Coronavirus outbreak forces container shipping carriers to file an Emergency Cooperative Working Agreement with the Federal Maritime Commission.
The Loadstar in a recent article cited Alphaliner stating that three of the largest US container shipping carriers have applied to the FMC. The main purpose is for emergency permission to establish cooperation on trades between the US and the Caribbean.
Partial anti-trust immunity
The container shipping carriers involved are Crowley Liner Services, Seaboard Marine and King Ocean.
They have requested for partial anti-trust immunity on trades between the US east and Gulf coasts and the Caribbean, Central America and the northern coast of South America.
This would provide, scope to match capacity with an expected decline in demand as a result of the coronavirus outbreak.
The proposed agreement authorises the three container shipping carriers to
- Discuss and agree upon the removal of one or more vessels from their trades.
- Coordinate timetables, sailing dates, frequency of sailings and the carrying capacity offered by each of them.
- Charter space from each other on an ad hoc basis in an effort to stem losses.
- Face operational challenges that may result from the Coronavirus outbreak.
Duration of the agreement
The agreement would last from May until the end of 2020, and could provide a precedent for deepsea carriers to request similar partial anti-trust immunity if the crisis deepens and begins to pose risks such as bankruptcy.
Also, the agreement won’t cover the US-Puerto Rico route, which is classified as a domestic trade and continues to be regulated by the Jones Act.
The proposal before the FMC is far smaller in terms of capacity and volumes: Seaboard Marine has a fleet of 26 ships, totalling 43,000 teu; Crowley has 17 vessels, amounting to 20,000 teu; and King Ocean has a combined capacity of 10,000 teu across 11 ships, according to Alphaliner data.
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Source: The Loadstar
