THE NEXT FMC CHAIRMAN?

THE NEXT FMC CHAIRMAN?

It would be easy to think that the evolution of ocean shipping policy in the U.S. has ground to a halt for the foreseeable future. Congress recently weighed in with the Ocean Shipping Reform Act of 1998, and most agree it isn't likely to revisit the issue for a number of years. With the challenges that Congress now faces in combating terrorist threats, it's difficult to come up with a less-pressing issue than shipping policy. But the notion that regulation of shipping is a barren landscape is not at all correct. There are important changes to U.S. shipping regulation that could be made in coming years without legislative action. And as the years go by, the environment surrounding regulation of this industry shifts subtly, like tectonic plates, in ways that will ultimately come knocking on the door of U.S. once again.

That was the overall point made by FMC Commissioner John Moran in a speech on Oct. 24 to the Foreign Commerce Club of New York. He made several observations in that speech and a subsequent interview that are noteworthy not only because they shed light on what's happening in this regulatory arena, but also because he is widely considered by FMC watchers to be the leading candidate to succeed Harold J. Creel Jr. as chairman of the agency. Moran is a Republican whose background already has been vetted, who is well-liked, and who would likely sail through the confirmation process at the Senate Commerce Committee, where he served as maritime counsel in the late 1980s.Moran said developments on the global scene will play an important role in the development of U.S. regulation in the years to come. Noting that most major U.S.-flag carriers have been sold to foreign companies, Moran said, 'This development may lead domestic policy-makers in the U.S. to approach the formulation of maritime policy from the perspective of a shipper nation.' The recent interest in Congress to amend the 1936 Carriage of Goods by Sea Act to deny carriers certain defenses against liability for cargo loss (such as if a ship should wander into a storm) reflects the United States' gradual shift from a carrier to a shipper perspective on issues involving liner shipping, he said.

Moran said changes in competition policy in Europe, where governments may be taking a stronger position against concentrations of market power, could influence U.S. policy. 'There has been a sea change in international attitudes about competition policy in general, and liner competition policy has been the subject of a great deal of attention around the world' at forums such as the Organization for Economic Cooperation and Development, which will hold a forum on the issue in December. 'How our trading partners view liner competition policy, and what they do with their laws in this area, will certainly impact the future of carrier antitrust immunity in the U.S.,' he said.

Moran also brought up a point often made about liner shipping, that consolidation in the industry could one day render antitrust immunity unnecessary even from the perspective of carriers, the policy's chief defenders. 'The trend towards concentration in the liner trade, if it continues, could raise questions as to whether the current scheme of antitrust immunity and regulatory oversight is adequate when the liner industry is down to a handful of global carriers,' he said. 'A related question is whether the antitrust immunity will be relevant or even desirable to the carriers when there are only two or three competitors in the major trades.'

He said OSRA gave the commission a more liberalized authority, 'and I believe the mandate' to be active in seeking ways to reduce costs and burdens and foster a more market-driven system. What does he mean by this? The FMC, in its two-year review of OSRA released on Sept. 26, cited a number of areas where the agency could exercise its authority within the spirit of the law and its powers as expressed in the law.

Moran didn't mention any specific plans by name, but some FMC watchers saw a clear direction in the list of possible areas of action the agency published in the two-year review. That area concerns regulation of carriers controlled by government agencies. The agency said it is interested in regulating state-owned NVOCCs as controlled carriers and imposing retroactive penalties on controlled carriers for predatory pricing, something the FMC cannot do today. Further action on the controlled-carrier issue will come when the agency rules on efforts by China Ocean Shipping Co. and China Shipping Group to obtain relief from provisions of the law that limit their pricing flexibility. Said James Devine Jr. president of Distribution Publications Inc., an Oakland-Calif. tariff publishing firm: 'I see a real focus there on the controlled-carrier issue.'

Peter Tirschwell is editor of JoC Week. He can be reached at (973) 848-7158, or via e-mail at ptirschwell

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