that would further achieve the objective of promoting a more market driven industry,” Moran said.
The study pointed out the need for some legislative amendments in OSRA to better achieve the intent of Congress, such as improving the FMC’s ability to implement its controlled carrier program.
“I particularly endorse the report’s suggestions that Congress authorize greater FMC oversight over the service contract activities of controlled carriers, that the definition of controlled carrier be expanded to include foreign government-controlled NVOCCs (non-vessel-operating common carriers), and that our potential remedies be amended to include retroactive penalties, such as assessment of fees,” Creel said.
Industry officials said they weren’t surprised by the FMC study’s findings, but plan to issue responses to the commission. The National Customs Brokers and Forwarders Association of America said it will file a petition that recognizes some of the intermediaries’ concerns that the FMC noted with respect to tariffs and the inability for NVOCCs to enter into service contracts.
