Following the investigation of high freight rates, the US Federal Maritime Commission (FMC) has set its sights on the three major alliances in the transportation industry, which has sparked heated discussions in the industry.
US President Biden signed an executive order in July this year, requiring the FMC to take measures to protect U.S. exporters from the high costs of shipping companies and combat unfair and unreasonable fees. Recently, the official website of White House has issued another article, worrying that the monopoly situation of the three major shipping alliances in the world has led to a lack of competition in the market, and demanding that the FMC ensure that US importers and exporters are treated fairly.
The White House statement said that nine transportation companies in the three major alliances, 2M ( Maersk shipping, Mediterranean shipping ), OCEAN Alliance ( COSCO Shipping Group , Da cabin ship , Evergreen shipping ) and THE Alliance ( Hapag-Lloyd , Ocean Network Shipping, HMM, and Yangming Shipping) control 80% of the global transportation market, far higher than 29% in 2011, and have a market share of up to 95% on East-West routes and transPacific shipping. These alliances are not subject to the Antitrust Law . If they lead to unreasonable delays, increased transportation costs, and serious reduction in market competition, the FMC has the right to challenge them.
It is understood that a transportation company has received an investigation from FMC recently. The FMC is scheduled to meet in December this year to discuss related issues.
The US government's actions have caused controversy in the operation industry. The industry believes that the lack of competition is not the reason for the shortage of space and the surge in freight rates in the United States. Data from shipping consulting agency Vespucci Maritime shows that in 2021, the trans-Pacific routes have both volume and price, attracting non-affiliated integrated transportation companies to invest in transportation capacity, and have snatched 30% of the market share. Currently, the market share of the three major alliances has dropped to 70%, and the market competition is fierce.
Industry insiders said that the surge in demand after the epidemic has pushed up freight rates in Europe and the United States, attracting non-affiliated members of the Asian range transportation companies to enter a large-scale entry and begin to flip the market. For example, the 10th-ranked 0,000-Hai Shipping html, which will first open a regular route between the United States and the West in April, and the Eastern route will be opened in June; the 20th-ranked Dexiang Shipping opened a direct flight from China to Canada Clippers in September; the 27th-ranked Shanghai Zhonglian Shipping also entered a regular route between Europe and the United States in July.
According to the latest report of the World Shipping Council (WSC), independent and new transportation companies have entered the market one after another. In the first half of the year, the number of new ship orders for container ships far exceeded the total in 2019 and 2020. To solve the supply chain bottleneck, only demand will return to normalization and overcome operational challenges such as terminal efficiency and truck labor shortages, which have nothing to do with the lack of competition.
In addition to the US investigation, EU is expected to review the Block Exemption Regulation (EBR) in 2024. The three major alliance contracts will expire in 2025, 2027 and 2030 respectively, focusing on the intention to subsequent reorganization. If BER is no longer postponed, the transportation company will return to the past situation of fighting alone, and the market may usher in high-intensity competition or even reshuffle.
