President Biden to Target Container Shipping Alliances in State of the Union Address

By Nick Savvides in Long Beach (The Loadstar) –

US President Joe Biden will tackle the competition law exemption for shipping today, saying his administration will target regulations allowing carriers to collaborate on vessel sharing and other parts of the supply chain. ‘supply.

In his State of the Union address, widely hailed by shippers but condemned by carrier representatives at this week’s TPM conference in Long Beach, he will note that 80% of the world’s container shipping capacity is controlled by only three alliances out of eight east-west trades.

The President will announce measures to lower consumer prices and level the playing field for U.S. businesses in shipping, including launching a new initiative by the Federal Maritime Commission and the Department of Justice to promote competition in the sea ​​freight transportation system.

However, senior industry officials have slammed Mr Biden, saying shipping companies have only made significant profits in the past two years, while others fear the breakup of the antitrust immunity comes back to haunt the industry.

Daniel Maffei (above), chairman of the Federal Maritime Commission (FMC) and a Democratic appointee, told the TPM audience yesterday, “I wouldn’t destroy alliances; it would lead to more consolidation” and, corrupting a quote from Winston Churchill, he added: “Alliances are the worst thing you can imagine, barring all the alternatives.

Mr. Maffei later said The Loadstar that, while the conference system had its drawbacks, it did not allow shipping companies to agree on the price. If alliances were banned, he argued, there would be more mergers, potential bankruptcies of shipping lines and ultimately larger entities, ultimately leading to a loss of competition.

According to him, while the alliance system is not ideal for consumers, it has its pros and cons.

“If we have alliances, there are three entities that can negotiate space sharing and shippers can contract several different carriers, but if there are no alliances, mergers could occur – it there is no benefit in ending the alliance system if mergers occur.”

According to Maffei, if carriers were to consolidate, they would be free to set fares in ways they currently cannot.

“We want more leverage for the FMC; we want to be able to go to alliances and say “we’re worried” or “we’re not exporting enough”. There are too many bad sides and not enough good sides.

Meanwhile, the carriers, via the World Shipping Council (WSC), also criticized the president’s speech, throwing a mess 24 hours before the speech, saying: “It is unfortunate that the president is demonizing the shipping companies, the industry which is the backbone of the US and global economy and has worked around the clock during the pandemic to move more cargo than at any time in history.

In the shipping companies’ view, any allegation “that the container shipping industry is highly concentrated and uncompetitive is factually incorrect.”

John Butler, President and CEO of WSC, said: “Ship carriers are actively competing in a global marketplace and that includes on the routes most relevant to U.S. trade, while levels of concentration in many other US industries are significantly higher than container shipping.

He added that the increase in the number of lines on trans-Pacific trades was “a clear sign of a competitive market responding to increased demand”, adding: “Competition has intensified in 2021, with more vessels operated by a larger pool of carriers serving the Transpacific Commerce.”

However, these views are not shared by shippers who argue that antitrust immunity for shipping lines does not “serve the public well”.

According to Lori Fellmer, importer at BassTech International and prominent member of the National Industrial Transportation League, there is no clear reasoning behind the decision to grant antitrust immunity to the lines.

“We don’t have visibility into the actual alliance agreements,” she said. “The system needs attention.”

And she asked, “Why [the lines] have that, what’s the point? It can’t just be for ship-sharing deals because they can have that without anti-trust immunity.

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