DU PONT EXECUTIVE URGES SHIPPERS, CARRIERS TO STUDY RATE PROCESS

DU PONT EXECUTIVE URGES SHIPPERS, CARRIERS TO STUDY RATE PROCESS

Ocean carriers and shippers must reconcile their problems concerning rates and service rather than trying to hammer out compromises that please neither side, a leading executive with E.I. du Pont de Nemours & Co. said Thursday.

Small shippers have formed associations to gain more collective clout when negotiating rates and service with the carriers. But now some of the largest shippers in the country are teaming up in an association to oppose the Trans- Atlantic Agreement's 1994 rate schedule and its limited discounts to high- volume shippers.The group of shippers includes Xerox Corp., Procter & Gamble Co. and PPG Industries Inc. The TAA is a group of 15 carriers that controls more than 70 percent of the containerized cargo on the North Atlantic.

William A. McCurdy, Du Pont's logistics and commerce counsel, said he isn't totally opposed to rate-setting carrier conferences, but he does object to how conferences set their rates.

Speaking at a shipping conference in Fort Lauderdale, Mr. McCurdy suggested that carriers and shippers, plus their vendors, collectively examine what they each do in order to eliminate duplicate services that add to carriers' costs and rates and can make shippers' products less cost-competitive.

Such a process will force carriers to reduce their freight rates, but their costs should fall at an even faster clip, Mr. McCurdy said.

His suggestion received no opposition from Christopher J. Rankin, director and chief executive of P&O Containers Ltd.'s North American Trade Division, a conference carrier.

"I'm critical of the (rate-making) process," Mr. Rankin said. "It's the process we have to attack, not the (conference) system."

Rather than the reactionary evil that some perceive conferences as, the groups have proved innovative over the years, Mr. Rankin said, pointing to such developments as containerization, intermodalism and computerization.

He said that without the protective nature of conferences, competition would erode, and governments would have less ability to ensure their shippers receive regular service.

But Mr. McCurdy said the existing conference system is costing U.S. exports their competitiveness overseas by forcing shippers to pay a "subsidy" to conference lines.

Mr. McCurdy blamed many of the carriers' financial problems on the carriers.

"The carriers have boxed themselves in as a commodity," he said. "Once you create a commodity, you can only compete on price."

The Du Pont executive called for modification of the 1984 Shipping Act to permit true partnerships between carriers and shippers through such means as confidential contracts.

Mr. McCurdy also advocated modification or elimination of certain provisions of the Jones Act, a cabotage law restricting U.S. coastwise service to U.S.-flag ships.