Victory for the Sea Wolf

Among U.S. shippers, the Isbrandtsen Steamship Line is a lone sea wolf. The biggest independent line operator in the world, Isbrandtsen has fought governments around the globe in the name of freedom of the seas, has battled fellow shippers to establish free rates. Last week, after a ten-year battle, Isbrandtsen recorded the most important victory in its log book. Ruling in Isbrandtsen's favor, the U.S. Supreme Court struck down the rate-setting practices of the international shipping conferences--voluntary groups of U.S. and foreign lines--thus opening the way for a flurry of price-cutting.

About half the 112 freight shipping conferences operating in U.S. foreign trade try to freeze out the independent shippers by a "dual rate" policy, i.e., rates up to 10% lower than standard for customers who use only conference ships. Isbrandtsen has refused to join such conferences, holding that they are cartels that add to the cost of foreign trade and discourage free competition. In the early 1950s the line captured 30% of cargoes between Japan and the U.S. East Coast (with only 11% of the sailings) by setting prices 10% below those of the Japan-Atlantic & Gulf Freight Conference, a group of 17 predominantly Japanese and U.S. lines. To meet Isbrandtsen's competition, the conference got U.S. Maritime Board approval of a dual-rate system.

Tough Isbrandtsen Founder Hans Isbrandtsen challenged the legality of the dual rate, fought it through many courts before he died in 1953. Since then, the company has carried on his battle under .the leadership of his son Jakob, 36, now company president. The Department of Agriculture, which ships huge quantities of surplus food, and the Justice Department joined the fray--but on Isbrandtsen's side.

When the Supreme Court ruled that dual rates are unlawful when designed to "stifle outside competition," it left the Maritime Board a small loophole: it can decide in each individual case. Nevertheless, the shipping interests fear that shippers will break loose from the conferences, fight the independents in an all-out price war for cargoes. U.S. lines would be particularly hurt by such a war because they have higher costs than foreign lines. But few shippers are likely to pull out of the conferences right away. Four hours after the court handed down its decision. Maryland's Republican Senator John Marshall Butler introduced a bill in Congress to make the dual rates legal. Powerful shipping interests will push the bill hard, but it will probably not get a hearing in this session of Congress.

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