Congress to look at joint contracting of tugboat services

The Subcommittee on Coast Guard and Maritime Transportation will hear an argument that foreign carriers should not be permitted to collectively negotiate rates with domestic maritime service providers because it gives them an unfair advantage.    Congress will dig into the question of whether domestic companies such as the tugboat operators are being disadvantaged as a result of the Federal Maritime Commission (FMC) allowing ocean carriers to collectively negotiate rates with maritime service providers.
   The Subcommittee on Coast Guard and Maritime Transportation of the House of Representatives Committee on Transportation and Infrastructure will hear from witnesses that include Michael A. Khouri, acting chairman of the FMC; John Butler, president and chief executive officer of the World Shipping Council, the principal trade association for the container shipping industry; Peter Ford, the chief strategy officer for terminal operator Ports America; and Thomas Allegretti, president and chief executive officer of American Waterways Operators (AWO), the principal association for the tugboat and towing industry.
   In January, the FMC voted to allow an amendment to an agreement between roll-on/roll-off (ro-ro) carriers Wallenius Wilhelmsen Logistics AS, Eukor Car Carriers Inc., American Roll-on Roll-off Carrier LLC, and Hyundai Glovis Co. Ltd. (Glovis). The agreement allows the ro-ro companies to collectively negotiate rates with maritime service providers, including tugboat operators.
   One of the five FMC commissioners, William P. Doyle, voted against allowing the amendment, noting how the tugboat industry said it would be disadvantaged by such negotiations.
   AWO had opposed the amendment, telling the FMC at the time that “foreign carriers should not be permitted to collectively negotiate rates with domestic maritime service providers, including tugboat operators. Such a provision would allow ocean carriers to gain an advantaged bargaining position because domestic entities have no counterbalancing ability to take collective action with immunity from the antitrust laws of the United States.”
   Doyle sided with the AWO and said the action by his fellow commissioners “reaches beyond the scope of the Shipping Act of 1984.”
   “Under the Shipping Act, antitrust immunity is permissible to certain agreements among and between ocean common carriers and marine terminal operators,” Doyle said.
   But in this instance, Doyle said the Shipping Act was being used “to actually undermine the U.S.-flag domestic fleet, in this case tugboat operators.”
   He said the amendment the other commissioners voted in favor of, “tilts the playing field for certain international carriers and opens the door to anticompetitive behavior resulting in adverse consequences for U.S.-flag maritime service providers, their mariners, and the domestic shipyard industry.”
   Meanwhile, the House subcommittee has also noted how the tripartite agreement between Japan’s “big thee” carriers – NYK, MOL and “K” Line – would permit ocean carrier alliances to jointly negotiate with maritime service providers.
   The subcommittee said, “U.S. industry again raised concerns regarding maritime service providers having no counterbalancing ability to take collective action.” It also said companies have raised concerns with the limited timeframe of 12 days in which comments can be submitted to the FMC on agreements and amendments to agreements.