Trade News > Maritime News > FMC Launches Vessel Capacity Investigation

FMC Launches Vessel Capacity Investigation

R.G. Edmonson | Mar 18, 2010 3:01PM GMT

The Journal of Commerce Online - News Story

Fact-finding mission pursues president’s national export initiative

The Federal Maritime Commission is starting an investigation of tight vessel capacity that ocean importers and exporters say is hindering their ability to compete in global markets, the commission announced Wednesday.

The FMC named Commissioner Rebecca F. Dye to lead the non-judicial fact-finding mission.

The announcement came as a House Transportation maritime subcommittee heard testimony from shippers and ocean carriers about the state of the industry, which has seen an increase in rates along with continuing complaints from U.S. exporters – principally in the agriculture sector – that they are unable to get containers to get goods to overseas markets.

The FMC said it is conducting the fact-finding in response to President Obama’s national export initiative, with a goal to double exports in five years and create 2 million jobs. An executive order on March 11, directs the use of “every available federal resource” in support of the initiative.

The fact-finding order gives Dye authority to call hearings, subpoena records and order reports. Preliminary recommendations are due June 15, with a final report to be submitted July 31.

Contact R.G. Edmonson at bedmonson@joc.com.

Import god has no clue.

- By JHanjin on 3/19/10

Carriers need to stop thinking about managing the industry and spend more time managing their own companies. The former is largely ineffective and condusive to crossing over the line and engaging in illegal activity. The antitrust immunity carriers have has actually been a crutch that has hurt the industry more than it has helped it as its lead to a mindset of sameness and a lack of real differences. When the industry embraces real competition like all other industries, it will be healthier for it. In terms of the FMC investigation, they should look into whether there was any illegal collusion and go where the facts lead it. There probably was some cheating, and just because someone thought something "was in the best interest of the industry" doesn't mean they didn't cross the line into illegal activity.

- By srebmunehtyb on 3/18/10

Think of it this way, do your local grocery stores get together and decide how much corn they are going to supply to your area? Do they also set a price that is equal all across the board? No they do not. Do Auto makers sit down in and decide what type of cars they are going to make and do they price them all the same? No they do not. Because there are Anti trust laws in place.

What the steamship lines are doing is setting the price and setting the capacity and that goes against a free market system. In a true Free Market, the strong survive and the weak die. If several of the lines go out of business so be it. The market will right itself and pricing would stabilize on it's own.

Allowing the Alliance to continue in the way that it is is Price fixing. And the Lines are not making any effort to hide that fact.

- By Importgod on 3/18/10

why the lines if they are so close and in alliance to raise the rate reducing capacity, they don't also get togheter and shares depots & equipment in the problematic areas.. ?
why they don't get a commitment to have some qty of equipment in everey area.
I'm very agreed with the alliance etc.. but if it is also to provide GLOBAL solutions
not only to recover the crisis money in 6 months...
have you tried to get equipment in Mid West ? I wish luck to every one that need equipment there...

- By magno35 on 3/18/10

what the industry needs is rate and service stability. when capacity is underutilized the shippers drive down the rates, when capacity is tight, the carriers raise the rates. what the industry needs is long term strategies by both shipper and carrier. i understand the lines need for cash after 2009 but the tactics are deplorable. this industry doesn't need hearings and governent intervention, it needs a common sense approach where carriers and shippers discuss costs, volumes, and expectations. we will not be able to export more if there are no vessels or containers and there are sure to be a lack of both if there is no profit in the industry for carriers. trust me, as a shipper of low value merchandise i need to be aware of rates or my goods will not be affordable overseas but in the same breath i would rather avoid the large fluctuations in price to have stability for my company, my customers, and my carriers.

- By TAVANZATO on 3/18/10

It's interesting to watch the various players in international trade in the US take particular positions dependent on where they are on particular issue. This is an interesting example, the FMC looking into capacity issues due to importers and exporters complaining about the lack of capacity. The cargo interests also want Congress to do away with all antitrust immunity, part of which involves carriers working and talking together on capacity issues. So the FMC will investigate what? Looking at the container industry they will find over 500 vessels anchored and a lot of capacity being introduced into the global markets during the next 24 months. In todays world capacity far exceeds demand, the carriers have chosen to constrain capacity so as to not create a supply/demand ratio that causes the rates to plunge - again. So after several people tell the FMC this - then what? Do they want the FMC to try and mandate the carriers increase capacity? Maybe ask Congress to pass a law? To do what - disband carrier Alliances? Saying that you want carriers to be unable to discuss capacity takes you to that place - no alliances. Alliances cannot function without discussing capacity, service patters, terminals calls etc Is that what cargo interests want?

- By Kingston4811 on 3/18/10