FMC to analyze EU conference ban

FMC to analyze EU conference ban    The U.S. Federal Maritime Commission plans to launch a two-year study on Europe’s decision last year to abolish rate-setting shipping conferences and its impact on U.S. maritime trade, Chairman Richard A. Lidinsky announced Monday at a major freight transportation conference in Anaheim, Calif.
   The agency will publish a notice of inquiry in the Federal Register in the next few weeks detailing study phases and requesting feedback from shippers, carriers, non-vessel-operating common carriers and other transportation intermediaries, he elaborated after his presentation.
   Conferences give antitrust immunity to ocean carriers to set and adhere to collective rates. The conference structure was mostly eliminated in the United States by the Ocean Shipping Reform Act more than a decade ago. Carriers have since participated in so-called discussion agreements under which they can benchmark services and guidelines, and voluntarily follow the guidelines if they choose rather than sticking to a common tariff.

Lidinsky

   Lidinsky, who was confirmed by the Senate in July, told the joint annual meeting of the National Industrial Transportation League, Intermodal Association of North America and Transportation Intermediaries Association, that the study will analyze changes in carrier market structures, competition, agreements, services, vessel capacity, rates and surcharges.
   The agency will also explore the extent to which the European Union’s repeal of the Block Exemption Regulation governing collective rate setting altered the mix of commodities shipped “and the competitiveness of U.S. container exports relative to EU container exports in foreign countries outside of the EU after the repeal,” he said.
   A key premise behind the study, Lidinsky told AmericanShipper.com, is to determine whether the abolition of conferences caused carriers to cut rates in the trade lanes to and from Europe as the result of new competition and whether they have tried to make up those revenues in other trade lanes.
   The European Liner Affairs Association has argued that the EU should reconsider the conference ban because it exacerbated the decline in ocean container rates caused by the global recession.
   FMC economists initially will consult with industry stakeholders to redefine the second and third stages of the study, which will be outsourced to experts to crunch the data, he said. The project is being modeled after a similar exercise in 1999 to 2001 to assess OSRA's impact.
   NIT League officials applauded the FMC’s decision but acknowledged the difficulty of trying to execute an econometric study in which other variables are held constant in an effort to isolate the impact of competition on rates. Trying to assess that impact when the liner market has collapsed due to the recession will be especially challenging, they said.

Carlton

   The trade association was a big supporter of European shippers who fought to end the conference structure in Europe. It also is opposed to the concept of discussion agreements.
   In October, the Transportation Stabilization Agreement, representing many carriers in the eastbound Asia-U.S. trade, announced that its members had voluntarily agreed to substantially raise rates for the 2010 contracting season that traditionally starts in May.
   “Other industries don’t sit around and say, ‘Let’s benchmark price,’ ” NIT League President Bruce Carlton said at press conference earlier in the day. ' Eric Kulisch