The Shipping Act provides the FMC special oversight of government-controlled common carriers operating in U.S. trades to ensure “just and reasonable” rates.
The U.S. Federal Maritime Commission has added Orient Overseas Container Line Limited (OOCL) and OOCL (Europe) Ltd. to its list of controlled carriers due to their recent acquisition by COSCO Shipping Holdings Co. Ltd.
The FMC defines a controlled carrier as an ocean common carrier that is directly or indirectly owned or controlled by a foreign government. In this case, the Chinese government has ownership in COSCO.
As required by Section 9(a) of the Shipping Act, controlled carriers are subject to special oversight by the FMC. The commission may, after providing notice and opportunity for a hearing, prohibit the publication or use of a rate, charge or regulation that a controlled carrier has failed to demonstrate is “just and reasonable.”
Under the law, with the exception for service contracts, a rate, charge, classification, rule or regulation of a controlled carrier may not become effective, without special permission of the FMC, until the 30th day after publication.
“Congress enacted these protections to ensure that controlled carriers, whose marketplace decision-making can be influenced by foreign governmental priorities or by their access to nonmarket sources of capital, do not engage in unreasonable below-market pricing practices which could disrupt trade or harm privately owned shipping companies,” the FMC said.
Since the last publication of the controlled carrier list in the Federal Register on Aug. 2, 2017, the FMC’s general counsel classified both OOCL and OOCL (Europe) Ltd. as controlled carriers on Aug. 16, 2018, after their parent company was acquired by controlled carrier COSCO Shipping Holdings Co. Ltd.
In addition, COSCO Shipping Lines (Europe) GmbH, which was removed from the controlled carriers list in 2017 after canceling all tariffs, resumed service in April 2018 and has again been added to this list. COSCO Shipping Lines (Europe) GmbH was originally classified as a controlled carrier on Nov. 9, 2015.
Meanwhile, the FMC has removed Algerian government-owned CNAN Nord SPA from the controlled carrier list since it no longer provides common carriage in the U.S. trades.
Other carriers to be removed from the list in recent years include Hainan P O Shipping Co. Ltd., which left the U.S. trades in 2012; APL after it was purchased by privately held CMA CGM from Singapore government-owned parent NOL; and United Arab Shipping Co., following its acquisition by privately held Hapag-Lloyd in May 2017.