As expected, US President Joe Biden placed the rampant revenue and profit-taking of foreign shipping lines four-square in the sights of his administration when he delivered his State of the Union address earlier this week in Washington.
What remains to be seen, though, is how carriers will react to the Ocean Shipping Antitrust Enforcement Act, meant to repeal section 40307 of the relevant US Code that protected non-American lines from domestic antitrust laws.
For some time, the Federal Maritime Commission (FMC) has targeted lines for perceived anti-competitive behaviour, said to have been driven to new heights as carriers raked in revenue unlike any seen before on the back of Covid-caused supply-chain havoc.
Previously, lines have been buffered by three consolidation formations – 2M, The Alliance, and Ocean Alliance – immune, as it were, from US antitrust laws.
It meant that the red-flag alarms raised by the FMC had no jurisdiction.
But then Republican Congressman Jim Costa introduced the Act on Monday, a day before Biden’s address.
Now, the FMC and the US Department of Justice (DoJ) have found the agency they’ve been looking for in an Act affording them the legal wherewithal to go after lines.
Suddenly, it seems the proverbial playing field has changed.
Long-standing complaints – detention and demurrage (D&D) charges that carriers pass on to freight forwarders and their clients, sudden schedule changes and subsequent costs, soaring freight rate arrangements, and the accusation that blank sailings often result from the lure of more lucre elsewhere, resulting in previously booked goods not getting shipped – are now front and centre yet again.
Whereas alliance-protected foreign carriers were once immune from prosecution in the US, lines now find themselves firmly in the sights of the FMC and the DoJ.
Moreover, as with most things American, what happens there tends to ripple across the world.
The liner industry, for that matter, is schtum, holding its cards close to its collective chest.
The World Shipping Council has said Biden’s administration is wrong in targeting lines, denying that the carrier industry runs itself like a kind of cartel, exempt from Uncle Sam’s corporate righteousness.
It cited increased competition in 2021, especially on Trans-Pacific trade where more operators emerged.
The freight-forwarding community, though, probably disagree, living in hope that something might finally be done about D&D charges and the like, long since a gripe of shippers and their agents.
