Carrier lobby groups secure nod for merger

Tie-up of TSA and WTSA draws muted response from cargo owners and exporters

PUBLISHED : Monday, 15 April, 2013, 12:00am
UPDATED : Monday, 15 April, 2013, 3:43am

The Federal Maritime Commission in the United States has approved the merger of two container line lobby groups that together control most of the containerised cargo shipped between Asia and America.

Sources said a formal announcement would be made today in the US following a vote by FMC commissioners last week.

The move will allow the Transpacific Stabilisation Agreement to join forces with the Westbound Transpacific Stabilisation Agreement.

The 15 TSA members, which include Orient Overseas Container Line, Cosco Container Lines, China Shipping Container Lines and Maersk Line, control about 85 per cent of the freight transported from Asia to the US.

Members of the WTSA, which has seen membership drop to eight members from 10, including OOCL, Cosco and Evergreen Line, ship about 60 per cent of the freight from the US to Asia.

Cargo owners and exporters have given a muted response to the merger.

John Lu, the chairman of the Asian Shippers' Council, which represents 18 shippers' groups in Asia and has complained previously about cartel-like behaviour by carriers, did not give a firm opinion on the merger.

The National Industrial Transportation League, which represents cargo owners in the US, did not object to the merger. Instead, it called on the FMC to "exercise all due diligence" to ensure the merger "does not impede the ability of US companies to have fair and competitive services in these important trade lanes".

Carrier-line members of the TSA and the WTSA are banned from colluding to fix freight rates under US antitrust laws, but the two groups can set voluntary rate guidelines and make recommendations about how much carriers can raise rates and other charges.

One Hong Kong-based transport analyst said: "I don't think the TSA is relevant. These guys suggest rate [rises] that are completely detached from reality. If they mattered, the Department of Justice would shut it down."

The TSA said the pact would cut costs and jobs because it would eliminate the need to keep two separate carrier agreements.