RESULTS are in from a Federal Maritime Commission (FMC) probe to discover why shipping profits are so high while service quality is so low, reports Ventura, California's gCaptain.
But far from finding price-fixing collusion afoot as many suspected, instead the fmc discovered that pricing of was subject to normal supply and demand pressures impacted by the Covid scare, as well as increased US consumer demand, congestion - and not a lack of competition that was widely alleged.
'The historically high freight rates have been devastating, but I want to emphasise that the Commission has done its job to enforce our competition authority,' commented FMC Commissioner Rebecca Dye.
'Our markets are competitive and the high ocean freight rates have been determined by unprecedented consumer demand that overwhelmed the supply of vessel capacity. Congestion further constrained available capacity,' she said.
Ms Dye looked at the role shipping alliances' alleged 'exemption' from antitrust laws under to the Shipping Act of 1984.
But she said: 'This exemption is an actually an alternative competition regime' put in place by Congress and administered and monitored by the FMC.
'During the pandemic, 'blank sailings' were a particular concern because of their potential to be used for anti-competitor purposes. Our monitoring, however, indicated that this reduced service by ocean carriers was driven by port congestion rather than a desire to reduce capacity, and delays and skipped ports have been a frequent occurrence,' she said.
Commissioner Dye's report comes two months after the US Senate passed its Ocean Shipping Reform Act of 2022, which, if the House of Representatives signs on, would greatly increase the FMC's regulatory clout.
The report said it believed that the most productive path forward for shippers and ocean carriers alike would be to enter mutually enforceable and binding service contracts. Without enforceable contracts, shippers are unable to protect themselves from volatile rates, it said.
SeaNews Turkey
But far from finding price-fixing collusion afoot as many suspected, instead the fmc discovered that pricing of was subject to normal supply and demand pressures impacted by the Covid scare, as well as increased US consumer demand, congestion - and not a lack of competition that was widely alleged.
'The historically high freight rates have been devastating, but I want to emphasise that the Commission has done its job to enforce our competition authority,' commented FMC Commissioner Rebecca Dye.
'Our markets are competitive and the high ocean freight rates have been determined by unprecedented consumer demand that overwhelmed the supply of vessel capacity. Congestion further constrained available capacity,' she said.
Ms Dye looked at the role shipping alliances' alleged 'exemption' from antitrust laws under to the Shipping Act of 1984.
But she said: 'This exemption is an actually an alternative competition regime' put in place by Congress and administered and monitored by the FMC.
'During the pandemic, 'blank sailings' were a particular concern because of their potential to be used for anti-competitor purposes. Our monitoring, however, indicated that this reduced service by ocean carriers was driven by port congestion rather than a desire to reduce capacity, and delays and skipped ports have been a frequent occurrence,' she said.
Commissioner Dye's report comes two months after the US Senate passed its Ocean Shipping Reform Act of 2022, which, if the House of Representatives signs on, would greatly increase the FMC's regulatory clout.
The report said it believed that the most productive path forward for shippers and ocean carriers alike would be to enter mutually enforceable and binding service contracts. Without enforceable contracts, shippers are unable to protect themselves from volatile rates, it said.
SeaNews Turkey
