The Federal Maritime Commission (FMC) is strengthening its monitoring of the three major container alliances by requiring members to provide more information on pricing and capacity on trades in which they cooperate. The move comes amid record industry profits and criticism of profiteering from the supply chain crunch.
The FMC said in a statement last Thursday it would require the 2M, Ocean, and THE alliances to submit more detailed information to the Commission’s Bureau of Trade Analysis (BTA), in an effort to better gauge carrier behavior and market competitiveness.
"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," said the FMC.
Container lines within the alliance are allowed to cooperate on operational matters, but cannot market, sell, or contract third-party providers jointly. Alliance members compete with each other and carriers in other alliances.
Container lines have long defended the alliances, arguing that they provide shippers with more service options and that smaller ports would lose services if the groupings were eliminated. The mega-alliances were forged in 2016, allowing container lines struggling with overcapacity to pool their cargo to larger, more energy-efficient ships.
The three largest container shipping alliances control 80 per cent of global box shipping capacity combined.
During a Senate hearing on March 3, FMC chairman Daniel Maffei said existing law does not give the FMC enough time to review proposed alliances before determining whether to attempt to block them from taking effect. The FMC does not approve alliances, but commissioners can vote to seek a federal injunction to block a proposed vessel-sharing agreement. The FMC has never tried to block any of the various vessel-sharing agreements underpinning the evolving alliance structures.
“We’ve not even tried. That goes for many, many years, different chairmen, different general counsels,” Maffei said at the hearing.
At JOC’s TPM22, Maffei said the FMC had not found any evidence showing container lines are colluding to keep freight rates high, but acknowledged the agency had stepped up its monitoring.
But that has not stopped shippers from accusing container lines of manipulating the market by withdrawing capacity in the spring of 2020 when US import demand crashed as COVID-19 spread through North America. Carriers countered by saying they removed capacity to avoid a market collapse like the one following the 2008–09 financial recession, and then threw as much capacity as possible on the trans-Pacific when demand roared back.