The Transpacific Stabilization Agreement told the Federal Maritime Commission that it will not pursue an amendment allowing member lines to discuss potential vessel capacity program options in the Asia-U.S. trade.
The TSA filed the amendment on Dec. 18, 2008, to take effect on Feb.1, 2009, absent any further commission action after a 45-day review period. After objections from organizations representing cargo interests, the FMC in late January issued a formal request for additional information, triggering another delay of at least 45 more days.
"This would put the effective date of the amendment into late March or April at the earliest," TSA Executive Administrator Brian M. Conrad told the FMC in a letter. "Since this amendment provides only for discussion authority, and contemplates a further amendment if a program is agreed to, the effective date of any program would then be pushed well into the summer.
"As the challenges facing the carriers continue to mount, time is critical," Conrad said. "Given the Commission's decision to delay the effectiveness of the amendment and the attendant uncertainties that have been created, the members believe that the benefit of this discussion authority, which is urgently needed, is severely diminished."
Groups including the National Industrial Transportation League, Agriculture Transportation Coalition and National Customs Brokers and Forwarders Association of America opposed the TSA's request to use its antitrust immunity to discuss capacity issues.
The TSA emphasized that it had no program to reduce capacity, and that any request for such a program would require separate approval by the FMC, but the shipper groups were not mollified. They urged the FMC to reject the request or at least require more explanation.
The TSA's chairman, Ronald D. Widdows, chief executive of APL Ltd., said TSA lines were disappointed by the regulatory delay resulting from the FMC's request for more information, and by the lines' inability to discuss options for addressing trans-Pacific capacity challenges.
"The current global financial crisis has created a severe overcapacity situation and threatened trans-Pacific carriers' financial stability," Widdows said.
"TSA members remain convinced that today's unprecedented trade conditions justify exploring a coordinated approach to more efficient use of vessel assets - an approach that ensures adequate service levels while permitting carriers to operate more efficiently," Widdows said. "TSA fully intended for this amendment to broadly benefit the entire industry - shipper and carrier alike - and was committed and prepared to continuously engage the shipper community as we moved through the process."
The TSA is a research and discussion forum of major container shipping lines operating from Asia to ports and inland points in the United States. The TSA operates under antitrust immunity granted by the shipping act. Its members cannot jointly set rates but have authority to discuss rate issues and set voluntary guidelines.
The TSA's 14 members are APL, China Shipping Container Lines, CMA CGM, Cosco Container lines, Evergreen Line, Hanjin Shipping, Hapag-Lloyd, Hyundai Merchant Marine, "K" Line, Mediterranean Shipping Co., NYK Line, Orient Overseas Container Line, Yangming Marine Transport and Zim Integrated Shipping Services.