The Federal Maritime Commission is making it tougher for small shippers and off-pier freight consolidators to combine forces to meet the terms of rate and volume agreements between shippers and carriers.
Buried in the commission's recent 76-page landmark decision on equal or ''me-too" access to service contracts is a significant section on "co- loading."Consolidators sometimes use co-loading to join their cargo together under one contract without telling the carrier who wrote the service contract, according to Laurie Zack, president of the International Association of NVOCCs and vice president of Sea Cargo International in Chicago.
The commission said: "A shipper signatory to a service contract may not permit other shippers to move cargo pursuant to its contract except under limited circumstances."
"This may be the hottest thing" in the decision, said Carlos Rodriguez, an attorney for the Sonnenberg, Anderson, O'Donnell & Rodriguez law firm.
Because freight consolidators' basic method of doing business is through combining cargo tendered by other parties, "the commission's decision has certainly disturbed the status quo in no small way with regard to the propriety of what has been . . . a routinely accepted business practice," he said.
Ms. Zack, however, said the decision will have only a minor effect
because most carriers already have cracked down on the practice of sharing service contracts.
Authorized under the 1984 Shipping Act, service contracts allow importers and exporters to negotiate lower, non-tariff freight rates with carriers in return for guaranteed volumes over a fixed period.
A carrier is required to make the terms of a service contract available to a second, "similarly situated" shipper if that shipper requests "me-too" access to it. Often, a consolidator seeking such access to a contract enlists the help of other consolidators to meet the volume requirements of the contract.
The commission last week answered a major question by defining a ''similarly situated" shipper as one "willing and able" - with the emphasis on "able" - to meet the terms of a service contract it seeks to access on a "me-too" basis.
The commission placed the burden squarely on the "me-too" shipper to prove it can fulfill the volume commitments in the contract, and gave carriers discretion to evaluate, and reject, a "me-too" request.
In addition, the agency ruled that consolidators, also known as non- vessel operating common carriers, should be treated no differently from any other shippers in a "me-too" situation.
That victory was leavened, however, by the co-loading decision, which appears to make it harder for a consolidator to show it can fulfill a "me- too" service contract.
"I'm not sure how much shippers get (out of the decision)," said David Street, attorney for California Shipping Line Inc. The line, based in Inglewood, Calif., brought the access question to the commission's attention in a 1988 complaint against Yangming Marine Transport Corp. of Taiwan.