Annual Review & Outlook 2013: Distribution-Publications

James E. Devine, Jr.For those of us in the shipping industry’s regulatory sector, we expect the U.S. Federal Maritime Commission to continue its efforts to increase efficiency and to encourage innovative business strategies in 2013. We’re also looking forward to action by the White House and in the U.S. Senate on two FMC commissioner nominations. Lastly, we expect ocean carriers to continue to transition from their traditional pricing strategies to new models.

This past year, the FMC, led by Chairman Richard Lidinsky, updated its rules of practice and procedure to make them more efficient. The commission adopted an innovative new bond requirement for non-vessel-operating common carriers doing business in China, reduced recordkeeping requirements for NVOCC rate arrangements and allowed freight rate indices in service contracts and NVOCC service arrangements. The FMC’s emphasis on efficiency and innovation will continue in 2013.

In early 2012, President Obama renominated Chairman Lidinsky to his post. William P. Doyle of the Maritime Engineers’ Beneficial Association also was nominated to a commissioner post. Because of congressional gridlock, however, neither Lidinsky nor Doyle was confirmed. Lidinsky’s term expired in June, but he continues to serve, and I expect he will be re-nominated in 2013. In Doyle’s nomination we saw a nod to labor, and we expect a re-nomination of Doyle or another labor insider.

For shippers, an important trend in the trans-Pacific trade as we start 2013 is the profusion of general rate increases and peak-season surcharges. Traditionally, carriers filed GRIs and PSS just once a year, but in 2012, carriers filed these throughout the year. Due to intense competition, most cargo moving under service contracts in 2012 was exempt from GRIs, and the multiple GRIs produced little new revenue. As a result, many carriers began applying peak season surcharges throughout the year to boost freight revenue. Shippers will need to remain vigilant as ocean carriers break away from their traditional pricing strategies.

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