Save the baby

Save the baby

Last month's House subcommittee hearing on U.S. regulation of international shipping doesn't mean Congress is ready to strip antitrust immunity from the Ocean Shipping Reform Act of 1998 - at least not yet.

But it looks increasingly likely that sometime in the next few years, U.S. lawmakers will revisit OSRA. Congressional interest in the law has been rekindled by the scheduled repeal in October of the European Union regulation that permits liner carriers to form rate-setting conferences.

OSRA didn't outlaw conferences in the U.S. trades, but it undermined them by permitting shippers to negotiate confidential contracts with carriers. The law resulted from a compromise between shippers, led by the National Industrial Transportation League, and carriers, led by Sea-Land and APL. The shippers won confidential contracting; the carriers retained their antitrust immunity.

A decade later, OSRA has worked remarkably well. Shippers have been happy with their new freedom to negotiate confidential contracts, and they've been able to live with the voluntary discussion agreements that carriers established to replace rate-setting conferences.

But shippers' acceptance of discussion agreements has always been grudging at best. Now that Europe is jettisoning conferences, there's likely to be a push to end carriers' antitrust immunity - and this time there will be no U.S.-owned liner operators to resist that effort.

OSRA continued antitrust immunity for marine terminal operators as well as ship lines, but it wasn't a big deal for most MTOs in 1998. "Now things have changed," says Chuck Carroll, executive director of the National Association of Waterfront Employers.

One reason is that ports face increased pressure to address concerns about pollution, noise, security and road congestion. These public policy problems cannot easily be solved without involvement of marine terminal operators, and that's where antitrust immunity comes in.

In recent years, MTOs have cooperated on several projects that would have gone nowhere if terminal operators had been required to act independently. Examples include the PierPass program to shift truck traffic to night gates at Los Angeles-Long Beach; a requirement that trucks at those ports use RFID tags on their tractors to enhance efficiency and security; and a current initiative by New York-New Jersey terminal operators to help reduce pollution on a portwide basis.

None of these efforts would have been possible if MTOs did not have limited antitrust immunity. "If marine terminal operators are going to be associated with a problem," Carroll says, "they need antitrust immunity to come together to discuss solutions to the problem."

Cargo interests may want to get rid of discussion agreements for carriers, but there's no compelling reason to end immunity for marine terminal operators. If or when Congress decides to overhaul the shipping act, the MTO baby shouldn't be thrown out with the carrier bathwater.