FMC order denies container carrier service contract filing exemption

The U.S. Federal Maritime Commission in a Dec. 20 order said it will proceed with a proposed rule to exempt ocean container carriers from an essential terms publication requirement in the Shipping Act.

Essential terms are currently provided to the FMC by the ocean container carriers in tariff format when they file their service contracts. They include the origin and destination port ranges, commodities involved, minimum volumes and the service contract duration.

During a Sept. 26 meeting, the commission agreed with the World Shipping Council’s September 2018 Petition P3-18 that publication of essential terms no longer serves a purpose in the competitiveness of ocean container shipping.

However, the commission rejected the petition’s call to also eliminate the confidential service contract filing requirement of the Shipping Act.

The Washington, D.C.-based World Shipping Council, which represents 20 container carriers or 90% of global liner vessel capacity, argued in its petition that an exemption to the service contract filing “has no bearing whatsoever on the functioning of the competitive marketplace” and will not reduce competition between container carriers or with non-vessel-operating common carriers.

Atlantic Container Line, the Caribbean Shipowners Association and the National Industrial Transportation League wrote letters to the FMC supporting the World Shipping Council’s full petition.

While FMC Chairman Michael Khouri and Commissioners Daniel Maffei and Louis Sola approved the continuation of the service contract filing requirement, Commissioner Rebecca Dye stated she would have granted the petition in its entirety.

“I would find that the exemption will not be detrimental to commerce because existing record keeping and audit requirements for ocean carrier service contracts will permit the commission to investigate any alleged harm to shippers, with respect to particular service contracts, as the commission found with NVOCC negotiated service arrangements,” Dye wrote in a formal dissent with the FMC order.

“The mass service contract filing requirement is burdensome, unnecessary and represents the worst of an ocean shipping regulatory regime that has outlived its usefulness,” she said.