FMC demand more transparency in shipping alliance behaviour

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First session of maritime webinar off to a sailing start!

Last Thursday, Dr Jean-Paul Rodrigue (Hofstra University, New York) delivered Session 1 of the webinar series on market structure and maritime competition. Adopting a historico-institutional stance, Dr Rodrigue shed light on market consolidation and vertical integration in container shipping. An enriching Q&A session with the participants followed the lecture.

Among the key highlights of the discussions, it was noted that containerisation had now reached a mature stage where the volume of cargo the system can handle has nearly peaked. Path dependency built into the containerised transportation system means that a disruption at any point in the system has negative ripple effects throughout the supply chain. The maturity of the industry has in turn led to consolidation. Recent trends include horizontal integration, either directly through mergers or indirectly through the formation of alliances and consortia, and vertical integration via investments by carriers in shore side terminals, trucking and rail operations, and logistics firms.

Competition between container shipping lines takes place not just with price and capacity, but increasingly with packaged services for shippers – a situation which has however created business opportunities for niche players, such as SMEs, who are able to provide specialised services (e.g. express services). In terms of outlook, the current trends towards shipping rates moderation might come to a halt with new disruptive factors impacting the chain, such as the Shanghai shutdown or renewed congestion at US west coast ports. Finally, although a result of multidimensional and highly complex factors, surging freight rates have led to governments’ scrutiny around the world – and calls for their intervention, both to enforce existing competition law and to consider possible changes.

Interested to know more? Don’t miss out on your chance to enhance your professional skills and knowledge. Register to the webinar series (CHF 120) here to catch up with Session 1’s replay and join our top experts for Sessions 2 and 3! Any questions? Get in touch with [email protected].

FMC now requires more alliance data in call for transparency

A major update has emerged on the transparency of shipping alliance market behaviour. 2M, OCEAN, and THE, and each of their member companies will now need to provide enhanced pricing and capacity information, in a call from the US Federal Maritime Commission (FMC) that uniform data be provided. This information will be put to use in assessing ocean carrier behaviour and marketplace competitiveness.

The result of this action will mean a greater overview can be given to the Commission’s Bureau of Trade Analysis (BTA) on pricing of individual trade lanes, by container and service type. Capacity management decisions information of ocean carriers and alliances will also be given.

The BTA carried out a one-year study to gather data to analyse carrier behaviour and marketplace trends. 'Under the new requirements, carriers participating in an alliance will need to submit pricing information about cargo they move on the major trade lanes, and both carriers and alliances will be mandated to submit comprehensive information related to capacity management.' according to the FMC article.

The anticompetitive impact on the marketplace will also be analysed. After recent investigations were started by various organisations, including government authorities, it has become clear that the major three alliances are coming under scrutiny for attempting to become exempt from various shipping laws.

In the same vein, it recently emerged in an FMC investigation that Hapag-Lloyd incorrectly applied detention and demurrage (D&D) charges to 11 containers handled by California drayage firm Golden State Logistics (GSL). Meanwhile Wan Hai will have to settle claims brought against it concerning D&D charges for 21 boxes, the second carrier to settle a D&D claim. 

Agenda

Upcoming events:

• 10 May ¦ Webinar series on maritime crisis solutions organised by FIATA
• 17-20 May ¦ FIATA HQ Meeting 2022, Geneva with the participation of all FIATA Association members, their delegates and FIATA international partner organisations 
• 20-22 June ¦ WCO-PSCG Meeting, Brussels
• 30 June ¦ FIATA General Meeting