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April 24 2023

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14 Journal of Commerce | A pril 24, 2023 Cover Story foreign markets and better defend- ing them against container rate increases, detention and demurrage fees, changes in shipping schedules, and ships leaving ports with empty containers, a longstanding hard- ship for US exporters. US exporters accused container lines of refusing to load their cargoes during the worst of the pandemic-driven port disruption, which carriers refuted, saying they were prioritizing higher paying imports and not reposition- ing containers so as not to hinder circulatory flow. "Big business needs to play by the rules, and the foreign-flagged ocean carriers enjoy an exemption from federal antitrust law that no other transportation sector enjoys. Not the airlines, not the railroads, not the trucking industry," Gara- mendi said in the statement from Costa's o€ce. "This legislation brings us one step closer to pro- tecting American consumers and businesses from price gouging by foreign-flagged ocean carriers." The legislation also would autho- rize the Federal Maritime Commis- sion (FMC) to formally comment on mergers and acquisitions under review by the Department of Jus- tice's Antitrust Division. The Federal Aviation Administration holds simi- lar authority in antitrust reviews for the aviation industry. The WSC opposed the legis- lation, arguing that repealing the antitrust laws that allow ocean carriers to share space on ships and provide more e€cient service to more ports would "undermine competitiveness." "Nobody has oŒered a reason why we should throw away such a useful tool as vessel-sharing arrangements, and I think some of the rhetoric comes from a misun- derstanding about how VSAs help the supply chain work better," John Butler, president and CEO of the WSC, said in a statement following the bill's introduction. JOC Senior Editor Ari Ashe contributed to this report. email: teri.gri• email: twitter: @LogTechEric Enforcement Act in March 2022, but it didn't garner enough support due to the potential impact on carriers' ability to operate within alliances. Costa said his bill would lower shipping costs and level the playing field in ocean shipping. The three major carrier alliances — the 2M, THE, and Ocean — are made up of 10 foreign-based container lines that the US Department of Transporta- tion said in February 2022 control more than 80 percent of the global ocean shipping market. The 2M Alli- ance of Maersk and Mediterranean Shipping Co. have announced they will end their partnership in 2025. "For far too long, foreign ship- ping monopolies have manipulated the ocean shipping industry and employed unfair trade practices, hurting American exporters and con- sumers," Costa said in a statement. "We have seen delays, congestion, and empty containers leaving Amer- ican ports." The bill also aims to provide a boost for US exporters by priori- tizing getting their products into Brokers and Forwarders Association of America, the Consumer Brands Asso- ciation, and the National Industrial Transportation League. Ocean carriers, however, warn that the additional reforms, along with FMC rulemaking on detention and demurrage, increase the risk of regulatory overreach. "This was a market system that functioned quite well and delivered extraordinarily low-cost shipping services worldwide, pre-pandemic, and I think it can do so again," MSC Executive Vice President Bud Darr, speaking on behalf of the World Shipping Council (WSC), said during the same House T&I Committee hearing. "But we do need to be somewhat cautious that well-intentioned eŒorts do not have the opposite eŒect of perhaps what's intended." Reassessing antitrust immunity In a separate-but-related legisla- tive eŒort, Reps. Jim Costa, D-Calif.; Dusty Johnson; John Garamendi; Josh Harder, D-Calif.; and Jimmy Panetta, D-Calif., on March 24 introduced a bill that would repeal limited antitrust immunity for for- eign ocean carriers, a move the WSC warned could bring about the col- lapse of carrier alliances and VSAs. Costa previously introduced a ver- sion of the Ocean Shipping Antitrust "A marine terminal is not intended to be used as a warehouse."

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