The severe ongoing disruptions in the maritime supply chain have turned proper logistics management and planning into Mission Impossible. Though exacerbated by the COVID-19 pandemic, the underlying causes are not new. Rather, they demonstrate the existing vulnerabilities of the supply chain.
Here, regulators have an important opportunity to act in the interests of ensuring more resilient global supply chains and, in turn, the ability for economies to strengthen and flourish.
Crucial to addressing these issues, and to ensuring the future fluidity and resilience of the maritime supply chain, is ensuring fair competition and a level playing field for all supply chain actors. FIATA welcomes the comprehensive efforts taken by US maritime regulators to delve into the various issues and supports the Ocean Shipping Reform Act of 2021, which would strengthen US regulatory enforcement in this area and provide an excellent example for other economies around the world.
An important initiative of the current US administration is its work investigating the effects of carrier consolidation on other essential industry sectors, such as freight forwarders. This should include a review of carrier alliances, consortia, and vessel-sharing agreements, as well as the increasing trend toward vertical integration of ocean carriers to include end-to-end freight movement within their services in direct competition with other logistics sectors, despite benefiting from special anti-trust immunities.
While business models inevitably evolve, it is important that competition remains fair. In the context of rapidly rising freight rates, maritime regulators should also exercise greater scrutiny over practices that perpetuate a wide spread in prices and treatment between large shippers and smaller shippers, which usually access the market via freight forwarders.
Following the US Federal Maritime Commission’s (FMC) work to produce its Final Rule on Demurrage and Detention, FIATA produced a toolkit to help its members leverage the ruling as a best practice in other economies around the world. The next step should be to ensure the Final Rule really has teeth, using strict enforcement to mitigate what has become an increasingly complex bottleneck in the global supply chain.
With the right regulatory responses, resolving the inefficiencies of the maritime supply chain may no longer be Mission Impossible. Fair competition and a level playing field, as well as developing smoother interfaces between the different supply chain actors, is crucial to this effort.