US inaction on malpractices riles shippers

PUBLISHED : Tuesday, 14 December, 2010, 12:00am
UPDATED : Tuesday, 14 December, 2010, 12:00am

Exporters and importers on both sides of the Pacific Ocean have reacted with surprise and disappointment to the lack of action by the United States shipping watchdog to tackle alleged malpractice by shipping lines on trans-Pacific routes.

But while the lack of action against shipping lines by the Federal Maritime Commission has been criticised by shippers' groups, plans by the FMC to seek closer co-operation between shippers and container lines have been welcomed by some carriers.

These include the Tung family controlled shipping company, Orient Overseas Container Line (OOCL).

The FMC announced a five-point plan last week that will include increased oversight of shipping line alliances and agreements and improved efforts to solve disputes between shippers and carriers.

This followed more than 170 interviews over several months by FMC executives with cargo owners, lines and others involved in the trans-Pacific container trade.

The probe was prompted earlier this year when exporters and importers were unable to get cargo loaded because the resurgence in trade growth came at a time when shipping lines had cut capacity in response to the global economic downturn.

But voicing his concern, John Lu, head of the Asian Shippers' Council which represents shipper's groups throughout Asia - including the Hong Kong Shippers' Council - said the FMC announcement had come as a surprise and disappointment. 'Shippers have lost confidence in the anti-trust watchdog,' Lu said, adding that what he called 'abuse' by container lines was 'clear-cut and substantial. He said: 'The outcome was zero. That's shocking.'

Lu said the problems faced by shippers from container lines were considered by the FMC as 'misunderstandings' between the two sides.

'But lines' abuse did not start yesterday, or two days ago. It's been going on for years,' Lu said.

It was this abuse which had prompted the European Union to outlaw cartel-like behaviour two years ago, he added. Meanwhile Asian shippers would continue to fight what he called shipping cartels and encourage Asian governments to end anti-trust immunity for shipping forums, while also working through organisations such as the Global Shippers' Forum.

The National Industrial Transportation League, which represents US manufacturers, imports and exporters, also voiced its 'profound disappointment' at the FMC's conclusions. League president Bruce Carlton said the FMC probe was launched last March 'in response to a flood of complaints from US importers and exporters who experienced service disruptions, rolled cargoes, abrogated service contracts and virtually uniform rate and surcharge increases from carriers in the transpacific trades.

'The turmoil in the two-way Pacific trades occurred over an extended period beginning in late 2009 and well into 2010,' he said.

Among the abuses claimed by shippers was that a shortage of shipping capacity meant cargo could not be loaded on board ship, while shipping lines charged shippers 50 or 100 per cent more for carrying cargo than was agreed in contracts between the two sides. 'The commission appears to have concluded that these problems were simply a misunderstanding between carriers and their customers over their respective contractual obligations,' said Carlton.

'The commission's announcement failed to include any reference to the findings made during the investigation. The commission also failed to include any analysis of the facts gained in 170 interviews with market participants.'

Carlton said if the FMC does not release its full report into the investigation, the league could make a Freedom of Information request to force publication.

But Stephen Ng Siu-kow, OOCL director of corporate planning, was more upbeat, saying the company supported the conclusion of the FMC's inquiry that long-term solutions could be achieved by customers and carriers working together. 'We understand the FMC is working to bring together shippers, intermediaries, carriers, terminals, ports, and government counterparts in other nations to ensure an efficient and reliable ocean transportation system that supports a sustained recovery in trade and the global economy.

'We believe such forums are essential for the container shipping industry,' said Ng.

Five-point plan

Measures to monitor shipping deals and solve disputes were revealed

The number of interviews with cargo owners and shipping lines carried out by the Federal Maritime Commission was: 170