Exporters raise concerns about ocean carrier market power

Date: Wednesday, March 1, 2023
Source: FreightWaves

WASHINGTON — U.S. exporters called on Congress to introduce more economic reforms in ocean transportation and increase the pressure on carriers that abuse their market power.

Representing those exporters in front of the U.S. House Agriculture Committee on Tuesday, Agriculture Transportation Coalition Executive Director Peter Friedmann acknowledged cargo volume surges and supply chain disruptions have dissipated and that there’s currently “plenty of competition” among container ship operators for his members’ shipments to overseas markets.

“But things will change where we’ll have to ensure there’s competition, so we need to make sure there’s a mechanism by the government to review ocean carrier plans so that we don’t wake up in couple years and the economy turns again and there’s more demand and even fewer ocean carriers around,” Friedmann told the committee.

Friedmann was referring to a provision he expects lawmakers to include in a new package of ocean shipping reforms being contemplated on Capitol Hill whereby the Federal Maritime Commission would be given authority to block alliance and other marketing agreements ocean carriers file with the FMC that the commission finds to be anticompetitive.

When asked by Rep. Jim Costa, D-Calif., about repealing ocean carriers’ antitrust immunity, Friedmann said it would help “by recognizing there are now 10 [major] ocean carriers left in the world, and they’re consolidating further.”

Costa is considering reintroducing the Ocean Shipping Antitrust Enforcement Act, a bill he introduced last year that would amend U.S. shipping regulations by stripping foreign ocean carrier protections from certain antitrust laws.

Friedmann pushed back, however, on the influence Chinese ocean carriers Cosco and OOCL might have over international container shipping in the event of a military conflict, given they are two of the world’s 10 largest carriers.

“I think we have adequate carriage [capacity] because all these other ocean carriers are owned in European countries, Taiwan, Japan, Singapore,” Friedmann responded, when asked about the risk. “And I don’t think that between COSCO and OOCL they have 20% [of vessel capacity]. Cosco is big, but OOCL is much smaller. We also learned during the pandemic that there’s additional capacity that will come into service if there’s demand for it.”

While the hearing focused on issues to be considered as the committee began deliberating on reauthorization of the Farm Bill, lawmakers asked Friedmann about other transportation challenges, such as truck size and weight. He pointed out how difficult it is for truck drivers to have a “hodgepodge” of truck weight regulations around the country.

“You cannot drive a truck across the United States without stopping and getting permits and revising the number of axles on your truck,” Friedmann said.

Friedmann recommended increasing the federal weight limit from the current 80,000 pounds to 105,500 pounds, currently allowed through exemptions in certain states such as Washington and Oregon.

But increasing truck size and weights, according to Rep. Jim McGovern, D.-Mass., “is a bad idea,” he said during the hearing.

“We live in a country with the highest road fatalities of any developed nation,” McGovern said. “The Department of Transportation has studied this and found that even a 10% increase in truck size and truck weights leads to less control and potentially more crashes.”


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