Ocean Shipping Act Of

Summary of Ocean Shipping Act Of

1978. P.L. 483, 46 U.S.C. 842, also known as the Controlled Carrier Act, is an amendment to the Shipping Act of 1916 designed to inhibit so-called predatory rate practices on the part of certain carriers controlled by foreign governments. For several years prior to the adoption of the act it had been evident that some state- owned vessels, most notably Soviet, had been successful in attracting cargo away from Western flag carriers by offering rates below those necessary to sustain profit-oriented businesses. Under the act, all rates must be “just and reason-able,”as determined by comparing the rates charged with the carrier’s costs; rates at or below cost are presumed unreasonable. If no cost information is available for the controlled carrier, costs will be “constructed”by comparison with noncontrolled carriers on the same trade route.

A controlled carrier may not reduce rates on less than thirty days’ notice to the Federal Maritime Commission, which may suspend or disapprove rates found to be unjust or unreasonable. Rate reductions resulting from the action of a Conference (read this legal term for further details) of which a controlled carrier is a member are presumed to be just and reasonable. No test of reasonableness of rates is required on commerce between the country controlling the carrier and the United States.

For purposes of the act, a controlled carrier is one owned by a foreign state or its instrumentalities, or in which a majority of the carrier’s directors or its chief executive is appointed by a foreign government.

(Main Author: William J. Miller)