FMC allows ro-ro carriers to jointly contract tugboat services

However, FMC Commissioner William P. Doyle, who voted against the amendment, said it is beyond the scope of the Shipping Act and harmful to the U.S. tugboat industry.    A divided Federal Maritime Commission (FMC) had held that starting today, roll-on/roll-off (ro-ro) vessels deployed in services covered by an agreement between Wallenius Wilhelmsen Logistics (WWL), EUKOR Car Carriers, American Roll-on Roll-off Carrier (ARC) and Hyundai Glovis Co. “will be permitted to engage in joint negotiation for the procurement of tug services.”
   The FMC voted four to one last week to allow the amendment to an existing agreement the carriers filed with the FMC to come into force.
   “The parties to the WWL/EUKOR/ARC/Glovis Cooperative Working Agreement sought very limited new authority in terms of joint procurement,” FMC Chairman Mario Cordero said. “Careful analysis of what was proposed yielded no concerns about potential anticompetitive behavior or adverse consequences to ports, or the American shipper. Ultimately, this amendment should increase efficiencies, benefitting our nation’s port gateways.”
   However, FMC Commissioner William P. Doyle, who voted against allowing the amendment, said it “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. U.S-flag tug service providers are not ocean common carriers and they are not marine terminal operators.
   “Allowing foreign carriers to use their collective power to negotiate against individual U.S.-flag tug boat owners and operators does not create a level playing field for the tug vessels. It’s not a fair practice,” he added. “Under this amendment, we are now witnessing the use of the Shipping Act to actually undermine the U.S.-flag domestic fleet, in this case tugboat operators.”
   He pointed to comments submitted by the American Waterways Operators, the primary trade organization for the tug and barge industry, which said, “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 said, “I support the Shipping Act and recognize the important role of the Commission in granting limited antitrust immunity to foster a fair, efficient and reliable international ocean transportation system. This amendment 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.”
   In December, Norway’s Wilh. Wilhelmsen and Sweden’s Wallenius Lines announced they had signed an agreement that would lead to a new ownership structure for Wallenius Wilhelmsen Logistics, EUKOR Car Carriers and ARC.
   Under the agreement, Wilh. Wilhelmsen ASA will issue shares to Wallenius Lines in exchange for their shares of the currently joint investments. At the completion of the merger, Wilhelmsen and Wallenius will hold 37.8 percent and 48 percent, respectively, of the new entity, to be named Wallenius Wilhelmsen Logistics ASA. In addition, they agreed that Wallenius will reduce its shareholding subsequent to the merger, whereby both parties eventually will have an equal shareholding in the new entity.