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Shippers’ associations

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Typography

Shippers’ associations.  This is a group of shippers that consolidates or distributes freight on a non-profit basis for the members of the group in order to secure volume rates or service contracts (U.S. Shipping Act 1984).

Many shippers’ associations came into being as a result of the above Act which recognises that such associations can negotiate volume rates and service contracts with carriers on behalf of their members. Many conferences and other carriers may give favourable terms to shippers who enter into service contracts because of the volume of shipments. If many small shippers are able to join a shippers’ association that can enter into such service contracts with a conference, each will be benefited. It was intended by the law that the establishment of shippers’ associations would give the smaller shippers increased, collective bargaining power.

Their combination into negotiating groups does not seem to breach the U.S. antitrust provisions. This may result in shippers’ associations, whether in the United States or abroad, compelling conferences to negotiate under pain of penalties under the Act for refusal to negotiate.

The forerunner to the shippers’ associations was the council, which would represent its members but could not carry out contracting on behalf of the members. Some shippers’ councils were converted into associations. These would continue to represent the members in any negotiation with carriers and their agents and governmental bodies, but would also be able to enter into service contracts or rate agreements with carriers on behalf of the members. The associations can usually obtain privileges, rights or concessions with carriers and government bodies. The associations also generally provide their members with all information of importance or concern to the members. This means that if the shippers’ association was to negotiate service contracts with conference carriers, they would be cargo “consolidators” and shippers as far as the conference members were concerned.

Under the U.S. law, it is prohibited for a carrier or a conference to refuse to negotiate with a shippers’ association.

In 1989, it was discovered that persons who were not actual shippers were joining shippers’ associations and entering into service contracts with conference carriers. In 1990, the law was amended to ensure that membership of shippers’ associations was limited to newly defined “shippers”. If shippers’ associations act as NVOCCs or freight forwarders, they are subject to the regulations of the FMC for filing tariffs and obtaining licences. 

 

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