Carrier Official Pleads Caution on Ocean Regulation

Carrier Official Pleads Caution on Ocean Regulation

An ocean carrier representative, responding to a sharp broadside from a congressional leader, said legislators should be cautious about imposing new regulations on container ship lines because of problems in U.S. markets this year.

Carrier-shipper tensions have grown because of volatile market conditions since the economic downturn, said Christopher Koch, president of the World Shipping Council, the Washington-based association representing major ship lines, and new restrictions on business practices could bring unforeseen consequences.

"This needs to be done thoughtfully," Koch said at this week¹s freight policy forum hosted by the National Industrial Transportation League. "We need to think this through. "What is this possible legislation intended to produce? What is it trying to fix?"

Koch's response followed strong remarks Rep. James L. Oberstar, D-Minn., chairman of the House Transportation and Infrastructure Committee, delivered at the NITL forum calling for elimination of carrier antitrust immunity and sweeping new restrictions on business practices.

One large shipper of containerized chemicals, speaking on condition of anonymity, said Oberstar¹s suggestions were a move in the right direction but would not have an impact on current exporter frustrations. He said he welcomed Oberstar's call for greater oversight from the Federal Maritime Commission, for instance. The FMC is investigating carrier practices and complaints from shippers, particularly exporters, about the lack of container availability.

"The FMC has always enforced the law and will enforce the law," FMC Chairman Richard A. Lidinsky said. He said the FMC has heard complaints cited by Oberstar that some container lines have denied boarding to containers not owned by the carriers. "Apparently lines are not taking third-party boxes," Lidinsky said. "If an exporter does make an effort to get a box, that box should be loaded. It is a practice that's out there, and we've heard from several shippers that have cited this."

But Koch suggested legislative and regulatory attempts to fix problems in shipping markets could be misguided. He noted, for instance, Europe has eliminated antitrust immunity for carriers, but shippers face similar and even deeper problems there.

"There is now an explosion of surcharges in Europe, and that has happened since immunity was replaced. Rates have gone up much faster in Europe than they have in the U.S., and that is since Europe has replaced immunity," he said. "Carriers don't roll cargo for kicks," Koch said. "They do it because there is more demand and more bookings than they have the capacity to handle. There have been reports of 50 percent overbooking of vessels. These cause problems on both sides."