FMC gives G6 a green light

APRIL 3, 2014 — The Federal Maritime Commission announced yesterday that it had concluded a comprehensive review of the proposed amendment to the G6 Alliance Agreement, FMC Agreement No. 012194-002 including the information received from the agreement parties in response to the FMC’s request for additional information.

The pending agreement between American President Lines, Hapag Lloyd AG/USA, Hyundai Merchant Marine, Mitsui OSK Lines, Nippon Yusen Kaisha, and Orient Overseas Container Line would expand the current geographic scope to allow G6 operational cooperation in the trades between the Far East and the U.S. West Coast, and between North Europe and all U.S. coasts.

The Commission’s unanimous decision will allow the Agreement to become effective as scheduled on Friday, April 4, 2014.

The Commission’s decision is based on a determination that the agreement is not likely at this time, by a reduction in competition, to produce an unreasonable increase in transportation cost or an unreasonable reduction in transportation service under section 6(g) of the Shipping Act.

“The Commission’s action on the G6 Alliance is based on an extensive, competitive analysis conducted by the Commission’s staff and comments received by shippers and other industry participants. The Commission will continue to review the competitive impact of global alliances. This Alliance will considerably increase available capacity in the expanded geographic scope, and has the potential to generate operational efficiencies and positive environmental benefits,” said Chairman Mario Cordero.

Commissioner William P. Doyle said that he appreciate APL’s and Hapag Lloyd’s commitment and support to the United States with respect to jobs and the commercial ships they have registered under the U.S.-Flag.

However, Commissioner Doyle said he was “highlighting as a concern” Article 5.9 of the amended Alliance Agreement where the parties have added the term tug services.

Tug owners and operators should be aware of the vague language in this clause,” said Commissioner Doyle. “In any event, the G6 Parties must comply with all U.S. laws should they discuss and agree upon jointly contracting for tug services. The application of this provision should require special purpose monitoring.

“The G6 Parties should be mindful of the antitrust probes that are being conducted in the oceanborne transportation sector – worldwide. To this end, the FMC will continue to monitor this Alliance. Specifically, the Federal Maritime Commission will be modifying its current monitoring program to reflect the new services outlined in the amendment.”