Senate OKs Bill to Reform Ocean Shipping

The Senate on Tuesday passed legislation aimed at promoting more competition in the highly regulated ocean freight business.

The Ocean Shipping Reform Act breaks with current cartel pricing by groups of ocean lines, known as conferences, by allowing carriers to negotiate confidential deals with individual shippers. The bill preserves antitrust immunity for the conferences to set freight rates under the Shipping Act of 1984, but it eliminates the requirement to file all tariffs with the Federal Maritime Commission.

Carriers would have to publish standard freight rates, but confidential contracts could not be seen by other shipping lines by checking with the commission.

The commission, which would have been eliminated as a separate entity under some earlier versions of the bill, remains intact to monitor the conferences.

The agency won Senate supporters last October for its aggressive handling of a dispute with a Japanese dockworkers’ union over port practices that put U.S. shipping lines at a competitive disadvantage.

Passage of the legislation was a victory for shipping lines such as CSX Corp.’s Sea-Land and APL Ltd. The bill was also supported by the National Industrial Transportation League, which represents companies that ship freight via all modes of transportation.

To become law, the House needs to consider the legislation.

Major U.S. carriers have argued that regulations requiring the terms of all contracts to be made public have made it easy for foreign shipping lines to examine contracts and then undercut U.S. companies competing for shipping business.

An amendment offered by Sen. Slade Gorton (R-Wash.) to extend the confidential contract provisions to freight consolidators was defeated by a vote of 71 to 26.