REVIEWING THE SHIPPING ACT

WHEN CONGRESS PASSED the Shipping Act of 1984 it mandated a legislative review five years down the road. Halfway along on that route, the industry last week staged a midterm review. Sponsored by the Containerization and Intermodal Institute and the Maritime Administration, this effort assured that Congress will have facts, not just more argument, when it is called upon to determine necessary amendments.

Over the years, the lack of consensus in the industry has sometimes been an excuse for legislative inaction. The midterm review didn't produce a consensus, either. What it did produce was a series of reports on what the act has done - its accomplishments, its failings - from the standpoint of carriers, shippers and rate-making ocean conferences.For example, Manuel Diaz, executive director of the U.S. Atlantic/North Europe Conference, warned that the 1984 act must not go the way of the 1961 one. Because of its so-called public interest feature, that statute spawned a series of legal actions that completely defeated its purpose. Twelve years after it was passed, Mr. Diaz maintained, the regulatory process was in disarray, carrier agreements languished on file in Washington, and the industry was forced to live with artificial conferences reflecting 60-year-old voyage and trading patterns, completely ignoring the technological impact of the container.

Ronald Gottshall, managing director of the TransPacific Westbound Rate Agreement, declared that distortions of the intent of the 1984 act already have been seen in the application of service contracts, which it authorizes, and independent action, which it mandates for conference agreements. Independent action - below conference rates intended as a way to meet unusual outside competition - has instead become the norm. Service contracts - which guarantee a special rate and level of service in return for an assured volume of cargo - have, in his view, depressed rates generally and probably have done more to damage carrier revenues and viability than anything else in recent years.

Shipper representatives applauded service contracts, but asked for greater confidentiality of terms. But is the hope of confidentiality an

illusion? Rates don't really remain confidential for more than a matter of days, some hearers noted.

John R. Arwood, chief executive of Trans Freight Lines, had high praise for the section of the act that, for the first time, permits carriers to join with others to rationalize their services. Without this "new freedom" bestowed by the 1984 act, he said, every operator on the North Atlantic would be in even more serious jeopardy.

Richard V. Parks, president of Farrell Lines, however, said some aspects of the new law have been nothing short of devastating for U.S.-flag carriers. Service contracts, independent action, the changes governing intermodal rates, all have depressed revenues, he said. But most important, he said, the Federal Maritime Commission missed a great opportunity to counter the malpractices of some foreign-flag operators. The greater freedom from regulation under the act, he asserted, actually is "more freedom to do what one needs to, illegal if necessary, in order to secure the cargo."

Such conflicting views may suggest the industry and its users are in hopeless discord. Not so. The real message is that firm, fact-based positions are taking shape. They will provide the best guidance for amending the act. At the midterm review, shippers and carriers, rather than congressional staffers, were credited with hammering out the 1984 act. If the industry could get together once, a speaker remarked, "we can do it again."

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