House panel eyes ending ocean carriers’ antitrust exemption

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In a subcommittee hearing on Tuesday, members of Congress discussed overturning antitrust immunity that ocean carriers have enjoyed for decades.

The Coast Guard and Maritime Transportation Subcommittee hearing also included discussion on requiring ocean container companies to load more domestic exports, while reconsidering how detention and demurrage charges are applied to U.S. exporters.

“It just turns out that the ocean carriers are exempt from the monopoly and the antitrust laws of the United States, and there ought to be a law that the ocean carriers are subject to antitrust laws, like other parts of our economy,” John Garamendi, D-Calif., said during the hearing.

Last week, Garamendi and several other House members introduced the Ocean Shipping Antitrust Enforcement Act to “address unfair practices that harm American businesses, producers, and consumers,” along with unfair container rate increases and refusals of cargo bookings for American exports.

Garamendi questioned Bud Darr, executive vice president, MSC Group, about ending carriers’ antitrust exemption.

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“I don’t think that’s a good idea, no sir,” said Darr, speaking on behalf of the World Shipping Council.

MSC Group is the largest ocean container carrier company in the world. The Switzerland-based company has more than 700 container ships in its network.

“I think it’s fraught with quite a bit of peril and unintended consequences,” he said. “Whether we like it or not, some of the major shipping companies that the world relies upon are state backed or state owned to some degree as well. We face that competition every day. Given the right framework, we will continue to compete and compete successfully. We will continue to serve the commerce needs in the United States, which is my country.”

But William H. “Buddy” Allen, president and CEO of the American Cotton Shippers Association (ACSA), testified that agricultural shippers have had to contend with unfair detention and demurrage charges from ocean carriers and ports. The Ocean Shipping Reform Act (OSRA), which was signed into law last June, aimed to offer certain protections for U.S. exporters.

OSRA’s implementation and enforcement in the maritime industry are still being reviewed and amended by Congress.

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“[ACSA] members want to move cargo fast. We want to take cost off the table. We want certainty. We want choice. We want an open marketplace, in the manner by which we procure and utilize assets so that we can move as fast as possible and reduce cost to our customers as much as possible,” said Allen, whose Memphis-based organization represents merchants of raw cotton in the U.S. and abroad.

“At the same time, we incurred $1.3 billion worth of unbudgeted costs during this time frame [in the pandemic], not all of which were detention or demurrage, but certainly some were,” Allen said. “In addition to the monetary cost, U.S. agriculture lost market share and faces reputational risk, and we simply must do a better job of communicating so we can operate more efficiently together.”

The committee also heard testimony from Matthew Leech, president and CEO, Ports America, and Mario Cordero, executive director, Port of Long Beach.

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