The FEDERAL Maritime Commission (FMC) has stepped in to address skyrocketing freight rates, serious port congestion, and demurrage charges.
The FMC will conduct “the most rigorous scrutiny” of the three shipping alliances and, if necessary, prohibit further implementation of the alliance agreements.
The FEDERAL Maritime Commission (FMC) on Monday announced strong measures to tighten oversight of three major shipping alliances in an effort to crack down on potential competition violations.
Under THE direction of Michael Khouri, chairman of THE Federal Maritime Commission, THE FMC has sent letters to three global carrier alliances (2M, Ocean Aliance and THE Alliance) requiring it to submit certain carrier-specific trade documents to THE FMC on a monthly basis, up from quarterly, THE company said in a statement.The FMC’s Bureau of Trade Analysis (BTA) has traditionally relied on data provided confidentially by individual ship operators and information from commercial sources to monitor and analyze container carrier freight rates and service market trends.Given recent market volatility, the Bureau of Trade Analysis (BTA) said it needed to receive critical trade data directly from allied shipping lines more frequently to better enable economists to assess changes in trans-pacific and Transatlantic trade in a timely manner and report their findings to the FMC.One of the core functions of the FMC is the supervision of the MARITIME Carrier Alliance agreement submitted to the agency.The FMC receives and evaluates detailed, commercially sensitive information from a regulated entity, in this case a party to a MARITIME Carrier Alliance agreement.This information will be carefully analyzed along with other information that will allow FMC investigators to identify market trends and potential illegal activities.FMC is currently reviewing and supervising the archival agreement and will continue to perform after the archival Agreement becomes effective.The FMC prioritizes ongoing monitoring of more than 300 cooperation agreements submitted to the Committee.The alliance of the world’s three largest operators is a top priority and has received the highest and most rigorous scrutiny.Based on the licensing rights, geographical coverage and potential market conditions, these three agreements are most likely to cause or contribute to adverse effects in the shipping market.
FMC will continuously monitor changes in key economic indicators and underlying market conditions of all global alliance agreements to detect any collusion by members that may raise and maintain above-competition freight rates or unreasonably reduce services.These agreements are reviewed in greater detail by FMC staff and the Committee is regularly briefed on current findings and recommendations.
FMC Chairman Michael Khouri said, “If the carrier is found to have committed any possible violation of the competition regulations, the carrier will be immediately summoned to resolve the issue.If necessary, the FMC will seek an injunction in federal court to prevent further enforcement of the Alliance agreement.”
The FMC will get tough on demurrage charges
A powerful coalition of truck drivers, agricultural exporters and freight forwarders has lobbied hard to suspend demurrages at congested ports such as Los Angeles, Long Beach and New York.The alliance, led by the Port Freight Association, estimates that traffic congestion caused its members to charge $150m in unreasonable demurrage fees in 2020.
U.S. ports are experiencing unprecedented traffic and congestion due to continued strong growth in china-U.S. Air traffic, a surge in cargo, and a continued rebound in cargo volume.The ports of Los Angeles and Long Beach are also facing shutdowns, and several shipping companies have issued written notices saying the situation is not optimistic.West Coast ports and Chicago are also struggling to cope with a surge in imports that has brought a flood of empty containers.
In response, the FEDERAL Maritime Commission (FMC) is preparing to take action on the thorny issues of port congestion and out-of-control demurrage charges imposed on shippers, truck drivers and freight forwarders at U.S. ports.
In response to industry submissions on the issue, the FMC has appointed Commissioner Rebecca Dye as a designated fact-finding officer to investigate the co-operating shipping lines and notify the ports of Long Beach, Los Angeles, New York and New Jersey.
“As a result of these stakeholders’ concerns, the FMC now has a clear and urgent responsibility to investigate these practices,” the statement said.To investigate behaviors that have an unprecedented negative impact on traffic congestion at ports and bottlenecks elsewhere in the country’s supply chain.””This is a serious risk to America’s economic growth, to job growth and to the country’s competitive position in the world.”
The FMC investigation will attempt to determine whether the policies and practices of these shipping companies are related to demurrage charges, container return, and container availability associated with severe retention of U.S. exports, and whether they violate existing laws and regulations.
“As I focus my investigation on the extreme conditions at the ports of Los Angeles, Long Beach and New York and New Jersey, I want to thank my colleagues for their support of Supplement FACT-Finding 29,” said Dye, the fact-finding officer.The order emphasizes that As a fact-finding officer, I have all the enforcement options available to resolve the crisis that exists at our major ports.”
In particular, the investigation will focus on: “Possible unreasonable practices by carriers and Marine terminals in the return of containers and the export of containers, and demurrage and demurrage charges at the ports of Long Beach and New York/New Jersey of Los Angeles pose a serious risk to the United States’ ability to handle trade growth.
