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Signals™ Headlines - October 5, 2001

OSRA Impact Study Released: Includes FMC’s Suggestions for New Legislation & Regulation

The Federal Maritime Commission (FMC) has issued a comprehensive report on its two-year study on the regulatory and economic impact of the Ocean Shipping Reform Act of 1998 (OSRA). The study assesses the ocean shipping industry’s operations during the first two years of implementation under OSRA. In preparing the study, the Commission relied upon a broad range of sources, including the cross section of industry views provided in response to the Notice of Inquiry and survey on OSRA’s impact conducted earlier this year.

The main focus of the study is an examination of 5 key issues: service contract developments, agreement and voluntary service contract guideline activities, ocean transportation intermediary (OTI) licensing and bonding, tariff publication, and controlled carrier issues. A general regulatory and economic overview of ocean shipping is also included. In the study’s closing observations the Commission offers several suggestions to Congress for possible amendments to the Shipping Act. The most significant of these focuses on controlled carriers. The FMC suggests Congress give it “greater authority to address unjust and unreasonable rates contained in the service contracts of controlled carriers.” Also, the FMC suggests that the definition of controlled carrier be expanded to include NVOCCs owned or controlled by a government.

In announcing the issuance of the study, Chairman Harold J. Creel, Jr., said “OSRA was enacted to promote a more competitive and efficient ocean liner industry by placing a greater reliance on the marketplace — indications are that it is doing so. Carriers and shippers are tailoring service contracts to their specific market-place needs. Discussion agreements with non-binding ratemaking authority essentially have replaced traditional conferences as the primary forum for carriers to exercise their antitrust immunity with regard to pricing. And our findings regarding voluntary service contract guideline adherence by agreement carriers indicate that adherence generally depended on the overall market conditions of the particular trade examined.”

Chairman Creel indicated that he particularly endorsed the study’s conclusion that the Commission must continue to monitor the evolution of the industry under OSRA to ensure that it fosters a viable ocean liner industry primarily dependent on marketplace forces rather than government regulation. The study can be viewed by visiting the Commission’s Internet website at www.fmc.gov and is available in several downloadable formats

FMC Investigation Prompts Action by Port Everglades: Tug Service Monopoly Ends

In response to an investigation by the Federal Maritime Commission (FMC), Port Everglades has agreed to end the monopoly on tug services enjoyed for 43 years by Hvide Marine, and its subsidiary Seabulk International, Inc. FMC’s Fact Finding Investigation No. 24 focuses on exclusive arrangements for tug services at Florida ports that may be in violation of the Shipping Acts. This investigation was begun in June 2001, and remains on-going. During early August, hearings in this matter where held Forth Lauderdale, FL by FMC Commissioner Antony Merck. The Broward County (Florida) Commission agreed on August 21 to approve the application of Tugz International, an affiliate of Great Lakes Towing Co., to provide tug service at Port Everglades. Additional hearings in this investigation were scheduled for late September at Port Canaveral, Florida, but these have been postponed due to travel restrictions in the US following the events of Sept. 11. According to Tugz International, tug service at Port Canaveral is provided by Seabulk International under an exclusive franchise.

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