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Major Ocean Carrier Alliance Approved by FMC

Tuesday, October 25, 2016
Sandler, Travis & Rosenberg Trade Report

After what it called “an exhaustive review process” designed to preclude any adverse impact on competitiveness, the Federal Maritime Commission has announced that the Ocean Alliance agreement among four major vessel carriers became effective as of Oct. 24. Members of the alliance, which still must be approved by regulators in Europe and China, have previously said they are looking to “go live” around April 2017.

The agreement consists of COSCO Shipping, CMA CGM (including APL), Evergreen Marine, and Orient Overseas Container Line Limited. It authorizes participants to share vessels with one another, charter and exchange space on one another’s vessels, and enter into cooperative working arrangements in connection with their services and operations in the trade lanes between the U.S. and Asia, Northern Europe, the Mediterranean, the Middle East, Canada, Central America, and the Caribbean.

According to media reports, the Ocean Alliance will control the largest market share in the Asia-Europe (39 percent) and Asia-North America (35 percent) trade lanes. However, FMC Commissioner William Doyle said concerns about competitiveness have been ameliorated because the parties to the agreement “are limited in their ability to use their collective market power to jointly negotiate contracts with marine terminal operators” and instead “must negotiate independently with and enter into separate individual contracts with stevedores, tugs, barges, chassis providers, and other third-party service providers.”

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