NIT League backs APL’s petition for rate flexibility
The National Industrial Transportation League has backed APL’s request to the U.S. Federal Maritime Commission for an exemption from certain pricing restrictions applicable to government-controlled carriers, saying that granting the exemption would increase service options for shippers and further competition between ocean carriers.
APL effectively became majority controlled by the Singapore government in September when the country’s government agency Temasek increased its stake to more than 50 percent in Neptune Orient Lines, the parent company of APL and APL Logistics.
The FMC said Sept. 23 that APL had made a petition for a full exemption from the first sentence of Section 9(c) of the 1984 Shipping Act, advising the agency that they anticipate meeting the statutory definition of a controlled carrier “in the very near future.”
This means that APL should become subject to the controlled carrier provisions of the U.S. Shipping Act. The law provides that, except for service contracts, rate reductions made by controlled carriers in their tariffs cannot be implemented until 30 days after the date of publication. Other carriers can cut tariff rates immediately after publication.
The date for comments sought by the FMC closed Tuesday.
“The league believes that the FMC should grant exemption authority to APL so that it may reduce its rates, charges, classifications, rules or regulations in order to meet customer requirements and to respond to market forces, without the delay created by the statutory 30-day waiting period,” the NIT League said in comments filed on Tuesday with the FMC.
Granting the exemption to the Singapore-controlled carrier “would put APL on equal footing with other liner carriers not subject to the Controlled Carrier Act and three prominent Chinese controlled carriers that recently received nearly identical exemptions,” the NIT League said.
No major container shipping line is subject to the controlled carrier restrictions. The FMC has recently granted a relief from these pricing restrictions to COSCO Container Lines, China Shipping Container Lines and Sinotrans. The NIT League supported their petitions.
The NIT League described the 30-day waiting period for changes in controlled carrier tariffs as an “artificial barrier” that “temporarily excludes APL from markets.”
It added that the FMC would retain its authority over APL’s prices after granting the requested exemption. “If the commission had reason to believe that APL’s pricing practices were predatory, or otherwise harmful to the American shipping industry, then the commission could investigate APL and prohibit the use of any tariff rates, charges, classifications, rules, or regulations found unjust or unreasonable,” the NIT League said.
The league cited recent stock market documents issued by Temasek, saying APL’s new owner aims “to maximize long-term shareholder value.”
“There is no reason to believe that APL will become a foil for the Singapore government to engage in practices that are detrimental to commerce or the U.S. economy,” the NIT League said.
The controlled carriers safeguards were originally introduced to prevent harmful predatory pricing by state-controlled Soviet shipping lines.
The FMC will discuss the petition made by APL behind closed doors during a meeting Oct. 27.