NCBFAA Challenges Carrier Vessel Sharing Agreement

Washington, DC: In comments filed with the Federal Maritime Commission (FMC), the National Customs Brokers and Forwarders Association of America, Inc. (NCBFAA) has challenged a proposed change to the U.S. Pacific Coast – Oceania Agreement, an antitrust immunized Vessel Sharing Agreement (VSA) among carriers serving the Pacific Southwest/Australia and New Zealand trades that has been in effect for several years. Essentially, the carriers want to reduce the number of sailings by the Agreement in this trade and establish and enforce a mechanism to preclude any member from providing service in this trade even outside the scope of the Agreement.
         In its comments, the NCBFAA pointed out that vessel sharing agreements are normally pro-competitive, since they tend to make more efficient use of vessels and permit multiple carriers to provide competitive alternatives in the same trade. In contrast, the Association contended that this particular amendment was inconsistent with those pro-competitive goals.
        “This is not an innocuous amendment by which members of a VSA have reallocated their relative utilization of slots in a particular service,” the NCBFAA noted. “Instead, the members have both removed a significant number of slots from the northbound and southbound services and have established an enforcement mechanism, through the payment of liquidated damages, that precludes any member from independently competing with the other members through ‘any direct, relay or transshipment service’ outside the remaining scope of this particular VSA.”
         The NCBFAA is urging the FMC to look carefully at both the proposed amendment and the existing Agreement and require that the members provide information concerning the likely affects of the amendment, whether the amendment results in any improvement in vessel service, why it does not result in an unreasonable reduction in service or an unreasonable increase in rates, and why the non-compete provisions of the Agreement would be the only reasonable method by which the VSA can operate.
         Headquartered in Washington, DC, the NCBFAA represents nearly 860 member companies with 100,000 employees in international trade - the nation's leading freight forwarders, customs brokers, ocean transportation intermediaries (OTIs), NVOCCs and air cargo agents, serving more than 250,000 importers and exporters. Established in 1897 in New York, NCBFAA is the effective national voice of the industry. Through its various committees, counsel and representatives, the Association maintains a close watch over legislative and regulatory issues that affect its members. It keeps them informed of these and other related issues through its weekly Monday Morning eBriefing and various meetings as well as conferences throughout the year. 

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Copies of the comment letter can be found here: