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New US Bill Would Clamp Down On Ocean Carrier Market Power

 |  March 1, 2022

Rep. Jim Costa (D-Calif.) introduced the Ocean Shipping Antitrust Enforcement Act on Monday. The proposed bill would amend U.S. shipping regulations by repealing section 40307 of Title 46 of the United States Code, which protects foreign carriers from certain antitrust laws.

“This bill is critical in leveling the playing field in ocean shipping,” Costa said in introducing the legislation, reported Freight Waves.

“For far too long, a handful of shipping companies have controlled the ocean shipping industry and employed practices that have caused congestion and delays at American ports. If these companies are left unchecked, unfair practices will continue to harm American exporters and U.S. trade interests, which could worsen the supply chain crisis and drive up consumer prices.”

Foreign container ship companies serving the U.S. have a certain amount of antitrust immunity — not available to most other companies — in the form of rate discussion agreements and vessel sharing agreements that are intended to guard against shipping overcapacity, prevent rate wars and maintain market stability.

However, lawmakers and the administration contend that this immunity has allowed carriers to increase pricing power over shippers, particularly as supply chain disruptions have roiled the industry over the past two years.

California’s ports and shipping industry has been at the forefront of supply chain concerns in the United States since late 2021, with long delays and backlogs blamed on a wide variety of issues. Despite the State having the world’s 5th largest economy on par with countries such as the UK and India, California’s ports rank near the bottom in recent efficiency rankings, below developing countries such as Kenya or Turkey.

According to Costa, applying federal antitrust laws to foreign ocean shipping companies “unties the hands of current and future administrations to take stronger actions to defend American exporters from unfair trade practices like unjustified container rate increases, exorbitant detention and demurrage fees, unexplained changes in shipping schedules, and ships leaving ports with empty containers rather than filling them with American agricultural goods.”

The proposal comes as the Federal Maritime Commission and the Department of Justice attempt to bolster enforcement of U.S. competition laws. Last week they announced an initiative, building on a memorandum of understanding signed last year, whereby the two agencies will share lawyers and economists to “aggressively enforce” Shipping Act violations.

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