China Shipping Container Lines

US watchdog extends monitoring

PUBLISHED : Monday, 12 September, 2011, 12:00am
UPDATED : Monday, 12 September, 2011, 12:00am

Maritime regulators in the United States will maintain a close watch for potentially anti-competitive behaviour by container lines operating transpacific services until at least the end of April next year.

The move is intended to help protect the interests of cargo owners, including exporters in China, by ensuring the Federal Maritime Commission receives early warning if shipping lines impose 'unreasonable' price rises or cuts in services.

This comes amid the likelihood that shipping lines could start to park container ships from December to cut costs and capacity on major transpacific and Asia-Europe trade routes following an expected drop in shipping demand during the traditional winter slack season.

The shipping lines to be affected include the Orient Overseas Container Line, mainland groups Cosco Container Lines and China Shipping Container Lines and Taiwan's Evergreen Marine.

But Sunny Ho Lap-kee, an executive director of the Hong Kong Shippers' Council - which represents exporters and manufacturers - said cargo owners were 'very unhappy with the FMC', pointing out the commission had done little to curb the power of the transpacific container lines.

The carriers are still immune from prosecution for cartel-like behaviour despite an attempt last year to push through a law through the US Congress to end their antitrust immunity.

Ho forecast that the pre-Christmas peak season would end prematurely at the end of this month or early next month because of lacklustre consumer demand. 'Ships are not full,' he said, adding that ships on transpacific routes were sailing from Asia 95 per cent full.

The FMC's action covers the 15 member carriers of the Transpacific Stabilisation Agreement, which controls about 94 per cent of eastbound container traffic, and the 10 lines belonging to the Westbound Transpacific Stabilisation Agreement, which has about 65 per cent of westbound market.

The member carriers already had to lodge verbatim transcripts with the FMC of certain meetings involving chief executives and other senior executives where revenue policy and shipping capacity issues were discussed. But this requirement was due to expire earlier this month.

The commission voted to extend the measure because the transcripts 'will provide important information as carriers enter the traditional September-October peak season [and] potentially reduce transpacific capacity in the slack season'.

Extending the reporting requirement until the end of April also meant the commission would have capacity information available for the start of the annual service contract negotiations between shipping lines and cargo owners that begin in May.

Justifying the action, the commission said the transcripts would 'provide the commission with information relating to potential equipment availability issues, capacity changes, and any conduct that is likely, by a reduction in competition, to produce an unreasonable reduction in transportation service or an unreasonable increase in transportation cost'.


Hong Kong's highest annual container throughput in teu (20-foot equivalent units), set in 2007