NIT League supporting confidential contracts for NVOs

NIT League supporting confidential contracts for NVOs

The National Industrial Transportation League, in a major change of position, said Friday that it supports the ability of ocean transportation intermediaries known as non-vessel-operating common carriers to sign confidentially negotiated service contracts with their customers.

The NIT League, the nation's largest organization of shippers, made the statement in a filing with the Federal Maritime Commission in support of petitions filed in recent weeks by several NVOs including United Parcel Service, BAX Global, Ocean World Lines and C.H. Robinson Worldwide, all seeking confidential-contracting rights.

Under the 1998 Ocean Shipping Reform Act, which the NIT League played a key role in helping get enacted, only vessel operators in the U.S. trades are permitted to sign contracts in which freight rates and other key terms remain confidential.

The new position by the NIT League is further evidence of political adjustments to the changing face of the global transportation and logistics industry.

The NIT League told the FMC that it strongly supports contracting between NVOs and their customers on a broad basis, though its endorsement was not registered for any of the individual petitions filed in recent weeks. The NIT League said it believes the FMC has authority under OSRA to grant a "class exemption" to offer service contracts.

The NIT League offered several arguments for FMC action, including multiple examples of changes in the shipping industry over the past five years since OSRA took effect on May 1, 1999. It also proposed that the FMC institute a rulemaking process to help determine the circumstances an individual NVO would have to meet in order to sign a service contract with a shipper. In that sense, the NIT League appeared to side with UPS, which in its petition suggested that only asset-owning NVOs -- transportation companies, such as UPS, that don't own ships -- should be given confidential contracting provisions.

The NIT League agreed with UPS's view that in the five years since OSRA was passed, the industry has seen the emergence of a global logistics industry, with entities such as UPS, DHL/Deutsche Post, and others weaving an international web of routes, services and different transportation modes.

"The issues raised in this proceeding present tremendous opportunities for the liner shipping industry," said Peter Gatti, the NIT League's executive vice president. "Broadening the ability of parties to enter into service contracts is clearly the correct response to the changing needs of a globally competitive transportation environment."