Primed for action

Primed for action

In its petition seeking authority to sign confidential ocean container contracts with shippers, UPS enlisted the support of more than 225 U.S. lawmakers who signed letters to the Federal Maritime Commission on the integrator's behalf. Such a robust level of support would make a potential change in law a strong possibility if the FMC rejects the petition when it decides the issue sometime next year.

UPS is not willing to say at this point that it will pursue a legislative change to current rules under the 1998 Ocean Shipping Reform Act, which prohibits UPS and other companies that operate as non-vessel-operating common carriers from signing confidential contracts with shippers. Currently, only shipping lines can sign confidential contracts with importers and exporters.

"We're not going further; we're not speculating on what our next move would be," said David Bolger, a UPS spokesman. "We felt it was appropriate to have the FMC review it before going to Congress...We know it's an option down the road because that's how statues are made and changed."

But in the event UPS should feel the need to take the issue to Congress, it has arrayed considerable support, including more than 200 representatives and 17 senators. The company made "door-to-door" visits on the Hill, Bolger said, educating lawmakers about the OSRA provision and why an exception should be granted. Of the 75 members of the House Transportation and Infrastructure Committee, at least 38 - a bipartisan majority - have filed letters with the FMC supporting the UPS position.

"Members of Congress are aware of this issue," Bolger said.

Yet the issue will not come to the fore in Congress until the FMC acts on the issue, which probably won't occur until the spring. Whichever way the FMC rules in the contrasting petitions from UPS and three other NVOs including BAX Global and C.H. Robinson, the issue promises to be the biggest the agency will face next year, one with major implications for U.S. ocean shipping policy.

"We'll wait and see what the FMC does in regard to this petition before we would consider trying to do anything," said Justin Harclerode, deputy director of communications for the House transportation committee. But with the amount of support UPS has in Congress, "it wouldn't be unthinkable if some member somewhere would try to legislate regarding this."

As a rule, federal agencies are reluctant to counter the wishes of Congress, which determines their budgets, staffing levels and continued well-being. Although the FMC is not a typical federal agency, its members are appointed by the president and approved by the Senate.

In letter after letter, lawmakers made it clear that they want the FMC to grant the exemption. Members of Congress, many of whom sent identical letters of support, noted that the FMC has the authority to provide exemptions to OSRA rules, and that the ocean shipping marketplace has changed since Congress wrote the law in 1998. If congressional intent was unclear when the law was enacted, lawmakers are clarifying it now.

"The Commission was empowered with the ability to make these determinations so that such questions could be answered in a flexible and timely manner, without the necessity of legislative action by Congress," wrote Rep. Doc Hastings, R-Wash., a clear indication that the FMC will save Congress the time of changing the rule itself.

"The UPS petition, citing the recent evolution of the ocean shipping marketplace, is precisely the reason Congress granted such broad exemption authority to the FMC," Sen. Tom Harkin, D-Iowa, said in a typical letter to the FMC. "While anticipating dramatic changes in the ocean shipping industry with the passage of OSRA, Congress did not contemplate how fast or how smoothly the market could adapt to these changes. By granting this petition, the FMC will acknowledge these changes ..."

And while many lawmakers said they were "hopeful" the FMC would give the UPS petition its "utmost consideration and render an equitable decision," other members were more blunt in their direction to the commission.

"I would appreciate the Commission's consideration and support for UPS's petition to enter into confidential service contracts. I look forward to the Commission's favorable review," said Rep. Lane Evans, D-Ill., a member of the House Armed Services Committee.

The FMC also received letters from members of the House and Senate Appropriations committees and from Frank A. LoBiondo, R-N.J., chairman of the House Transportation and Infrastructure Committee's Coast Guard and Maritime Subcommittee.

The FMC is not expected to rule until next spring, said commission Secretary Bryant L. VanBrakle. The record on the petition does not close until Jan. 16. "It's a voluminous record already. There's a lot to look at, not to mention a lot going on," VanBrakle said.

UPS may also have administration support for changes, although perhaps not from the FMC itself. The U.S. Department of Justice also filed a letter with the FMC in support of the UPS petition, although it cited other companies that are interested in the change as well. "The department supports the common intent of these petitions, which is to permit more entities to compete with the VOCCs (vessel-operating common carriers) on an equal footing," the Department of Justice letter says. "When regulatory barriers that confront one class of actual or potential rivals are removed, competition is enhanced. The department believes that exempting all NVOs from all tariff-publication requirements would produce the greatest competitive benefits."