HTML _ IB97035 - Maritime Economic Regulation and the 105th Congress
13-Nov-1998; Stephen Thompson; 9 p.

Abstract: The Ocean Shipping Reform Act of 1998 (¨the Act¨) (P.L. 105-258, October 14, 1998) takes effect May 1, 1999. The Act requires the Federal Maritime Commission to have implementing regulations in place by January 1, 1999. The Act allows individual ocean ship operators (primarily containerships, often called ocean liners) who belong to one or more rate-setting conferences to sign (mostly) confidential contracts with their customers without making the same terms available to all similarly-situated customers. Railroads have been allowed to sign contracts with shippers since 1980. The limited authority of interstate trucking to sign contracts was made open-ended that same year. There is support among some groups for changing the economic regulation of railroads, but that interest in change is not related to the right to sign contracts. There seems to be no effort to limit trucking from signing contracts. Rail financial health had been precarious before 1980, as ocean carrier financial health is today. Rail profitability increased significantly after 1980, when they were granted authority to sign contracts with shippers, and were granted other partial economic deregulation. The Act allows the ocean carrier contract rate to be kept confidential, while most other terms of the contract must be made public. The Act provides for shore-side labor unions to obtain dock-movement information from contracts for use in monitoring collective bargaining agreements with ship operators. The Act does not affect the Jones Act. The Act has widespread support from ocean carrier customers, ship operators, ports, and maritime labor. Freight consolidators (sometimes called non-vessel operators, NVOs, or non-vessel common carrier operators, NVOCCs) combine small shipments into larger shipments. The freight charges they save by doing this provides their operating profit. NVOs want the Act amended to allow them to sign confidential contracts with their customers. Other freight consolidators, known as shipper associations, are permitted to sign contracts with shippers. Shipper associations support the Act. Other provisions in the Act include a requirement that ship operators make rates known to customers, such as via the internet, but rates do not need to be filed with the Federal Maritime Commission. Negotiations preceding enactment of the Act occurred among interested groups over the past several years. Shipper interest in reducing maritime economic regulation has been evident for many years, both preceding and subsequent to enactment of the Shipping Act of 1984. Hearings on the effect of the Act on freight consolidators are very likely to be held by the House during 1999 because of a commitment to freight consolidators before the Act was passed by Congress in October 1998. That commitment was made by the Chairman of the House Subcommittee having jurisdiction over ocean shipping economic regulation. The purpose of hearings would be to assure that the Act does not drive freight consolidators from the industry. [read report]

Topics: Marine

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