FMC reverses policy on unlicensed
ocean intermediaries
go figure …
$1.4 trillion
In a move that could have a wide-ranging impact on the operational flexibility
and security of the global supply chain, the Federal Maritime Commission
(FMC) will permit government-licensed U.S.-based third-party logistics service
providers to use unlicensed agents to perform ocean logistics services for them.
The FMC’s policy reversal, which took effect in early November, opens the door
for U.S.-licensed “ocean transportation intermediaries,” a term that encompasses
a raft of freight forwarders and non-vessel operating common carriers, to engage
companies without U.S. licenses to act on the licensed company’s behalf. The one
stipulation is that the unlicensed company must disclose that it is rendering services on behalf of its licensed partner and not under its own name.
A Nov. 6 decision by the U.S. Court of Appeals for the District of Columbia
Circuit overturned agency regulations barring a licensed intermediary from
conducting business with an unlicensed firm. The FMC maintained that it was
following a congressional mandate in a 1984 law deregulating the U.S. shipping
industry that the agency protect the public from unknown, unqualified, and
unscrupulous agents acting as intermediaries.
However, the appellate court, siding with U.S.-licensed agent Landstar Express
America, which had filed suit to invalidate the FMC law, ruled against the agency
on jurisdictional grounds, saying the FMC regulation exceeded the agency’s
statutory powers.
The court found that the 1984 law’s definition of an “ocean transportation
intermediary” includes only those entities that are held out to the public as providing the services of an intermediary. Because an unlicensed agent would only
provide services on behalf of a licensed third party and would not hold itself out
to the public as providing an intermediary’s services, the FMC lacked the
authority to extend its licensing requirements to those agents, the court found.
The court also said that enough legal safeguards were in place to shield the
public from the actions of an unscrupulous agent because the identity of the
licensed intermediary who the agent was working for would be disclosed.
The FMC has decided not to challenge the ruling and will either rewrite its reg-
ulations to conform to the court’s edict or seek a legislative remedy from Congress.
The ruling is a blow to the FMC and to the U.S. Bureau of Customs and Border
Protection (CBP), which in a post-9/11 world has striven for greater visibility of
the companies responsible for moving goods to and from the United States. CBP
and the U.S. Department of Homeland Security, which oversees CBP, “may now be
on the outside looking in,” says Ashley Craig, an attorney for the Washington,
D.C.-based law firm of Venable LLP, which has been closely monitoring the case.
CBP had opposed changes to the FMC regulation.
The ruling may also open carriers, third parties, and shippers up to greater lia-
bility and security risk because the field of potential shipping agents includes
many who are unknown to U.S. authorities, Craig says.
At the same time, the ruling may give the entire supply chain greater flexibili-
ty to conduct commerce. Third parties can expand their coverage and service
capabilities through new agency relationships, while shippers could benefit from
increased service options, Craig says.
Craig says the major shipping trade groups such as the National Industrial
Transportation League, the World Shipping Council, and the National Customs
Brokers & Forwarders Association of America have “remained silent” on the case
and its potential impact.
—M.S.
Amount by which proposed climate change legislation would
increase diesel fuel prices
between 2015 and 2050,
according to a report prepared
by the measure’s critics.
SOURCE: REPORT BY SENS. KAY BAILEY
HUTCHISON (R-TEXAS) AND CHRISTOPHER S.
BOND (R-MO.)
index: truckload rates
remain at or below
2000–02 levels
Truckload rates on many key traffic
lanes are at or below levels from the
2000–02 period, a stark reminder of
how the economic downturn, a
freight recession, increased competition, and overcapacity have spawned
a near-lost decade for truckload rates.
The North American Truck Load
Rate Index, which is maintained by
the consultancy Trans-Research
International Inc., tracks truckload
pricing trends for virtually all truckload operations in major U.S. markets.
It found, for example, that in 2001,
the rate for a 53-foot dry van moving
from Atlanta to Los Angeles was $1.34
a mile. Today, the rate on that lane is
$1.32 a mile.
From Dallas/Fort Worth to Atlanta,
the rate today is $1.36 a mile, compared to $1.38 in 2001, the index
found.
The index is based on paid freight
bills and doesn’t include applicable
fuel surcharges. It only covers ship-per-loaded and consignee-unloaded
shipments.
The consultancy says the examples
of static freight rates are repeated
across virtually every major U.S. traffic
lane except for loads going in and out
of Florida and into New England.
