Osra, which was passed by the US Senate and signed into law in October last year, became effective from May 1.

Mr Poon said Osra would not actually deregulate the shipping liner industry as it was a continuation of a series of amendments of the Shipping Act of 1984. But he said the recent amendments had moved the body of the law into new territory.

Osra ends a common-carrier system of tariffs filing with the government, and encourages carriers and shippers to negotiate bilateral contracts according to their particular commercial needs.

Besides allowing contract confidentiality, Osra eases publication of tariffs, contract rates and service terms. And destination points will no longer have to be publicly filed.

It also allows groups of ocean carriers to negotiate rates and services with inland carriers at the discretion of customers.

Mr Poon said the liner industry was capital-intensive, with shipping lines investing huge sums of money in vessels, terminals, logistics back-up services and people - their most important asset of all.

Osra was timely as it allowed changes to an industry unable to satisfy customers and make reasonable profit for shareholders.

'Osra reflects the real value and the real demand of the liner industry,' Mr Poon said.

It allowed necessary changes in the way carriers negotiated and purchased transport and logistics services.

One of the most widely discussed provisions of Osra was the increased freedom it gave ocean carriers to offer service contracts, Mr Poon said. With the more confidential contracts, the parties were able to form closer working relationships.

Contracts could be simplified and tailored to meet customer needs, offering benefits to both sides.

'The previous concept of one-size-fits-all service would not be able to survive in this new competitive environment, as it offered no incentive for any side to explore opportunities and make further improvement,' Mr Poon said.

He said although the conferences would still exist, their power and influence was likely to decline as the ability of carriers to use them to stabilise trade through joint rate-making and capacity constraints would be weakened.

'These protections will disappear with the shift to individual and confidential service contracts,' Mr Poon said.

Large carriers with excellent services would gain the loyalty of customers and have little need to depend on conferences.

'Service contracts are driven by volume, the greater the volume a customer can promise, the lower the rate and the better the terms,' Mr Poon said.

Osra did not favour either side, he said. Instead it enabled both sides to work in close co-operation, with the mutual understanding that required confidentiality and trust in each other.

OOCL is conducting a pilot project with the Dubai Port Authority (DPA) to help solve standardisation and security problems facing the increasing number of shipping-industry Internet users.

SMDG, which is made up of almost 100 seaports and shipping lines, is an official sub-group of the Western European Edifact (electronic data interchange for the facilitation of commerce and trade) Board.

It is responsible for the design of standard messages and instructions exchanged electronically between ports, shipping lines and agents.