SHIPPERS SAY SHIPPING ACT NEEDS CHANGES PRESENT LAW PLEASES CARRIERS

SHIPPERS SAY SHIPPING ACT NEEDS CHANGES PRESENT LAW PLEASES CARRIERS

Ocean carriers feel content about the 1984 Shipping Act in its present form, whereas shippers are restless and seek change.

Since the act is undergoing a mandatory five-year review during which changes may be proposed, the views of carriers and shippers are important."The 1984 act is working as intended," said Peter J. Finnerty, vice president of public affairs at Sea-Land Service Inc. in Washington, D.C.

Mr. Finnerty addressed the annual conference of the National Customs Brokers & Forwarders Association of America last week. He was speaking in his capacity as chairman of the Ocean Common Carrier Coalition, which represents 28 liner shipping companies.

"It (the act) is balancing the interests of shippers, carriers and other interests with a minimum of government intervention under the oversight of the Federal Maritime Commission," Mr. Finnerty said.

Shippers, however, believe the 1984 act has not realized its full potential

because rate-setting ocean shipping conferences have used it to thwart meaningful negotiations with shippers.

Paul L. Crouch, vice president of traffic at Calcot Ltd., a large cotton shipper in Bakersfield, Calif., said that in many trades shipping conferences prevent meaningful negotiations by refusing to allow their member lines to take independent action on contracts, especially service contracts.

He added that if the Federal Maritime Commission does not or cannot change this situation through its regulatory powers, Congress should amend the 1984 Shipping Act now that it is up for review.

R.C. Buckingham, who represents First International Shippers Association, a Seattle-based group of agricultural and fish exporters, added that the effectiveness of the act is further diluted when conferences are allowed to meet with independent lines and reduce capacity.

He was referring specifically to the Transpacific Stabilization Agreement, in which the major carriers in the eastbound trades have agreed to reduce their capacity by 10 percent to help firm up rates.

"Why does the FMC allow conferences to rationalize services with non- conference carriers, which is a nice way to say take advantage of the shipping public?" Mr. Buckingham said.

At the root of most problems between shippers and carriers, it seems, is the antitrust immunity granted to ocean carriers in the 1916 Shipping Act and reaffirmed in the 1984 act.

"The pricing of ocean freight transportation should be established by supply and demand, not by independent cartels," Mr. Crouch said.

"In our negotiations with all other carriers, such as truckers, railroads, freight forwarders and other vendors, they have to be competitive with the marketplace or they do not get our business," he added.

Mr. Finnerty responded that such arguments miss the difference between common carrier and contract carrier systems of transportation. Open access to the shipping industry has been guaranteed by law since 1916, he noted, whereas open access in surface transportation was not permitted until deregulation about 10 years ago.

Any attempt to remove the antitrust immunity ocean carriers enjoy would be a major change in the shipping act, and should be preceded by thoughtful and informed debate, Mr. Finnerty said.