CONSOLIDATORS FIGHT FMC OVER CO-LOADING PROPOSAL

CONSOLIDATORS FIGHT FMC OVER CO-LOADING PROPOSAL

Irate U.S. and European freight consolidators Tuesday charged that the Federal Maritime Commission's proposal to tighten rules on combining cargoes

from different shippers to earn volume discounts amounts to a near ban on that practice.

The proposal threatens to cut the number of consolidators serving U.S. trades in half, said Paul Unsworth, president of the American International Freight Association here.European consolidators are scheduled to hold urgent talks with European

Commission officials today to sound the alarm about the U.S. proposal.

Jim White, director general of the British International Freight Association in London, Tuesday said he will meet with senior officials at the EC's competition directorate to explain consolidators' concerns.

The U.S. government "is trying to extend its legislative clout extraterritorially" and must be stopped, said Mr. White.

The FMC last week proposed "narrowing the scope of activity regarded as 'co-loading,' " the industry term given to the practice of two of more consolidators - also known as non-vessel-operating common carriers - combining small and medium-sized lots from shippers in order to obtain volume discounts

from carriers.

The FMC said rules in effect since 1985 have been confusing, and that ambiguities have led to an overly broad treatment of consolidating activities as co-loading services. As a result, rates on a substantial amount of consolidator shipments may be eluding scrutiny, it said.

Two key changes proposed by the commission would prohibit co-loading agreements from covering full-containerloads, and ban the movement of co- loaded cargoes under service contracts between consolidators and shipping lines.

Service contracts are special agreements in which a shipper agrees to move a certain volume of freight with a particular carrier in exchange for a rate discount ranging from 2.5 percent to 15 percent.

The International Federation of Freight Forwarders Associations of Zurich and the American International Freight Association said in a joint statement Tuesday they were shocked at the severe restrictions proposed by the

commission.

Shippers and consumers benefit from lower co-loading rates, and the practice is common in the air freight, trucking and railroad industries, they argued.

"It seems incredible in this age of deregulation and encouragement of free trade that an agency of the U.S. government is pursuing a policy directly opposed to those ends," said Mr. Unsworth of the American association. Mr. Unsworth owns Unsworth Transport International Inc. of Linden, N.J.

The consolidators said the commission's proposal runs counter to President Clinton's repeated statements of support for small business exports because the vast majority of U.S. freight forwarders and transportation intermediaries qualify as small businesses.

Representatives from major carriers said they are studying the FMC proposal. The commission will be seeking comments for the next two months.