All the planets are in alignment, everybody is on the same page, and all the ducks are in a row.
Non-vessel-operating common carriers that bombarded the Federal Maritime Commission with petitions for relief from tariff-filing requirements of the Ocean Shipping Reform Act have forged a common bond. The NVOs had proposed a smorgasbord of choices to give them parity with ocean carriers, from the ability to negotiate confidential service contracts to the wholesale elimination of tariffs.
Five of the eight petitioners, as well as the National Industrial Transportation League and the Transportation Intermediaries Association in early August told the FMC that they have found a solution they all can live with. Last week, the last critical industry sector weighed in. The World Shipping Council told the commission that it would not oppose the "unified" NVO petition.
All this activity is designed to encourage the FMC to expedite a decision in the cases. More than 14 months have passed since UPS first petitioned the FMC for exemption from OSRA's prohibition against NVO service contracts. Some petitioners are showing their impatience. The FMC has given no indication when it will take up the NVO matter. Nothing may happen until after the elections, or even early 2005.
Delay on the NVOs' petition may affect the course of another slow-moving ocean-transportation issue: international cargo-liability reform. The U.N. Commission on International Trade Law working group that is drafting a new international cargo-liability convention will meet in Vienna Nov. 29-Dec. 6. U.S. delegates will push for "freedom-of-contract" language that would allow contracting shippers and carriers to lower the standard liability limits set forth in the convention. If the U.S. adopts the new convention, it would replace the 1924 Carriage of Goods by Sea Act.
The petitioners that filed supplemental comments with the FMC in August made it clear that the commission's deliberations on NVO service contracts and Cogsa reform were discrete activities, but the two have a curious way of looping back on one another. Peter Gatti, the NIT League's executive vice president, said it's important that there is consensus among U.S. delegates on the freedom-of-contract issue, meaning carriers and NVOs agree. The U.S. proposed freedom of contract in August 2003. Since then, carriers and NVOs have been meeting to work out their differences.
If U.S. law prohibits NVOs from entering service contracts, there is no logical reason why NVOs should support freedom of contract as part of Cogsa reform. U.S. delegates to Uncitral will meet in Washington on Oct. 15. UPS representatives will attend the meeting, spokesman David Bolger said. "There shouldn't be discrimination against NVOCCs, and we're looking for alternative language that doesn't favor carriers over the NVOCCs," he said. "We've made it clear this is where UPS stands; I'm sure the others have done the same."
Chris Koch, president of the World Shipping Council, said the timing of the two issues should not cause an overlap. "By the time we get a Cogsa treaty, we'll be a couple of years down the road," he said. "I expect the FMC will address NVO exemptions considerably before that. I think it's fair to say, by taking the position we're taking, it's also going to make it much easier for the FMC to provide expedited action on this."
"We have forged a consensus among many of the petitioners," Gatti said. "We're hopeful that the consensus can move the commission to act quickly, so that the world is not kept waiting for this major development to go forward in the United States. Other countries recognize that what happens here is important to them."
The "joint supplemental comments" by UPS, FedEx Trade Networks, C.H. Robinson Co., BDP International, BAX Global, the NIT League and the TIA call for NVOs to be able to enter confidential agreements with customers. "NVOCC Agreements" would include the same essential terms as an ocean carrier's service contract, and would be kept on file at the FMC.