F.M.C. RULES ON MILITARY CARGO SHIPMENTS
Under US law, military cargoes must be shipped aboard US registry
The U.S. Federal Maritime Commission ruled on 10 Dec. that the
U.S. Department of Defense cannot ship commercial military cargo
via foreign-registry lines on U.S.-registry ships. The ruling
affects three lines, but the decision was viewed as a precedent.
The U.S. Military Sealift Command has tried since 1988 to solicit
bids from foreign lines that charter space on U.S.-registry ships,
with the intent that competition may lower rates. Under U.S. law,
military cargoes must be shipped aboard U.S.-registry vessels,
but the department argued that since the cargoes were aboard U.S.
ships, foreign lines who charter space on them should be able
to compete for business. The 10 Dec. ruling involved Sea-Land
Inc., which has space-sharing agreements with P.& O. Containers
Ltd. and Nedlloyd Lines B.V. In June 1995, F.M.C. administrative
law judge Frederick Dolan Jr. ruled that restrictions in space-sharing
agreements violate the Shipping Act of 1984, which forbids carriers
from allocating shippers in space-sharing arangements and prohibits
a line from soliciting cargo from a specific shipper except under
applicable laws of countries. A lawsuit filed by Sea-Land is pending
in a federal appeals court. The F.M.C. agreed that the charter
agreements amounted to allocating shippers, but said that in
this case a different law required that restriction.