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THE Alliance files an amendment to add further detail to protections in the event of an insolvency

August 11, 2017

I am pleased THE Alliance is seeking Federal Maritime Commission authority to form, contribute funds to, develop rules for, and administer a contingency fund designed to protect against the effects of one of the parties experiencing financial distress or an insolvency event.

Parties to THE Alliance Agreement (Agreement No.: 012439) filed an amendment with the Federal Maritime Commission on August 7, 2017, seeking authority to form, contribute funds to, develop rules for, and administer a contingency fund designed to protect against the effects of one of the parties experiencing financial distress or an insolvency event.

Parties to THE Alliance Agreement are Hapag-Lloyd AG and Hapag-Lloyd USA LLC (acting as one party); Kawasaki Kisen Kaisha, Ltd.; Mitsui O.S.K. Lines, Ltd.; Nippon Yusen Kaisha; and Yang Ming Marine Transport Corp. The parties have requested expedited review by the Federal Maritime Commission.

Those interested may submit comments on the agreement to the Secretary, Federal Maritime Commission, Washington, DC 20573, within twelve (12) days of the date this notice appears in the Federal Register. A copy of the agreement is available through the Commission’s website https://www2.fmc.gov/FMC.Agreements.Web/Public/AgreementHistory/1912

Earlier this year, I served as a panelist on the fallout from the Hanjin bankruptcy at the TPM conference in Long Beach, California. I highlighted that the August 2016 collapse of Hanjin Shipping was a wake-up call for the entire ocean transportation and logistics chain. Over $14 Billion worth of cargo was stranded at sea on 100 ships scattered around the globe.

It is so important that another Hanjin debacle does not happen again. Companies may fail, but the responsibility lies with everyone, at least to the extent that we do not have the damage that occurred post-Hanjin.

Looking back, things could have been done differently. Looking forward, things must be done differently. We need safeguards and THE Alliance is heading in this important direction.

I firmly believe that if a carrier joins an alliance, it is the responsibility of the alliance members to ensure the cargo gets to where it needs to go. If a carrier fails and that carrier is party to an alliance, the cargo carried on the failed company’s ships may only equate to a fraction of the container volume carried. The majority of containers may belong to the other carriers in the alliance. My point is this — Hanjin was carrying the cargo not only of Hanjin but of the other alliance members of CKYHE as well.

Everyone suffered in the ocean maritime transportation chain. So it is essential that all take responsibility. The responsibility is to get the ship into port and get it unloaded, get the empties on board and get the ship back out to sea.

I am studying the proposed amendment and will consider all comments filed from stakeholders and the public on this important issue.

William P. Doyle is a Commissioner with the U.S. Federal Maritime Commission. The thoughts and comments expressed here are his own and do not necessarily represent the position of the Commission.