Wednesday, 17 September 2008 00:00
By Chris DupinWith Europe regulators ending antitrust protection for liner shipping conferences on trades touching their continent Oct. 18, an alliance of shippers organizations from around the world is calling for U.S. and Asian governments to also seek ways to make shipping more competitive.
In a "joint declaration" issued after three days of meeting in Montreal this week, the Global Shippers Forum (GSF) said the liner shipping industry has changed in the 10 years since the Ocean Shipping Reform Act of 1998 was enacted, and that the United States should "undertake a comprehensive review of its own shipping laws to determine whether an antitrust exemption should continue to exist for liner carriers.
“GSF believes that antitrust immunity as it relates to the ability of liner carriers to benchmark, discuss, set or fix rates, service terms and/or surcharges, is not necessary and should be terminated."
The joint declaration was issued by the U.S.-based National Industrial Transportation League, Canadian Industrial Transportation Association (CITA), Asian Shippers' Council, European Shippers Council and Japan Shippers' Council, which in turn have representatives from shippers councils from four-dozen individual countries.
"A lot has happened in global trade and regulatory perspectives" since OSRA was enacted a decade ago, said Bruce Carlton, president and chief executive officer of the NIT League, at a press conference where the declaration was issued.
While under OSRA "effectively conferences were made irrelevant in very short order. It is our view that the time has come for the U.S. Congress to take a fresh look at this subject," Carlton said. "Collusive behavior in any form is really not the means to achieve efficiency and competitive rates and … relationships between shippers and carriers."
Carlton noted that Elijah Cummings, chairman of the House Subcommittee on Coast Guard and Maritime Transportation, has indicated he is interested in looking at shipping regulation, but added that given the other economic issues faced by the country "it probably would be foolish for me to predict today that the first item that Congress is going to take up is regulatory reform in ocean shipping."
Bob Ballantyne, president of CITA, said in principal there is interest by the Canadian shipper and Canadian government in further regulatory reform, but that was unlikely to happen unless the United States also makes changes.
"Asian governments, while recognizing national differences, are encouraged to introduce market-based principles as they apply to liner shipping," the GSF's declaration said. "As world leaders and influential trading partners throughout Asia, China and India are strongly encouraged to apply their antitrust laws to liner shipping."
"We are very confident that China will look at this issue very seriously because China basically is an exporting country and also they do not have enough shipping capacity that is owned by Chinese government or Chinese enterprise," said John Y. Lu, chairman of the Asian Shippers' Council and the Singapore National Shippers' Council.
China "is a net freight buyer, they must buy services so it is a lot of money going out of China. And who is paying for it? That is the Chinese exporters and China is the manufacturing center of the world so this looks like it is going to be a hot item in the next year," he added.
The joint declaration touched on several other issues including:
• Supply Chain Security. The group rejected calls for 100 percent scanning of all cargo saying it was too costly and not effective. Instead they said a multilayered approach for cargo security should be used. Security agencies should distinguish between known and unknown shippers, the group said, and "national security regimes must be mutually recognized among nations and must be compatible across national borders."
• Piracy. The group called for "strong, coordinated efforts by international bodies and national governments around the world," to fight pirates, noting the sharp uptick in piracy incidents off the coast of East Asia in recent months.
• Surcharges. GSF said surcharges for higher fuel, security expenses or other reasons should be made visible and transparent. "Surcharges should only be temporary in nature, and should reflect only actual unexpected cost increases or decreases faced by suppliers." And surcharges "must be justified and should be solely determined by an individual carrier," not by conferences or discussion agreements, noting that different carriers have different costs.
• GSF also called for government and industry attention to be focused on maintaining critical and vital infrastructure necessary for supporting international supply chains, and said that revenue from transport user charges and taxes should be directed to the transportation purpose for which they are collected.
• The forum also embraced the idea that "shippers, carriers and governments need to take into greater account the effect on the environment of the transportation of freight both nationally and internationally." But the group said "punitive" charges on transport users is not the proper method to protect the environment from the effects of freight transport. Carlton singled out the U.S. Environmental Protection Agency's SmartWay program as a cooperative program between government and industry as worthy model.
The entire declaration can be downloaded at the organization's home page: www.globalshippersforum.org/ — Chris Dupin
