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FMC Increases Reporting Requirements for Major Carrier Alliances

FMC increases reporting requirements on carriers
(file photo)

By The Maritime Executive 11-25-2020 07:07:50

After announcing that it was opening an investigation into the tactics used on container fees and the logistical challenges, the Federal Maritime Commission announced that it has also increased the reporting requirements for the three global carrier alliances.  The limited carrier space to deal with the surge in shipping volumes and rise in rates has brought increasing scurrility on carriers with many countries calling for action.

The FMC announced that it has sent letters to the carrier alliances 2M, THE, and OCEAN, requiring that certain carrier-specific trade data historically filed quarterly must now be submitted monthly. The Commission’s Bureau of Trade Analysis determined that given recent fluctuations in the markets, they need to receive key trade data directly from alliance carriers on a more frequent basis to better position staff economists to timely evaluate changes in the transpacific and transatlantic trades and report findings to the commission.

According to the FMC, one of its core functions is the monitoring of ocean carrier alliance agreements analyzing the information from the ocean carrier alliance agreements, along with other information. The FMC determines trends in the marketplace and is seeking potentially illegal behavior.

The FMC review and oversight responsibility for filed agreements is ongoing and continues after a filed agreement has gone into effect. The FMC prioritizes the monitoring of more than 300 cooperative agreements giving a high priority and scrutiny to the three major global carrier alliances.

These three agreements have the greatest potential to cause or facilitate adverse market effects based on the agreement’s authority and geographic scope in combination with underlying market conditions says the FMC. The FMC is monitoring key economic indicators and changes to underlying market conditions for all global alliance agreements to detect any joint activity by agreement members that might raise and maintain freight rates above competitive levels, or unreasonably decrease services. 

“If we detect any indication of carrier behavior that may violate the Shipping Act’s section 6(g) competition standard, we will immediately seek to address these concerns with direct carrier discussions,” said Chairman Michael  Khouri. “If necessary, the FMC will go to federal court to seek an injunction to enjoin further operation of the alliance agreement.”

The pressures on the major carriers have been mounting since the summer. In September it was reported that China’s transport ministry summoned more than a dozen of the major carriers to a meeting to discuss rising rates and urging the shipping lines to take steps to slow the cost increases.

With demand unusually high there has been increasing speculation that carriers moved to lock in long-term rate increases while also benefitting from low oil prices.