William P. Doyle’s Statement on the Commission’s Vote to Approve TSA’s Expansion

Amendment to the Transpacific Stabilization Agreement

FMC Agreement No. 011223-048

This week, I voted to take no further action to delay the effective date of the Transpacific Stabilization Agreement (TSA) amendment to include the westbound trans-Pacific trade. This Commission vote was triggered when TSA filed an amendment seeking a 24-month trial period to expand the geographic scope of the TSA. The amendment expanding the TSA becomes effective April 14, 2013. With this filing, I reviewed the material presented to the Commission, and in my view, the interests and concerns of the carriers, shippers, and consumers appear to be addressed in a balanced manner. Going forward, the Commission will continue to closely monitor the TSA.

For reference, the TSA and the Westbound Trans-Pacific Stabilization Agreement (WTSA) are separate discussion agreements whose members have limited antitrust immunity to discuss and set voluntary rate guidelines. From this background, the members of the TSA filed an amendment with the Commission in December 2012 seeking to expand the discussion group’s scope to include the entire trans-Pacific round trip, and with that expansion, to specifically include the westbound trade for a 24-month trial period. According to the TSA, the primary purpose of expanding the TSA is to reduce costs by eliminating maintenance of two separate carrier agreements, each with its own meetings, dedicated carrier support staff, separate compliance requirements, and repetitive administrative overhead.

The National Industrial Transportation League (NITL), one of the oldest and largest national associations representing companies engaged in the transportation of goods (shippers) in both domestic and international commerce, did not challenge or object to TSA’s proposed amendment. NITL did, however, urge the FMC to exercise all due diligence to ensure that the expansion of the TSA would not impede the ability of U.S. companies to have fair and competitive services in the east and westbound Pacific trade lanes. According to NITL, the organization represents more than 500 companies—ranging from some of the largest users of the nation’s transportation system to smaller companies engaged in the shipment and receipt of goods. With such a large base, NITL’s urging clearly merited Commission consideration.

Currently, the TSA members do not have authority to discuss and reach an agreement on restricting capacity. Comparatively, in its current form, the WTSA permits its members to discuss and reach an agreement on restricting capacity. But once the TSA expansion becomes effective, the expanded TSA will not have the authority to discuss and reach an agreement on restricting capacity in either the inbound or outbound directions. TSA members can only exchange and discuss capacity information; they cannot discuss capacity rationalization. Furthermore, with respect to measures that aim to safeguard fair and competitive service, members of the newly amended TSA will continue to provide monitoring reports to the FMC. Additionally, pursuant to the Commission’s 2003 settlement agreement, TSA will continue to attend semiannual meetings with Commission staff. In summary, the FMC will continue to exercise its regulatory responsibilities and accompanying authority.