WORLD SHIPPING COUNCIL SAYS CARRIERS, SHIPPERS BENEFIT FROM OSRA

WORLD SHIPPING COUNCIL SAYS CARRIERS, SHIPPERS BENEFIT FROM OSRA WORLD SHIPPING COUNCIL SAYS CARRIERS, SHIPPERS BENEFIT FROM OSRA
   The World Shipping Council told the U.S. Federal Maritime Commission that the Ocean Shipping Reform Act has enabled shippers and carriers to reach customized one-on-one service contracts in a stable trading environment through the use of discussion and other carrier agreements.
   The WSC, which represents 42 ocean lines which handle about 90 percent of the U.S. international ocean trade, said in a filing with the FMC that the reform law has produced more individualized contract terms regarding quality of service and carrier service commitments.
   Shippers appear to be seeking individualized terms regarding service levels and measures, alternative cargo movement arrangements, treatment of select surcharges, credit terms, contract duration, and liability terms, the WSC said.
   Carriers are seeking more from shippers in terms of certainty in volumes to be shipped and in the timing of such shipments; assistance to achieve bi-directional equipment balances; opportunities to help shippers take costs out of their supply chain, rather than focusing solely on rates; and to achieve faster turn time on equipment, the carrier group said.
   Confidential contracts and the elimination of shippers’ right to “me-too” on rates do not appear to have any major impact on rate levels, the WSC said. “Service contract rates are determined primarily by the nature of the package of transportation and transportation-related services covered by the contract, the value of bargained benefits and costs and market conditions in the trades involved.”
   Absent the publication and non-discrimination provisions, shippers can now bring carriers more deeply into their supply chain management processes and carriers are able to work more effectively to provide customer-specific transportation and logistics solutions, the WSC said.
   Discussion agreements and more flexible conferences which allow independent and confidential contracting have allowed carriers to delve into trade information which in turn contributes to rate and service stability, the WSC said. By sharing important trade information, members of discussion agreements “can avoid panic-driven rate reductions when supply/demand imbalances put downward pressure on rates.”
   “It is not unusual for agreement members to engage in discussions pointing out that certain prices are not recovering variable or out-of-pocket costs,” the WSC said. “Collectively sharing such information can lead carriers to consider and voluntarily adopt appropriate remedial action.”
   Discussion agreements also help to instill carriers’ investment confidence, the Washington-based council said.
   “No agreement member is required to apply any guideline when negotiating its service contracts; nor does failure to apply a guideline subject a member line to any penalty whatsoever,” the WSC said. “Under a regime of individual, confidential contracts, the participating carrier alone, and not a committee of conference lines, is responsible for accepting or rejecting any proposed contract terms.”