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Rocking the Boats: Federal Government Tackles Competition in Maritime Shipping

Posted  September 21, 2021
By J. Wyatt Fore

The Federal government is taking a closer look at the maritime shipping industry—and for good reason.

In 2000, the 10 largest shipping companies controlled just half of the world container shipping market.  Today, it’s more than 80%.

As goods are increasingly manufactured in Asia and then transported to the United States, ocean carriers control a critical chokepoint.  This shift, combined with COVID-19, has left shippers with “fewer routes, fewer smaller ships and fewer ports” to keep the flow of goods moving.  The resulting logjams have created major headaches, further pushing rates upward for those seeking to expedite delivery.  Ocean carriers have reaped the rewards, earning record profits from higher freight rates.

Shippers who suffer from congestion and higher prices are speaking out—and are receiving a receptive audience in Washington.  Despite its historic pro-carrier reputation, the Federal Maritime Commission (“FMC”) has introduced several initiatives to promote competition in the industry.  For example, in 2020 the FMC issued a rulemaking clarifying practices on so-called “demurrage and detention” fees, exorbitant charges that ocean carriers impose on shippers for the time their freight sits waiting to be loaded or unloaded.  The FMC has also investigated ocean carriers’ restraints on trucker chassis pools in Memphis.  And just last month, the FMC issued subpoenas to ocean carriers regarding freight surcharges.

Even the White House has gotten involved.  In his landmark Executive Order on Promoting Competition in the American Economy, President Biden called on the FMC to use its existing powers to “vigorously enforce the prohibition of unjust or unreasonable practices.”  Shippers, including major American retailers and bulk commodity transporters, have lauded the White House’s order—and urged the FMC to take further action to promote competition in the seaborne supply chain.

Restoring maritime shipping competition remains an ambitious goal.  But those directly harmed by anticompetitive practices need not wait for the Federal bureaucracy to act.

Although regulated entities like ocean carriers have a limited “exemption” from antitrust law, the Shipping Act also prohibits those entities from engaging in unjust or unreasonable practices, including those that restrict competition and harm the shipping public.  The Shipping Act also allows private plaintiffs—not just government enforcers—to sue for violations, including recovering damages (called “reparations”).  As a result, those directly harmed by carriers’ unreasonable practices should not hesitate to contact counsel to explore possible remedies.

Given increased concerns about monopolies and anticompetitive conduct in the American economy, the Shipping Act may just grow sharper teeth.

Edited by Gary J. Malone

Tagged in: Antitrust Enforcement,