FMC rules on “Unreasonable Refusal to Deal”
NewsUS Shippers did not get everything they wanted in FMC’s final rule on definitions relating to unreasonably refusing to load export cargo.
Shippers urged to “be more selective”
Chairman Mario Cordero said the ability of the Federal Maritime Commission to mitigate the impact of a shipping line failure is limited, and shippers should not be surprised if another carrier fails.
In his opening keynote address at the TOC Americas Conference being held in Cancun this week Chairman Cordero emphasised that the US Federal Maritime Commission (FMC) has no formal role in Hanjin’s receivership process, but is “attempting to make sure we mitigate the impact” to shippers.
One of the effects the FMC is grappling with at the moment is a chassis supply crunch at LBCT in Long Beach, where as many as 25% of the normal chassis fleet are unavailable as they are parked holding Hanjin containers. Companies are focused on finding ways around the immediate disruption, but the real question, said Cordero, is what lessons can shippers learn from the whole crisis?
Cordero noted that shippers are looking around at who is next: “I don’t know, but I wouldn’t be surprised if there is another another one,” he warned. Cordero agreed with forecasts that the number of major carriers in the industry could be cut in half over the next few years due to mergers, acquisitions and possibly more carrier failures. For now, shippers need to be a lot more “selective” about who they do business with, he added.
Cordero’s remarks indicate the FMC is expecting shippers to have a lot fewer options in the future, and he appeared comfortable with a market where three main alliances dominate the main Asia-US trades. Comparing today to 2013 when the P3 Alliance was seeking regulatory approval, Cordero said there were a lot of unknowns then about impact of alliances on ports of call, third party contracting and other important issues, but today the FMC has a much better idea of how alliances work.
In light of Hanjin’s failure the FMC is concerned, however, about the responsibility of Alliance carriers if one member goes under. The Hanjin incident has raised the question of what duty alliance partners should have to a member carrier's customers, and this is something the FMC is investigating further, Cordero said.
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