Could this be the beginning of the end for ocean carrier contracts governed by the Federal Maritime Commission (FMC)? A recent petition to the FMC asking for elimination of ocean carrier tariffs seems to single that direction. The ocean shipping Industry undergoing deregulation in the US since the Ocean Shipping Reform Act of 1998 is heading toward the same pricing structure as the airline industry, which deregulated in the late 1970s.
The airlines have consolidated into a very few large airlines, something we are currently witnessing with the ocean lines. The major difference is those air carriers are US-based, unlike any ocean carrier.
As most ocean carriers’ pricing authority has moved overseas to the parent country, there is less understanding or incentive for compliance within current FMC regulations.
Does the total removal of tariff compliance for ocean carriers translate to a good development for the markets? Will the American consumer be at the mercy of foreign government-pricing practices without recourse here at home? Will special considerations be given to the biggest and most influential, leaving the small and medium-sized to the mercy of their competitors.
All good questions, and there may be unintended consequences to total removal. Less competition among shippers, non-vessel-operating common carriers and freight forwarders doesn’t always result in a healthy competitive environment for consumers.
As China is moving toward more governmental compliance emulated on the FMC, why would the US relinquish its long-standing leadership role in the world as other countries move toward the same ideology?
The FMC has made great strides in recent year(s) with regards to ocean contracting regulations that hampered business flow. Undoubtedly, more can be done and the FMC should continue to do more. However, throwing the baby out with the bathwater does not appear to be a good long-term strategy.