FMC explains why it backs “THE Alliance”

With THE Alliance Agreement finally approved by U.S. Federal Maritime Commission, FMC Commissioner William P. Doyle explains why he voted to take no further action and allow THE Alliance Agreement to take effect on December 19th.  THE Alliance (“THE”) brings together Hapag-Lloyd, K-Line, MOL, NYK, and Yang Ming as the as the final piece in the “second generation” of global ocean carrier alliances:

“After receiving substitute language from the parties, key authorities in THE Alliance Agreement are now directly on par with authorities contained in the other second generation alliance agreements of 2M and the OCEAN Alliance.”

According to the FMC, this follows the framework whereby alliance members must negotiate independently with American businesses such as tugs, barges, stevedores, chassis providers, container equipment lessors, bunker suppliers and other third party service providers in the U.S. 

On commercial matters THE parties can gain significant efficiencies by jointly discussing operational matters. 

Doyle believes this balances the ocean carriers’ economic needs to gain operational efficiencies while the FMC exercises its duty to “foster a vibrant domestic maritime sector for the American businesses, families, and workers that rely upon it.”

The Agreement does allow THE to jointly negotiate with marine terminal operators who agree to such an arrangement.  Looking forward, some ports and MTOs may wish to file their own agreements with the Commission permitting them to jointly negotiate as a group with the ocean carrier alliances, Doyle adds.

“I appreciate the initiative undertaken by THE carriers to place emphasis on how it can help a carrier member’s shippers and other customers in the event a carrier member becomes bankrupt,” he says. “The Hanjin bankruptcy served as a wakeup call to carriers and shippers, and THE Alliance’s efforts to create a mechanism to keep cargo moving in the event of another carrier bankruptcy demonstrates that carriers and alliances have heard the concerns of the shipping public and are working to create commercial solutions to address those concerns.”