We are in an anti-regulatory moment in U.S. history, but at what point does lax enforcement become too lax?
The answer may be “now!” for the American ports and shipping industry.
Designed to increase efficiency in the international ocean transportation system, the Shipping Act of 1984 allowed ocean carriers to band together in strategic shipping “alliances,” which permitted them to share ships and port facilities to reduce operational costs.
These alliances must file cooperative agreements with the Federal Maritime Commission. If the agency does not obtain a federal court injunction to block the agreement, alliance members enjoy a limited antitrust immunity.
But the Federal Maritime Commission has sought to block a carrier agreement exactly once in 33 years — unsuccessfully.
This lax enforcement crossed into excess earlier this year when a group of international carriers filed an alliance agreement to enable members to jointly negotiate with U.S. tugboat operators.
Tugboat operators were not consulted, and it’s easy to see why. If their customers are allowed to band together to negotiate, the tugboat operators lose all leverage in those negotiations.
As a major driver of American commerce — generating 500,000 direct jobs and supporting more than 23 million in the United States, according to the American Association of Port Authorities — the American harbor services industry is no stranger to operating in a globalized economy.
But it should not have to overcome distinct disadvantages imposed by its own government — disadvantages that give foreign companies unfair negotiating leverage over American businesses.
This is but the latest effort in what had been a series of previous such attempts by foreign ocean carrier alliances to negotiate with U.S. tugboat operators.
When asked to defend this decision and inaction, the acting Federal Maritime Commission chairman did not even reference tugboat operators. This leaves Americans to wonder if the American harbor services providers’ interests were even considered. If not, which interests are being watched out for by the Federal Maritime Commission?
Some in Congress are beginning to ask these questions. Reps. Duncan Hunter (R-Calif.), and Peter DeFazio (D-Ore.), who don’t agree on much, have joined together to challenge the Federal Maritime Commission to “do more” to stop potential anti-competitive collusion and have called on Congress to revisit the limited antitrust immunity granted under the Shipping Act.
Reps. Hunter and DeFazio are right to raise this issue. Congress should do more not only to push the Federal Maritime Commission to oppose anti-competitive practices, but also to amend the Shipping Act to prohibit carriers from collectively negotiating with and projecting their market power against maritime service providers.
Without changes, the skewed playing field will enable these massive shipping conglomerates to grow their competitive advantages over American businesses.
The current arrangement is not merely unfair — it represents a threat to the viability of the domestic harbor services industry. It makes no sense for the U.S. government to put an essential American industry at risk in favor of foreign shipping alliances. Congress must reform this antiquated law and put American businesses and mariners first.
Brian McNicoll is a former director of communications for the House Committee on Oversight and Government Reform and a former senior writer for The Heritage Foundation.
The views expressed by contributors are their own and are not the views of The Hill.