Federal Maritime Commission Increases Global Alliances’ Information Monitoring Report Requirements
Pursuant to direction from FMC Chairman Michael Khouri, the Commission has issued letters to the three global carrier alliances (2M, THE, and OCEAN) requiring that certain carrier-specific trade data currently filed with the Commission quarterly, must now be submitted on a monthly basis.
The Commission’s Bureau of Trade Analysis (BTA) has traditionally relied on a combination of individual vessel operator confidentially provided data and information from commercially available industry data to monitor and analyze container carrier freight rates and service market trends. The Commission’s BTA has determined that given recent fluctuations in the markets, they need to receive key trade data directly from alliance carriers on a more frequent basis in order to better position staff economists to timely evaluate changes in the transpacific and transatlantic trades and report findings to the Commission.
A core function of the FMC is the monitoring of ocean carrier alliance agreements filed with the agency. The FMC receives and evaluates exhaustive, commercially sensitive information from regulated entities, in this case, parties to an ocean carrier alliance agreement. That information is carefully analyzed, along with other information that permits FMC staff to determine trends in the marketplace and the potential for illegal behavior.
The FMC’s section 6(g) (46 U.S.C. 41307) review and oversight responsibility for filed agreements is ongoing and continues after a filed agreement has gone into effect. The FMC prioritizes its continuous monitoring of the 300 plus cooperative agreements currently filed with the Commission. The three major global carrier alliances are the top priority and receive the highest scrutiny. 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. On an ongoing basis, the FMC monitors 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. For these agreements, FMC staff conducts more detailed reviews, and periodically presents current findings and recommendations to the Commission.
Chairman Khouri stated, “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. If necessary, the FMC will go to federal court to seek an injunction to enjoin further operation of the alliance agreement.”