Distribution-Publications Inc.

Distribution-Publications Inc.

President

www.dpiusa.com

The Federal Maritime Commission has been asked to consider several petitions that, if approved, would radically change the regulation of non-vessel-operating common carriers serving the U.S. At Distribution-Publications Inc., we focus on helping our clients comply with FMC regulations.

Petition P3-03, submitted by UPS, asks the FMC to grant UPS, a non-vessel-operating common carrier, the authority to enter into service contracts with its shipper clients. Three other NVOs have submitted similar petitions.

Will the FMC grant these petitions? We don't think so. In our view, these petitions do not ask the FMC to grant exemptions from the Shipping Act. Rather, they ask the FMC to rewrite the Shipping Act, and this is clearly beyond its authority. Only Congress can rewrite the Shipping Act.

But UPS clearly has friends on Capitol Hill. Nearly 172 members of Congress and 12 senators have submitted comments to the FMC in support of its petition. Once its petition fails to win approval from the FMC, we expect to see a bill introduced and approved by the House of Representatives to give UPS what it wants: "back-to-back contracting."

UPS wants to continue to contract for transportation at the most favorable rates it can negotiate with ocean carriers. It does not want to operate its own ocean vessels. But UPS wants the authority to offer service contracts to its shipper clients, something only vessel-operating common carriers enjoy under the Shipping Act. Vessel operators and longshore labor oppose the UPS petition, and will lobby Congress to block it. Ultimately, we think the Senate will debate and decide on the merits of the UPS petition, but it's too soon to guess its decision.