FMC Suspects Link Between Container Alliances and Port Congestion

Mario Cordero of the U.S. FMC says that congested ports and alliances in the container shipping industry could be linked.

Mario Cordero of the U.S. Federal Maritime Commission (FMC) says that there could be a link between the four major global alliances that exist in the container shipping industry today and the problems with congested ports, ShippingWatch reports.

The FMC is set to meet with Chinese and EU counterparts in Brussels on June 18th, and while traditionally the topics of such meetings are said to be focused on market dominance and inflated prices, container rates' continuing record slide have reportedly shifted the agenda to discussion on possible links between industry alliances and overflowing ports.

"Our perspective number 1 concerns the impact of the alliances, even though the industry this year has primarily been challenged by low rates and overcapacity," said Cordero.

"We continue to monitor the alliances and their compliance with the VSAs (vessel sharing agreements), and we'll also be discussing this at the meeting in Brussels. As such, it's an important benefit to us all that we meet frequently, so that we can exchange experiences about a global industry.

"From FMC's perspective, it is an important topic how to handle the challenge of congestion in ports."

Cordero's co-commissioner at the FMC, Michael Khouri, commented on the link between the four major global container alliances and the problems with congested ports, saying, "we have received private reports and seen a number of stories in the press regarding the operations of the four alliances - G6, CKYHE, Ocean Three and 2M - and that these operations could be a contributing factor to the chronic congestion at U.S. West Coast ports and maybe other port facilities as well."

The Commissioner for Competition, Margrethe Vestager, has also said that the EU is monitoring alliances as well.

"The Commission will continue to monitor developments in the container industry and will scrutinize every concern relating to interference with competition that the Commission discovers on its own or which is reported," said Vestager.

"It goes without saying that the Commission is in frequent contact with players - carriers, customers, ports, etc., and I'm sure that they won't hesitate to notify us about cases that interfere with competition which they feel need to be investigated further."

Mario Cordero did not say whether the FMC's monitoring of alliances translates to a need for some form of action, or if the FMC or the US competition authority intends to publish a conclusion.

On Wednesday, it was reported that container-freight rates on the Asia-to-Europe trade route have dropped below shipping companies' fuel costs for the first time in two years.