Proposed Mega-Alliance Clears U.S. Regulatory Hurdle

Mike Schuler
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October 24, 2016

Photo: CMA CGM

A proposed vessel-sharing alliance involving some of the world’s biggest container shipping companies has cleared a major regulatory hurdle with approval to from the U.S. Federal Maritime Commission.

The Asia-focussed alliance, named Ocean Alliance, is comprised of COSCO Shipping, CMA CGM, Taiwan’s Evergreen Line and Hong Kong-based Orient Orient Overseas Line (OOCL). It was announced in April to rival the 2M Alliance, made up of container ship giants Maersk Line and Mediterranean Shipping Company.

The FMC said Friday it had completed its review of the OCEAN Alliance and decided to allow it to become effective following months of negotiation. The agreement was initially filed with the FMC on July 15, 2016, but was ‘significantly changed’ throughout the approval process, according to FMC Commissioner William P. Doyle.

“Today’s announcement follows an exhaustive review process by the Commission that thoroughly examined all aspects of the proposed agreement to assure that competition in the ocean transportation industry would not suffer,” the FMC said in a statement. “Commissioners and Commission staff extensively engaged filing counsel on a number of issues, and took advantage of the opportunity allowed for under the law to issue a Request for Additional Information, which necessitates the filing of further documentation in support of the application.”

Under the FMC’s approval, members of the Ocean Alliance are permitted to share vessels, charter and exchange space on each other’s ships, and enter into cooperative working arrangements in international trade lanes between the United States and ports in Asia, Northern Europe, the Mediterranean, the Middle East, Canada, Central America, and the Caribbean.

The Ocean Alliance is set to begin operating in April 2017, will run for five years, and is expected to initially involve 350 vessels. It still needs approval from the EU and China.

“The Commission worked very hard to balance the needs of not only the OCEAN Alliance applicants, but all other parties involved in the intermodal supply chain, with the ultimate goal of safeguarding competition in international oceanborne common carriage, with the American shipping public foremost in mind. The Agreement going into force represents a consensus of what will allow OCEAN Alliance carriers to achieve efficiencies without harming the marketplace,” noted Federal Maritime Commission Chairman Mario Cordero. “I applaud both Commission staff and the filing parties for not only their hard work, but the professional manner in which they addressed matters raised during the review process.”

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