FMC: Report on collusion and unfair competition between shipping lines during the pandemic

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According to Alphaliner, FMC’s research finds “heavy” competition in major east-west markets. The final report of an investigation into supply chain issues by the US Federal Maritime Commission (FMC) has concluded that the market for transatlantic services in transpacific trade is not concentrated. while transatlantic trade is minimally concentrated. The findings follow a 2-year investigation by Commissioner Rebecca Dye, who has been tasked with finding business solutions to supply chain problems in the pandemic. Although the working group identified three main concerns from stakeholders: rising prices in shipping, unfair delays and detention charges, and the disruption of blank voyage information, it found no evidence of collusion or lack of competition. loyal to drive up prices on shipping lines during the pandemic.

The report described competition among common ocean carriers, among the three major alliances, and among alliance members as “vigorous,” while the market for maritime services remained highly contestable, particularly on the transpacific. However, the investigation, titled ‘Effects of COVID-19 on the US International Shipping Supply Chain,’ concluded that certain ocean carriers were not fully in compliance with the incentive principle of the FMC’s interpretive rule on delays and detention.

It also concluded that the FMC lacked regulatory tools to deal with the “numerous charges” levied by operators and terminals through tariffs.

Promote mandatory and binding contracts

Commissioner Dye urged carriers and shippers to sign more binding and mutually enforceable contracts.

FMC rules require that for a carrier-shipper service contract to qualify for the fee waiver, the carrier must commit to certain fees or fee schedules and a defined level of service.

The investigation concluded with 12 recommendations for the FMC. Commissioner Dye made 8 interim recommendations in 2021, and the FMC adopted all of those that did not require legislative action.

“The historically high freight rates recently experienced by U.S. exporters and importers have been devastating to many, but I want to emphasize that the Commission has done its job during the COVID-19 pandemic to enforce our competition authority,” said Commissioner Dye.

“Our markets are competitive and high ocean freight rates have been driven by unprecedented consumer demand, primarily in the US, which outstripped vessel capacity supply. Congestion further restricted available capacity “.

Source: Alphaliner

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