The FMC issues a new mandate for stricter data reporting

In early May 2022, the Federal Maritime Commission (FMC) announced it would increase monitoring of the three official ocean carrier alliances. Currently, these include nine of the ten major ocean carriers worldwide:

  • 2M Alliance: Maersk, MSC
  • THE Alliance: Hapag-Lloyd, ONE, Hyundai, Yang Ming
  • OCEAN Alliance: CMA-CGM, COSCO, Evergreen

Container lines combine their fleets to streamline scheduling and boost efficiency of trade routes. Through strategic collaboration, these carriers benefit from operational cost savings, increased cargo capacity, and wider geographical coverage.

Under the new mandate, all three alliances and their member companies are now subject to enhanced reporting requirements on their freight pricing and capacity data. This will enable the FMC to more accurately assess ocean carrier behavior and marketplace competitiveness.

What’s changing for ocean carrier alliances?

The three aforementioned groups are already monitored at the closest and most frequent level performed by the FMC. Existing decrees require these alliances and their members to disclose:

  • Detailed operational data and minutes from meetings among agreement principals
  • Regularly scheduled meetings with agreement parties that FMC staff participate in

The new mandate targets more specific information disclosure:

  • All participants in ocean carrier alliances must “submit pricing information about cargo they move on the major trade lane,” including container and service types.
  • Both carriers and alliances are required to share “comprehensive information related to capacity management.”

The goal is to provide the FMC’s Bureau of Trade Analysis (BTA) with deeper insight into trade lane pricing, as well as more information on capacity management decisions taken by ocean carriers and alliances.

Why does the FMC want more data from alliances?

A key responsibility of the FMC is to monitor and regulate compliance from maritime service providers in the US supply chain. This includes determining whether carrier practices have “an anticompetitive impact on the marketplace.”

COVID-19 fueled supply chain disruptions have caused global supply and demand to fluctuate with little warning. This instability has made it challenging for shippers to predict market prices, although shipping alliances have mostly retained control over sea freight rates.

Prior to the new mandate, the BTA conducted a year-long examination to identify the essential data points needed to better analyze carrier behavior and marketplace trends. The latest regulations are a direct result of this study, designed to further enforce fair pricing and competition.

How do these changes affect shippers?

Inflation and skyrocketing freight rates have left businesses and consumers across the US struggling to find sustainable solutions in the past couple of years. The FMC’s new mandates see the tightening of controls and greater oversight over alliance carrier operations.

For shippers, these new changes will ideally bring more stability to freight spot rates and predictability in the market–despite the ever changing situation with a lingering pandemic.  Increased regulation of global shipping activity and pricing aims to increase transparency in business practices across the maritime industry.

The FMC’s call for improved coherence and clarity of alliance operations and capacity management decisions also seeks to streamline ocean freight shipping processes in the US and abroad.

On a final note, shippers and carriers should be ready for more changes in protocol, at any time. The FMC reassesses and adjusts reporting requirements for carriers and alliances on a regular basis, as circumstances and business practices change. Additional reporting regulation is possible, as current events continue to unravel.