WSC blasts Oberstar bill, says it risks great harm to shipping

US HOUSE bill, the Shipping Act of 2010, that would eliminate antitrust immunity for ocean carriers, received a hot reception from the big shipping lobby after it was introduced by Minnesota Congressman James Oberstar, also chairman of the congressional transport and infrastructure committee.

"If enacted," said the World Shipping Council, which represents most container tonnage afloat, "the bill would create an ocean transportation system that would make US trades less efficient and more costly for carriers, resulting in less choice, less capacity, lower service quality, and higher costs for US exporters and importers."We do not recommend this. 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," said the WSC.


The bill would result in excessive government regulation, proposing "various forms of rate regulation, mandatory revenue transfers, intrusion into how parties agree to structure their commercial offerings and agreements, and burdensome and ill-defined reporting requirements, said the WSC.


"The proposed legislation would not and could not prevent difficulties if such extreme economic conditions recur in the future," it said, adding: "Capacity shortages in late 2009 and early 2010 were brief, market-driven and unforeseen by shippers and carriers."


The WSC argued, American Shipper reported , that the "existing regulatory structure did not cause these transitory problems, but provided a predictable base from which carriers could efficiently and quickly respond to improved market conditions."


Mr Oberstar based his bill on complaints from importers and exporters about obtaining enough vessel space and sharp rate increases and said "eliminating the antitrust immunity for these conference agreements will increase competition by requiring ocean carriers to compete in the marketplace with the best price and service to get shippers` business. That will benefit industry as a whole."


In October 2007, the European Union eliminated the antitrust immunity for ocean carriers. "I am not aware of any ocean carriers being put out of business because of the loss of that exemption," Mr Oberstar said.


The WSC counters by saying the wording of the bill "would effectively destroy the current system of operating agreements serving American maritime foreign commerce. It would be both procedurally and substantively far more restrictive than the application of antitrust law, and would be wholly out of alignment with every other nations` treatment of such agreements. Impairing carrier operating agreements is not an agenda that has been advocated by shippers, nor is it supported by any findings or recommendations from the FMC."


The bill covers surcharges, insisting that they henceforth "accurately reflect increases in the carrier costs". It would impose mediation and arbitration in shipper-carrier disputes "so that the freight can keep moving". It would prohibit carriers from discriminating against a shipper providing his own container or other equipment and would deal with the bumping or rolling containers.


The FMC would develop remedies and penalties for carriers that engage in deceptive practices.