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Global Supply Chain News: Action to FMC  by Furniture Maker OJ Commerce Alleging Collusion among Container Carriers could be Tip of Iceberg


Carriers Said to Now be Scrambling to Meet Provisions of New Ocean Shipping Reform Act


Nov. 28, 2022
SCDigest Editorial Staff

With the balance of power shifting decisively to ocean container carries since not long after the start of the COVID-19 pandemic in 2020, shippers complained about carriers not adhering to their contractual obligations and other misdeeds, but many were reluctant to push back too hard on the carriers for fear of even worse treatment.

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Weiss further alleges that he has proof of collusion between Maersk and carrier MSC.  

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That led the Biden administration to get the Ocean Shipping Reform Act 2022 (OSRA22) into law. The legislation awards more power to the Federal Maritime Commission (FMC) and directs the FMC to take a more proactive role in investigating carrier behavior, establishing rules governing fairness in detention and demurrage charges and enforcing carrier obligations to support US exports.

The legislation also shifts the burden of proof to carriers in the case of disputes, which is a huge advantage to shippers who often did not file complaints in the past due to this burden.

In one of the first cases to be brought under the news law, furniture maker OJ Commerce accuses Maersk Line, and its subsidiary, Hamburg Süd, of failing to meet contractual obligations, collusion and retaliation – serious allegations indeed.

The action could result in millions of dollars in fines for Maersk – but according to a recent report on the web site, the long-term implications for the container shipping industry is the main storyline here.

Ultimately, the consortia arrangements among carriers, such as 2M, Ocean Alliance and THE Alliance could be threatened, whereas now they operate freely despite obvious potential issues with anti-competitive behavior.

According to the Loadstar, OJ Commerce CEO Jacob Weiss alleges there is evidence of a breach of regulations regarding consortia - and which could be very embarrassing for certain lines.

Much of that evidence submitted by the company has been redacted thus far in the documents the FMC has made public, and now Weiss is asking for this evidence to be disclosed.

The Loadstars quotes Weiss as saying that “The court gives very specific criteria for what qualifies for redaction, and clearly embarrassing emails do not qualify.”

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Weiss further alleges that he has proof of collusion between Maersk and carrier MSC.

The outcome of this case could “be a big factor in how carriers operate going forward,” Shabsie Levy, CEO of digital forwarder Shifl Shabsie Levy, told the Loadstar.

A number of similar cases from shippers are said to be queuing up. That in turn is pushing containers carriers to clean up their practices if they do not conform to the new standards imposed by OSRA 22.

Adding fuel to the fire, current FMC commissioner Carl Bentzel says that “Claims of retaliatory action [by carriers] in response to potential legal action [by shippers] have not been as well published, but we have received allegations.”

In part, OJ Commerce alleges that at the last minute, Maersk pulled out of negotiations with the furniture company on a new annual contract, forcing it to use the spot market with sky high rates that led to millions of dollars in extra costs to ship more than 4000 containers.

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