Competitive Shipping News and Developments

Compiled by Bruce Abbe, Strategic Trade and Transportation Advisor

Biden Administration, Congress seek to promote competition in ocean liner system

Concerns over the concentration of power within the ocean container liner sector leading to high rates and lack of service continued to garner headlines and the attention of policymakers in Washington, D.C., last week.

President Biden noted as much in his State of the Union Address. The U.S. Department of Justice (DOJ) and the U.S. Federal Maritime Commission (FMC) are partnering to strengthen their anti-trust oversight of the ocean carriers and their vessel sharing alliances to promote competition and ward off anti-competitive behavior.

Last week, FMC Chairman Daniel Maffei spoke to the large, annual Trans-Pacific Maritime (TPM) conference, hosted by the Journal of Commerce (JOC) in Long Beach, CA. On Friday, Maffei spoke to the Specialty Soya and Grains Alliance’s (SSGA) Transportation Go! conference in Milwaukee.

JOC reported that Maffei told TPM attendees that FMC “will not undo the alliances and there’s no evidence to show ocean carriers are colluding to keep freight rates high.”  Go here for more detailed coverage of Maffei’s remarks in JOC and here in the AJOT.

In Milwaukee, Maffei told Transportation Go! attendees that his remarks were “somewhat misreported.” The agency, he said, has been examining ocean carriers practices and has not seen evidence of price setting collusion “yet.” but it intends to continue to monitor the steamship lines operations and will take action if it finds evidence of illegal behavior.

What’s legal and illegal for the global ocean carriers’ operations is also up for debate in Washington.  Legislation was introduced in Congress last week by Rep. Jim Costa, D-Cal., that would strip the carriers of their current anti-trust immunity.

Meanwhile, two subcommittees of the U.S. House of Representatives Committee on Oversight and Reform sent letters to three major ocean carriers – Maersk, CMA-CGM and Hapag-Lloyd, asking them to respond with information about dramatic increases in the prices for shipping containers and reports of exorbitant fees and surcharges” well beyond their costs. The letters asked for responses by March 16.  Go here for more coverage.

STB hears from U.S. Department of Justice supporting adoption of reciprocal switching to improve rail competition

The DOJ has submitted formal comments to the U.S. Surface Transportation Board (STB) providing reasons for urging the railroad regulatory agency to adopt reciprocal switching.

The STB will hold a hearing on the reciprocal switching March 15-16. The board has delayed ruling on the contentious issue for years. Reciprocal switching has been in use in Canada, where it is called ‘interswitching.’ for more than 100 years. In cases where a railroad provides sole rail access to a shipper, the railroad would need to be willing to transfer a shipper’s rail cars to a second railroad at a junction point. The second railroad would pay a per-car switching fee to the first railroad, and the STB would determine the reasonableness of the fee.

Major railroads in the U.S. generally oppose it, while shippers – particularly captive shippers – generally support it.

Go here for coverage of the DOJ’s comments in industry news publication Railway Age, which also includes links to the American Association of Railroad’s position on the matter.

Canadian Pacific RR facing possible workers’ strike

The Teamsters Canada Rail Conference members voted last week by 96.7% to go on strike after midnight March 16 if talks fail between its negotiators and Canadian Pacific Railroad. The Canadian federal government will be holding mediation meetings between March 11 and 16 to try to forge an agreement.

CP rail is a major intermodal container rail carrier serving many SSGA exporters shipping food and feed ingredients by container from the U.S. Midwest out through the Vancouver, B.C. gateway to Asia markets. Go here for more coverage.