FACT IS, SHIPPING ACT
ALLOWS AGREEMENTSIf it looks like a fact, talks like a fact, and acts like a fact, let us treat it as a fact. Your editorial of March 20 ("Looks Like a Conference") addressing the recent attempt by various North Atlantic carriers to rationalize the tonnage situation in this disastrously over-tonnaged trade does not appear to have followed this axiom.
Your editorial seems to dwell on some vague idea that there is, or should be, a legal wall preventing conference carriers and independents from reaching agreements. In fact, the Shipping Act of 1984 fully comprehends any such agreement and leaves the decision by independents on whether to enter a conference or any other agreements entirely to their decision. Conferences are, moreover, required to admit any carrier that seeks to become a member.
Further, the facts are that the act was specifically designed to cover any agreement, including agreements between conferences and lines that are not members, and to prevent abuse of market power from all such agreements. All agreements are subject to a real-world test of the impact on the marketplace.
Upon filing, the Federal Maritime Commission must review every agreement to determine whether it will result in an unreasonable reduction of service or an unreasonable increase in transportation costs. Thereafter, the commission is required continuously to review every such agreement under the same test while it is in force.
The facts are that the Shipping Act of 1984 was intended to allow carriers to rationalize their activities as long as it did not increase cost or reduce service in an unreasonable way. It is also a fact that since enactment of the 1984 act, the commission has not been required to bring a single action under the agreement oversight provisions. Understandably, this has been so since service has improved in the intervening years and rates have declined.
Further, it is another fact, as your paper and many other publications have reported, that most of the carriers in the North Atlantic have been operating at a loss - certainly not a case of price gouging or any form of abuse of market power.
The Shipping Act of 1984 was intended to achieve a fair balance between carriers and shippers and to provide the means to maintain that balance through the supervision of the Federal Maritime Commission. Current trade conditions in the marketplace do not in any way warrant its intervention. Far
from failing to exercise its regulatory duties, the Federal Maritime
Commission has maintained a careful vigilance dealing with the actual conditions in the marketplace.
Peter G. Sandlund, Council of European
and Japanese Shipowners' Associations, Washington
CASE DOESN'T JUSTIFY
"Eased Rules Aid Efficiency," by Richard Beilock and James Freeman (Opinion, March 15), appears to make a very good case for the relaxation of entry restrictions in one particular situation, but hardly justifies the sweeping generalization that motor carrier economic deregulation is thereby vindicated.
Entry restriction is the weakest link in the bygone regulatory milieu. It is only faintly related to the essence of economic regulation, which is the oversight of rate levels and the attendant matters of discrimination among shippers and the maintenance of a viable transportation industry.
As a matter of fact, the cited improvement in yield for the unregulated haulers of agricultural goods out of Florida amounts to only 25 percent over the seven-year span, despite the significant reduction in empty miles. My own data for regulated carriers of general commodities in less-than-truckload lots nationally show a 26 percent gain in yield over the same time period. There is no evidence that they have had any improvement in empty miles. At the same time, their profitability has deteriorated.
On the surface it would appear that the Florida haulers (there is no mention of change in unit costs) have gained nothing for themselves, contrary to the Beilock-Freeman assertion that " . . . agricultural truckers are (now) able to make more money." The efficiency that may have been gained in this isolated instance has probably been passed on entirely to the shippers. That may be commendable, but there is no basis for assuming that haulers are better off. And there is no basis for relating this anecdote to economic deregulation of the motor carrier industry. Open entry and economic deregulation are not the same thing.
Dabney T. Waring, Jr.
Director of Cost Research
Motor Common Carriers Associations, Alexandria, Va.