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U.S. Shipping Act 1984


U.S. Shipping Act 1984. In the United States in the late 19th century much legislation was passed to prevent the restraint of trade and to ensure “free competition”.

This formed the basis of antitrust legislation. The objective of the legislation was to prevent the domination of transport by ocean carriers and also the concentration of power and resources, for example, by the large railways and large mining companies.

The result was that all conference agreements became illegal and unenforceable by courts. However, if liner operators, who had combined into conferences, did not service the U.S., the shipper base there would be disadvantaged. In the early 20th century a careful and detailed analysis was carried out and the conclusion was reached that the conference was necessary to ensure stable freight rates, sufficient sailing schedules and to maintain similar freight rates in both Europe and the U.S. The result of the enquiry was the Shipping Act 1916.

The Act allowed the use of conferences, but under strict conditions, e.g., closed conferences were not permitted. The Federal Maritime Commission or FMC was established as a body, independent of the Government Departments, to administer the Act and the immunity it gives carriers from antitrust sanctions.

The FMC sometimes comes into conflict with the U.S. Government Departments, especially with the Department of Justice, which advocates complete free competition without immunity from antitrust sanctions.

In the United States there has been a considerable body of regulations and control by the Government.

In the early 1980s, deregulation began to become popular. First, the U.S. domestic airlines, trucking and railway industries were “deregulated” in 1980 by reducing sharply the number and scope of regulatory requirements and also restricting the operation of some Government agencies (such as the Interstate Commerce Commission which oversees inland transport) or phasing out some agencies (for example, the Civil Aeronautics Board). However, the antitrust immunity for carriers was greatly reduced, especially for collective rate-making.

On the other hand, the U.S. Shipping Act 1984 provided ocean carriers operating in foreign trades greater antitrust exemption for joint activities, including collective rate-making, but it retained the regulatory requirements and the regulatory powers of the FMC, if somewhat reduced. It appeared that the Department of Transportation supported the carrier-initiated reforms to the regulatory system despite Opposition from the Department of Justice concerning antitrust immunity. The shippers, too, did not oppose the new regulations because, simply, they were given new rights in negotiating with carriers and conferences. This is a form of “market-place regulation”.

The objectives of the Act include the establishing of a process for liner service to and from the U.S. with a minimum of governmental intervention and regulatory costs. Conference members are free to agree to independent arrangements with shippers.

The Act:

permits lines to offer an intermodal through rate;

simplified the FMC procedures for reviewing conference agreements;

extended the antitrust immunity; prohibits “loyalty contracts”;

increases the negotiating powers of shippers;

requires filing of all tariffs with the FMC;

authorises “service contracts” between carriers and shippers;

recognises “shippers’ associations”;

and, protects U.S. flag carriers’ access to cross trades.

By the early 1990s, it appeared that the U.S. Shipping Act 1984 was operating very successfully, especially when it seemed that many shippers were using service contracts to and from the United States.