Shippers cool to TSA capacity discussions

   Shipper advocate organizations are expected to ask the U.S. Federal Maritime Commission to question transpacific container lines’ need to jointly discuss capacity among themselves through a discussion agreement that covers about 85 percent of the trade.

   The Transpacific Stabilization Agreement on Dec. 18 filed an amendment to its agreement on file with the FMC, seeking to allow its 14 members to discuss and reach agreements on cost savings and more efficient use of vessel and equipment assets and networks. But groups such as the National Industrial Transportation League and Agriculture Transportation Coalition are expected to file comments Thursday with the Federal Maritime Commission asking the agency to seek additional information about the request. 

These are decisions that can be made by the individual lines, said Peter Gatti, NIT League’s executive vice president. We know cargo volumes are down and we understand the need of carriers to reduce overhead, and part of the overhead is the capacity that individual carriers have in the trade. But from our standpoint, we believe that is a decision best left to the members based on the marketplace that determines to what extent individual carriers need to take capacity out of the system in order to sustain themselves.

This industry is not inherently different from other industries that operate internationally, he added. There really is no reason for carriers to have an ability to directly impact pricing by collectively setting guidelines on what each line would adhere to in taking out service in the transpacific trade.

This is going completely in the wrong direction, said Peter Friedmann, a Washington attorney who serves as counsel for groups such as AgTC and the Coalition of New England Companies for Trade. Europe is eliminating antitrust immunity and here these guys are trying to expand the scope of their activities.

There is no question that the law allows them to do this, but the FMC is also allowed by law to prevent them from doing it because it would constitute an unreasonable reduction in competition and service or an unreasonable increase in freight rates. We are going to make the point to the FMC that it is unreasonable and absolutely contrary to the direction that all our trading partners are going in. It certainly is not anything that will assist the U.S. merchant marine, because this is not the U.S. merchant marine, they are all foreign carriers. And it does not benefit U.S. exports.

There is mounting outrage in the export community over this, Friedmann said, adding carriers in vessel sharing agreements do not need antitrust immunity to reduce capacity.

Counsels for FMC commissioners said the FMC will likely take a close look at the TSA’s request, but they are also awaiting for a recommendation from FMC staff. In 2003, TSA carriers reached a settlement with the FMC under which they agreed for three years to remove from their discussion agreement authority to discuss or agree on capacity rationalization.

   The TSA asked the FMC to give its plans expedited consideration, which means it could have gone into effect as soon as Jan. 12. But the FMC is not slated to consider the request until Jan. 14, during a closed session of its next regular meeting.

   TSA's members are APL, China Shipping Container Lines, CMA-CGM, COSCO Container Lines, Evergreen Line, Hanjin Shipping Co., Hapag-Lloyd, Hyundai Merchant Marine, K Line, Mediterranean Shipping Co., NYK Line, OOCL, Yangming Marine Transport Corp. and Zim Integrated Shipping Services. In October, MOL announced its resignation from the group.

Source: American Shipper