FMC proposes rule to eliminate publication of service contract essential terms

The U.S. Federal Maritime Commission (FMC) on Friday published a proposed rule that will eliminate a Shipping Act requirement for ocean container carriers to publish the essential terms of their service contracts with shippers.

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 and on Dec. 20 approved an order to proceed with a proposed rule.

Public comments related to the proposed rule are due to the FMC by April 14.

“WSC will support the FMC’s proposal to eliminate the requirement to publish service contract essential terms,” World Shipping Council (WSC) President and CEO John Butler told American Shipper. “As we argued in our petition and as the commission has agreed, that regulatory requirement outlived its usefulness some time ago and removing it is good policy.”

The commission, however, rejected the World Shipping Council 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 would not harm the container shipping market nor reduce competition between the carriers and 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.

“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 wrote in her dissent regarding the commission’s partial approval of the World Shipping Council’s petition.

Butler said, “We do believe that the requirement to file service contracts remains an unnecessary roadblock to allowing the industry to do business at the speed of the digital economy, and we will continue to work with the FMC to make sure that outdated regulations do not prevent the marketplace from working at maximum efficiency.”