Shippers rail against TSA plan

Shippers rail against TSA plan
Nit League, AgTC, NCBFAA warn that allowing lines to expand discussion agreement would severely impact trade.

By Chris Dupin

   Shippers and intermediaries weighed in with comments to the U.S. Federal Maritime Commission on Thursday against a proposal that 14 transpacific carriers be allowed to expand their ability under a discussion agreement to jointly discuss and agree on supply and rationalization of ship capacity.
   The National Industrial Transportation League said the proposal submitted last month by the Transpacific Stabilization Agreement “has the strong potential to significantly distort the market for ocean transportation services in the eastbound Far East trade” and “has the potential to be harmful to shippers.”
   In a letter sent to the FMC Thursday afternoon, the NIT League, which represents more than 600 U.S. shippers, said, “exercise of the authority to achieve substantial capacity reduction would artificially impact transportation rates and service options for shippers and receivers,” and “may be in violation of the prohibition in the statute against ‘substantially anticompetitive agreements’ in U.S. law and inconsistent with policies adopted in the Ocean Shipping Reform Act of 1998.”

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   TSA members are said to control 85 percent to 90 percent of transpacific capacity, according to various filings.
   NIT League asked the FMC to deny a request by the carriers for expedited review and request additional information to better understand the TSA plans and evaluate whether the amendment is a “substantially anticompetitive agreement in violation of the Shipping Act.”
   The NIT League said it is “sympathetic to the economic difficulties that the ocean carriers are facing,” but they are “not unique to their industry. Businesses of many forms are suffering.
   “However, U.S. businesses must address the economic crisis by cutting costs, reorganizing and making sound strategic decision,” it adds. “The league does not believe that collective discussions between competitors concerning the overall supply of services is the appropriate means for addressing an economic downturn and loss of revenue by the carriers.
   “The problem of overcapacity is also not entirely due to the economic recession, but rather has also been created by the carriers’ own decision to purchase increasing large containerships,” the NIT League added.
   While the TSA is an agreement among carriers bringing freight into the country, the Agriculture Transportation Coalition, which represents U.S. exporters, also sent the FMC a letter Thursday, saying it “strongly opposes” the TSA’s proposed amendment.
   “The proposed collective actions to manipulate or even discuss and manipulate capacity are contrary to the stated purposes of the Shipping Act,” the group said.
   The proposal would stymie exports, reduce competition and exacerbate what is already a crisis facing U.S. exporters,” AgTC said.
   “At a time when the U.S. economy desperately needs every job we can sustain domestically and every dollar of export revenue we can generate, it is unreasonable to allow our access to the foreign market to be controlled and constrained by the proposed expansion of agreement authority,” the coalition said.
   The National Customs Brokers and Freight Forwarders Association said it was concerned that the request could lead to less service and higher rates.
   “NCBFAA believes that the proposal on its face raises concern that it could result in an unreasonable reduction in transportation service or an unreasonable increase in transportation costs,” said the letter from Edward D. Greenberg, the group's counsel.
   “No approval should be considered by the (FMC) unless or until the carriers are able to demonstrate that neither of these fears are justified,” said the letter from the group.
   “TSA members, all foreign carriers, are no more deserving of special consideration than any other company facing the problems caused by current economic conditions,” the group said.
   Headquartered in Washington, NCBFAA represents nearly 800 freight forwarders, customs brokers, ocean transportation intermediaries, non-vessel-operating common carriers and air cargo agents. ' Chris Dupin