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House OKs shipping bill
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August 5, 1998: 8:35 a.m. ET
Revamp to keep freight rates secret now goes to the Senate for approval
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NEW YORK (CNNfn) - The U.S. government is one step closer this week to dramatically changing the way businesses buy transportation for moving goods in and out of the United States.
The House approved an all-out revamp of shipping industry regulation late Tuesday. The bill now goes to the Senate, which passed its own version of the legislation in April. If the Senate approves of some alterations by the House, namely stripping out provisions concerning benefits for World War II merchant mariners, the legislation will move to the White House for the President's signature.
In his floor statement, Transportation and Infrastructure Committee Chairman Bud Shuster, R-Pa., said, "This legislation that began in the House will allow the ocean shipping industry to be more responsive to their customers' needs. It will also encourage the industry to work more closely with the U.S. ports, railroads, and trucking companies which will allow international freight to move more efficiently in an intermodal environment."
The primary regulatory change contained in the legislation is that importers and exporters will be able to keep their contracts with shipping companies confidential.
Currently, contracts between a company and a shipping line are filed at the Federal Maritime Commission in Washington, D.C. While the name of the importer or exporter is withheld, vital items like the origin, destination, route, and most importantly the rate, are made public.
The law was written originally with that requirement so ship lines, often viewed as a public utility, wouldn't be able to play favorites among customers. But U.S. companies have complained that the requirement puts them on an unequal footing with their overseas competitors.
Keeping rates secret would give U.S. importers and exporters the ability to design special transportation arrangements -- like paying a ship line a little more for transportation to a well-established market in exchange for a discount to a new target market -- away from the prying eyes of competitors.
"The members of Congress who have been involved with this legislation deserve the gratitude of U.S. businesses engaged in international commerce. This bill is a giant step forward in the effort to deregulate ocean liner shipping," said Ed Emmett, president of the National Industrial Transportation League, a group that lobbies on transportation issues for major U.S. companies.
Under the legislation, ship lines would retain their antitrust immunity to set rates collectively. However, individual ship lines would have the option of going outside the price-setting cartel to arrange a confidential contract.
Smaller companies worry that the legislation could put too much power into the hands of their larger competitors. Such leverage could be used to muscle not only competitors abroad, but at home as well.
In addition, freight consolidators and other middlemen are worried that ship lines will use the ability to keep rates secret to charge smaller customers more or cut middlemen out of the business.
The legislation was backed enthusiastically by Sea-Land Service Inc., the largest U.S. shipping company. The ship line is controlled by CSX Corp. (CSX), which closed down 1-9/16 at 38-7/8. 
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