The Federal Maritime Commission (FMC) said it has initiated a review of an agreement with the World Shipping Council (WSC), to determine whether signatory ocean carriers are still covered by limited antitrust immunity.
The June 26 filing said that the agency “aims to assess whether the activities undertaken by the WSC under this agreement align with the FMC’s jurisdiction as outlined in the Shipping Act. The central question is whether the cooperative working arrangement claimed by WSC is legitimately within the Commission’s purview, or if it falls outside the boundaries set by federal regulations.”
The WSC, which represents approximately 90% of global liner vessel services, was granted limited antitrust immunity under an agreement with the FMC in 2020. This agreement allows member carriers to engage in various trade association activities such as exchanging information, discussing policies, and formulating common industry positions. However, the Commission has raised concerns about whether these activities extend beyond the scope of cooperation intended to be regulated under the Shipping Act.
“I am not a big fan of the WSC and their approach. I have been very vocal on that always,” FMC Chariman Louis Sola, whose is exiting the agency today, told FreightWaves. “Rather than work with us on the rule-making Congress tasked us to do in the OSRA (Ocean Shipping Reform Act of 2022), they sue us in federal court.”
Sola was referring to the WSC in April filing a petition for review with the U.S. Court of Appeals for the District of Columbia Circuit seeking to have the FMC correct an internal contradiction in its new rule on detention and demurrage.
Members of the WSC include U.S.-flag carriers Matson and Crowley, as well as Maersk (OTC: AMKBY) of Denmark, Switzerland’s MSC, CMA CGM of France, Zim (NYSE: ZIM) of Israel, the ONE alliance of Japan-based lines, Taiwan’s Yang Ming (2609.TW) and Evergreen (2603.TW), and Cosco and OOCL of China.
Key to this jurisdictional inquiry is whether the activities detailed in the WSC agreement can be classified as a “cooperative working arrangement” under the parameters of the Shipping Act. According to the Commission’s guidelines, such arrangements are intended to regulate specific operations of ocean common carriers, typically involving direct shipping activities. The agreement under scrutiny fails to clearly align with these regulatory expectations, particularly because it involves discussions and lobbying rather than direct marine transportation operations.
“When these agreements are properly filed with the FMC, they receive limited antitrust immunity,” said maritime attorney Lauren Beagen, in a LinkedIn post. “That means conduct that might otherwise be considered monopolistic is permitted only within the boundaries of the Shipping Act and FMC oversight.
“But if an agreement’s purpose or activities fall outside the FMC’s regulatory scope? That limited immunity could be challenged … and revoked. And without it, those activities might not be allowed to continue.”
This could lead to legal challenges against WSC by competitors or customers, potentially altering the competitive dynamics in the ocean transportation industry. Furthermore, a decision against the WSC could set a precedent for reevaluating similar agreements filed with the FMC, tightening the regulatory environment surrounding cooperative arrangements.
Conversely, if the FMC concludes that the agreement is within its jurisdiction, it may signal a broader interpretation of “cooperative working arrangements,” potentially inviting other trade associations to seek similar status. This could stimulate more collaborative efforts among carriers to address industry-wide challenges while remaining under the protective umbrella of antitrust immunity.
“As a global trade association, the World Shipping Council takes its regulatory compliance responsibilities very seriously,” WSC Chief Executive Joe Kramek told FreightWaves, in an email. “Under the U.S. Shipping Act, ocean carriers are required to file agreements with the Federal Maritime Commission when they engage in cooperative working arrangements. In accordance with this legal obligation and with the encouragement of the FMC, five years ago WSC filed its Shipping Act agreement which has since been on file with FMC.
“We look forward to fully responding to the FMC’s order.”
This article was updated June 30 to add a statement from FMC Chairman Louis Sola and the World Shipping Council.
Find more articles by Stuart Chirls here.
Related coverage:
Drewry: No “lasting impact” from tariff break as ocean rates fall again
With Mideast shipping on high alert, Maersk re-opens Israel port
Maersk unveils new AI platform to simplify customs tasks
New Mideast tensions fail to boost trans-Pacific container rates
Brokerage Compliance Symposium
The day before F3. Every compliance issue you face - fraud exposure, carrier liability, FMCSA rules, cargo theft, insurance gaps - navigated by attorneys and operators defining best practices in a changing industry.
F3 Awards Dinner
The night before F3. FreightTech100 companies honored. FreightTech 25 and Shipper of Choice winners revealed live. Cocktail reception into dinner and live music - 300 industry leaders in one purpose-built room.
F3: Future of Freight Festival
Industry-defining keynotes, rapid-fire technology demos, and industry leaders networking in experiences across Chattanooga - plus the inaugural F3 Awards Dinner featuring the FreightTech and Shipper of Choice reveals.
The day before F3. Every compliance issue you face - fraud exposure, carrier liability, FMCSA rules, cargo theft, insurance gaps - navigated by attorneys and operators defining best practices in a changing industry.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register NowThe night before F3. FreightTech100 companies honored. FreightTech 25 and Shipper of Choice winners revealed live. Cocktail reception into dinner and live music - 300 industry leaders in one purpose-built room.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register NowIndustry-defining keynotes, rapid-fire technology demos, and industry leaders networking in experiences across Chattanooga - plus the inaugural F3 Awards Dinner featuring the FreightTech and Shipper of Choice reveals.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register Now