NIT League favors Shipping Act of 2010
The National Industrial Transportation League, the nation’s largest shipper organization, in a statement Friday said it “greatly appreciates and strongly favors the underlying pro-competitive regulatory reform principles set forth in H.R. 6167, The Shipping Act of 2010.”
The NIT League's support came a week after the bill was introduced by Rep. James Oberstar, D-Minn., chairman of the House’s Transportation and Infrastructure Committee and Rep. Elijah Cummings, D-Md., chairman of the committee’s Coast Guard and Maritime Subcommittee. The proposed law would prevent liner carriers from discussing or agreeing upon rates and charges, including guidelines that form the basis of pricing services for their customers, and enact a host of other changes.
“The bill recognizes that increased competition, reliability and market driven efficiencies are necessary for services provided by the liner carriers in the U.S.-international trades,” said NIT League President Bruce Carlton. “These are all principles that our members have long favored.”
The league did not offer unqualified endorsement of each and every provision in the bill, saying “details of this measure are still being studied.” But it called introduction of the bill “an appropriate first step,” adding it “stands ready to work with the Congress and all interested stakeholders.”
The group said it was willing to “engage in a dialog with the carriers and the other stakeholders — that includes labor, the Congress, the Federal Maritime Commission. All the principal players need to be discussing, at least understanding, the shipper’s perspective of why change is necessary,” said Peter Gatti, the NIT League’s executive vice president.
The NIT League’s statement noted it was “a leading participant in the legislative processes which resulted in enactment of the Shipping Act of 1984 and the Ocean Shipping Reform Act of 1998. The most significant changes brought by OSRA, namely confidential contracting between shippers and individual ocean liner carriers, have resulted in commercial benefits for both the carriers and their customers.”
“However, despite these contractual benefits, ocean liner carriers retained antitrust immunity for collective ratemaking and apply that extraordinary power primarily through “discussion agreements” to jointly discuss supply and demand and establish recommendations for freight rates and surcharges for the U.S. trades. Although actions taken as a result of collective discussions must be “voluntary” and not mandatory, recent events appear to have blurred this distinction,” the NIT League said. “At the very least, general rate increases (GRIs) and surcharges established collectively by carriers though discussion agreements serve as benchmarks for contract negotiations.”
The league said it agreed with Oberstar’s statement that immunity for discussion agreements has “outlived it usefulness and stifles competition.” Oberstar said the Antitrust Modernization Commission in 2007 found there was nothing unique about ocean carriers that warrant an exception from the antitrust laws.
The World Shipping Council, the main trade association for the liner industry, however, said it expects “repeal of rate discussion authority would lead to greater rate volatility and less predictable and less stable markets. We do not recommend this change. Greater rate instability is unlikely to be in the interests of shippers or in the interests of carriers that must continue to make billions of dollars of investment in the capacity needed to serve American commerce efficiently.” ' Chris Dupin