ADDENDUM

 

 

Federal Maritime Commission 

57th Annual Report

Fiscal Year 2018

Competitive Impact of Ocean Carrier Alliance Joint Purchases of 

Certain Covered Services

On December 4, 2018, the “Frank LoBiondo Coast Guard Authorization Act of 2018” was enacted 

as Public Law No. 115-282 (LoBiondo Act). Among other changes, the LoBiondo Act placed 

restrictions on cooperation between or among carriers and MTOs, including removing antitrust 

immunity for certain activities; prohibiting certain joint procurement activities; restricting 

overlapping agreement participation; and modifying the legal standard for enjoining agreements 

to jointly procure certain covered services, including:

• the berthing or bunkering of a vessel;

• the loading or unloading of cargo to/ from a vessel, or to/ from a point on a wharf or 

terminal;

• the positioning, removal, or replacement of buoys related to the movement of the vessel; 

or

• towing vessel services provided to a vessel.

Section 703 of the LoBiondo Act requires that the Commission annually provide Congress (1) an 

analysis of the competitive impact of ocean carrier alliance joint purchases of the covered services 

mentioned above; and (2) a summary of actions, including corrective actions, taken by the 

Commission to promote competition.

The Commission’s approach to competitive analysis of ocean common carrier agreements in 

general utilizes such market information as pricing or revenue data, vessel capacity availability, 

market shares, and market concentration to define and evaluate the market in which the agreement 

proposes to operate, or is operating once it becomes effective under the Shipping Act.

As of the close of FY 2018, three global ocean carrier alliances are operating in the trades. As 

initially filed, two of the global carrier alliances, the OCEAN Alliance and THE Alliance, both 

contained unclear and indefinite language regarding the Parties’ intent to use the joint contracting 

and procurement provisions dealing with an array of services such as those provided by terminals, 
ADDENDUM

tugs, barges, transshipment, bunker suppliers, etc. The 2M Alliance does not contain joint 

procurement authority.

Given the market share of both the OCEAN and THE alliances in the U.S. trades, the Commission 

determined that joint purchasing and negotiating authority could have potentially significant 

anticompetitive effects in the relevant markets. During the Commission’s review period, the 

proposed agreement authority was amended to clarify and ensure that any activity or arrangement 

executed under the authority that permits joint procurement was expressly prohibited in the U.S., 

or only permitted with the mutual agreement of marine terminal operators – the seller of covered 

services.

Further, the Commission notified OCEAN Alliance and THE Alliance that all future joint 

procurement agreements with third party service providers must be filed with the Commission 

before going into effect, unless they are among the exempted agreements listed in the Shipping 

Act or the Commission’s regulations. To date, OCEAN and THE alliances have not filed any joint 

procurement agreements for covered services that required Commission review. To the extent that 

either OCEAN or THE has established a marine terminal services agreement with suppliers of 

covered services that fall within the FMC’s current regulatory filing exemption, the Commission 

has provided written notification to the respective agreement parties that these and any future 

agreements reached through joint purchasing authority must be provided to the Commission. Any 

marine terminal services agreements provided to the Commission by OCEAN and THE will be 

analyzed for the competitive impact of the alliances’ purchases of covered services. Combined, 

the three global alliances today account for nearly 80 percent of cargo moving in the inbound and 

outbound U.S. liner trades. 

In addition to the global carrier alliance agreements, there are other vessel-operating common 

carrier agreements on file with the Commission that contain authority to jointly negotiate or 

contract for covered services. These agreements have low market share regarding covered services 

and are limited in geographic scope. Examples include: two-party space charter agreements; 

vessel sharing agreements limited to certain trades; and equipment discussion agreements 

authorizing the movement of empty containers. The Commission has initiated a process to obtain 

more information on each of these agreements to determine the effect of the LoBiondo Act 

amendments.