FMC signal coming on NVOCC confidentiality

FMC signal coming on NVOCC confidentiality

SHORT HILLS, N.J. -- The Federal Maritime Commission is likely to give some indication by the end of this year as to whether or not to allow non-vessel-operating common carriers to sign confidential rate agreements with shippers, said Karyn Booth, partner at Washington-based Thompson Hine LLP. "But the issue won't be resolved, and the decision will be years away," she told the Trans-Atlantic Maritime Conference sponsored by The Journal of Commerce.

If the FMC decides against granting NVOCC exemption or delays its decision, integrated logistics providers like FedEx Corp. and United Parcel Service are very likely to lobby Congress to provide legislative relief, said Ashley Craig, an associate at the Washington-based law firm Thompson Coburn LLP.

"Fedex is getting pretty frustrated and will urge deregulation," Craig said.

The panelists' predictions about the likelihood of the FMC ruling on NVOCC confidentiality highlight the heated debate between shippers and logistics providers, and ocean carriers. Shippers and logistics providers support confidentiality because they say it will enhance rate stability; carriers say the existing conference system ensures stability.

Booth said the FMC would not bow to political pressures in making its decision, and is working hard to work within the legal framework to see if it has the authority to grant the numerous NVOCCs' petition.

If Congress decides to consider granting legislative relief for NVOCCs, it is not "a slam-dunk that it will do so," Craig said. "It will be interesting to see the struggle in Congress between FedEx and UPS on the one hand that have a lot of clout in legislators' districts, and carriers like Maersk Sealand on the other, which don't have post-panamax vessels sailing through those districts."

Craig added that "if relief is not granted, I wouldn't be surprised to see a legislative solution."

If the European Union decides to end the block exemption carriers enjoy from anti-trust and price-fixing immunity, then Canada is likely to also end that immunity, said Mary R. Brooks, professor at Dalhousie University.

Then she said, "It will be interesting to see what the U.S. does when its major trading partners have ended the carriers' immunity."