WSC Says Proposed Shipping Act of 2010 Would Destabilize the Industry

New proposed federal legislation, H.R. 6167, the "Shipping Act of 2010," aims to significantly change the way that the international liner shipping industry is regulated in US foreign trades.

But, does it go too far?

The World Shipping Council (WSC) thinks so.

According to a 16-page report released by the WSC earlier this month, enacting the bill would be detrimental because the new legislation would:

eliminate the limited antitrust immunity currently available for rate discussion agreements filed with the Federal Maritime Commission (FMC).

make the vessel sharing agreements that underlie most services to and from the United States today virtually impossible to continue to operate.

interject the FMC into a far more intrusive regulatory role with respect to what are today market-based commercial business-to-business relationships between shippers and carriers.

In sum, the WSC says:

The cumulative effect of enacting H.R. 6167 would be to destabilize the industry at a time when the U.S. economy requires the continued investment in liner shipping assets, supported by a predictable and efficient regulatory regime.

While WSC recognizes that some shippers may take a different view, it does not recommend H.R. 6167's proposed repeal of ocean carrier rate agreement authority . . . The effects of the bill's additional proposed amendments curtailing vessel sharing agreements would likely result in immediate reductions in the frequency, variety, and geographic scope of ocean transportation services available to shippers. Finally, the introduction of intrusive economic regulation of the relationships between shippers and carriers would undermine efforts currently underway between shippers and carriers to re-define their commercial arrangements to better meet the needs of U.S. international commerce, and are flatly inconsistent with the bill's stated objective of seeking to rely on market forces to set fair and efficient rates. Service and price issues should be left to the carrier and the shipper to agree upon, not layers of new government regulation.

How do you see it? Would this proposed legislation make US trades less efficient and more costly for carriers? If enacted, will it result in higher costs for US exporters and importers?

TAGS: Finance
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