FEDERAL MARITIME COMMISSION

FMC TO STUDY IMPACT OF NEW SHIPPING LAW
ON OCEAN SHIPPING INDUSTRY

Washington, D.C. 20573

NR 00-07

CONTACT: Florence A. Carr, Deputy Executive Director, at (202) 523-5800

FOR RELEASE: March 24, 2000

Federal Maritime Commission Chairman Harold J. Creel, Jr., provided details today concerning the Commission's OSRA Impact Study. The project is designed to assess the impact of the Ocean Shipping Reform Act of 1998 on liner shipping, based on the Act's first two years in force. Chairman Creel advised that the study would evaluate information covering the period from May 1999 through May 2001, with the final report to be issued in the summer of 2001. Interim comments on the study's status will be made public this summer, he added.

Chairman Creel explained that the Commission initiated the project to examine whether OSRA was yielding the benefits envisioned, and whether it was having any detrimental impact. In particular, the Commission will be taking a close look at service contracting under OSRA to determine its effects on shipper-carrier relations, the types of contracts being signed, the use of joint contracting authority, the extent of innovation in contract provisions, and the impact of voluntary service contract guidelines. Chairman Creel noted that the Commission intends to make use of its extensive service contract database in analyzing how contracting, in the aggregate, is developing under the new legislation.

A second area on which the study will focus is carrier agreements. "We already are aware that the implementation of OSRA has coincided with a decline in the role of traditional conferences as collective pricing forums and a new prominence for discussion agreements," Chairman Creel said. The OSRA Impact Study will address such issues as how discussion agreements are operating, what effects they may have on price competition and service, and what use they make of their authority under OSRA to establish voluntary service contract guidelines. In addition, the study will examine the changes in types and numbers of other agreements, such as space sharing and operational agreements, and will evaluate the likely effects of the ongoing concentration of the liner shipping industry via mergers, acquisitions, and alliances.

The Commission's study also will include a section that specifically addresses the situation of ocean transportation intermediaries, a new entity created by OSRA. "We intend to evaluate the competitive circumstances faced by ocean transportation intermediaries under the new system," said Chairman Creel. "Particularly given the concern expressed by some that OSRA was not advantageous to their interests, we want to assess the impact of the new law on everyone and to be able to report to Congress if someone is not getting a fair shake."

And, the study will examine certain issues that impact other shipping-related industries, including marine terminal operators, maritime labor, shippers' associations, and independent port drivers.

Tariff accessibility and accuracy, an area in which the Commission already has noted the existence of troubling shortcomings, also will be revisited as part of the OSRA Impact Study. The Commission will update its earlier audits to determine whether common carrier tariffs now published on the internet are indeed accessible to the shipping public at a reasonable cost, and whether the information they provide is useful and accurate.

The Commission views a two-year period as the minimum base on which to make a meaningful assessment of OSRA's various effects, especially with respect to service contracting. "As the study progresses, we will be soliciting relevant information and insight from all segments of the international shipping community," Chairman Creel emphasized, "and anticipate a cooperative working relationship with all concerned parties."