Federal Maritime Commission launches liner probe as container availability becomes very tight

The Federal Maritime Commission (FMC) in Washington DC has launched a probe into liner activity in the ports of New York, Los Angeles and Long Beach as shippers voice ever louder concern about the lack of available containers to shift their exports. The investigation will look at the policies and practices of global liners relating to detention and demurrage, container return, and container availability for US export cargoes amid a near historical high tightness of available container equipment this autumn. Sister title Splash Extra first reported the FMC was monitoring liner activities in a July exclusive.

Certain practices of ocean carriers and their marine terminals may be amplifying the negative effect of bottlenecks

“The Commission has a compelling responsibility to investigate the situations that currently exist in our major port gateways,” the FMC stated in a release on Friday, adding: “The Commission is concerned that certain practices of ocean carriers and their marine terminals may be amplifying the negative effect of bottlenecks at these ports and may be contrary to provisions in the Shipping Act of 1984. The potentially unreasonable practices of carriers and marine terminals regarding container return, export containers, and demurrage and detention charges in the Ports of Los Angeles Long Beach and New York/New Jersey present a serious risk to the ability of the United States to handle trade growth.”

FMC chairman Michael Khouri said Friday the probe will include a review of any “potentially questionable practices” while fellow commissioner Daniel Maffei commented: “The pandemic conditions combined with the incredible import volumes partly resulting from the pandemic have created a crisis in the supply chain. I perceive that some carriers have taken positive steps to work with other groups in the supply chain to develop more fair and efficient practices as the crisis evolved over the past weeks. However, there are reports that some carriers are threatening high charges for failure to return empty containers on time, even in cases where congestion has made it difficult or impossible to do so.”

Data provided from Container xChange, a platform that sources available boxes for shippers, shows the steep decline in box availability at the port of Los Angeles last week (see below).

Amid a record rates environment on the transpacific, liner executives have also been summoned to see government officials in South Korea and China in recent weeks.

South Korea’s Ministry of Oceans and Fisheries met with nine lines on November 12 to warn that shippers were airing grievances that they were unable to export their goods.

“Any reported unjust contract violation or unilateral change in contract terms will be scrutinised and punished if necessary so that the market order can be maintained,” the ministry explained.

Splash reported last week on comments made by Rodolphe Saadé, chairman of CMA CGM, the world’s fourth largest containerline, discussing the pressure liners are coming under from Beijing.

“The market is so strong that they feel, the Chinese authorities, that at one point in time there needs to be a ceiling,” Saadé told the Financial Times.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.


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