US regulator to rein in carriers over charges

PUBLISHED : Thursday, 13 January, 2011, 12:00am
UPDATED : Thursday, 13 January, 2011, 12:00am

Orient Overseas Container Line, Cosco Container Lines and eight other carriers will come under tougher scrutiny from maritime regulators in the United States within the next two weeks to prevent them abusing their power with exporters and importers.

The 10 shipping lines are members of three groups - the Grand Alliance, the CKYH Alliance and the New World Alliance - that were served with an order on Tuesday by the Federal Maritime Commission in Washington seeking compliance with the tighter monitoring regime.

OOCL is a member of the Grand Alliance while Cosco belongs to the CKYH Alliance along with Taiwan carrier Yang Ming Marine Transport. Singapore-owned APL is a member of the New World Alliance.

Under a three-point inspection plan that comes in effect on January 24, the carriers must file the minutes of meetings or discussions involving senior executives, including chief executives, where ship capacity and schedule planning recommendations are approved.

The carriers must also lodge monthly, not quarterly, reports on the number of sailings, and container and deadweight tonnage capacity.

The third requirement calls for the alliances to 'provide notice of both increases and decreases in capacity'.

They must give notice 'when carriers substitute vessels or adjust sailings that have the effect of changing the pro forma weekly capacity for an individual string in the amount of 5 per cent or more', the commission said.

The aim is to ensure there is enough shipping capacity for US exporters and importers to move their goods, the commission said. This followed a situation a year ago when carriers failed to ensure there was enough container or container ship capacity operating in the key transpacific and transatlantic trade lanes following the rebound in trade.

As a result, cargo was left at docks and some carriers imposed a premium on freight rates which shippers had to pay to guarantee shipment of their consignments.

On the Asia-Europe trade route, British discount retailer Argos settled out of court after it initially sued Maersk Line for more than US$13.8 million after the Danish shipping firm said in January last year it would triple previously agreed freight rates.

Commission chairman Richard Lidinsky said the measures were also part of new monitoring requirements that would give the commission 'unprecedented scrutiny to discussions and decisions by Transpacific Stabilisation Agreement [and] Westbound Transpacific Stabilisation Agreement [carrier groups that include nine of the 10 alliance members] that could affect US exporters and importers'.

He added: 'As we continue our mission for a fair and efficient ocean transportation system, I'll be closely watching the 'three Cs' - containers, contracting practices and capacity.'