Alliances in Container Shipping PDF Download

Author: Minsang Eom
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ISBN:
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Languages : en
Pages : 0

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Book Description
Since the first shipping conference established in 1875 for regulating the tea trade between UK and India, the cooperative operations of shipping carriers are continuing as of 2022. The common activity of shipping companies such as setting common freight rates has been exempted from the enforcement of antitrust law, to prevent the ocean container shipping industry from falling into a collusive competition that may cause significant fluctuations both in service supply and price in the market. But, in 2008, the transition from the shipping conference era to the strategic alliance era occurred and changed the environment of common activities by encouraging more competition among the shipping carriers. Furthermore, due to the bottleneck and congestions that occurred in the global ocean freight supply chain during the Covid-19 pandemic, the voice for forcing shipping carriers is rapidly growing to stabilize the service supply and lower the freight rates. In 2021, the Federal Maritime Commission(FMC) of the US announced to investigate common activities of global shipping alliances and force the alliances to justify the price charged to shippers. In 2022, the Fair Trade Commission of South Korea charged a financial penalty to the alliance 'Committee of Shipowners For Asian Liner Service' for operating unjustified common activities including the setting of common freight rates, and announced further investigations on other alliances operating in South Korea. Such global 'trends' of the regulatory authorities legislating against the common activities of shipping alliances must be carefully introduced with the understanding of the uniqueness of the ocean container shipping industry, otherwise, the cost of negative impacts will be levied on the final consumers. The paper aims at consulting the two responsible regulatory authorities of South Korea, the Ministry of Ocean and Fisheries and the Fair Trade Commission, to support the decision-making process for the future regulatory policies to ensure the voices of involved stakeholders are considered. Interviews are conducted to gather the perspectives of experts representing the University, Shipping Company, and Government. The collected qualitative data indicate what should be considered in the next regulatory policy-making process for reacting to currently ongoing issues. First, the awareness of the importance of the ocean container shipping industry should be improved so that the policies can be justified by people and encourage the growth of the industry. Second, the voice of shipping companies should be considered when planning a new regulatory policy, as there is a risk of introducing over-regulation in the era in which the voices against the alliances are being emphasized. Third, the regulatory authorities should prefer incentivizing the shipping alliances rather than regulating, as it is important to attract foreign shipping carriers to deploy their services in South Korea to achieve a stable supply of services that benefits shippers in long term. Fourth, the ambiguity in the interpretation of two separate laws for regulating the common activities of shipping alliances should be solved, either by centralizing the authorities and/or preparing a detailed manual for the enforcement. Fifth, as the ocean container shipping industry consists of services from global networks, it is necessary for all the nations to cooperate to achieve a stable global ocean freight supply chain in the long run. Although the paper did not include the voices of every stakeholder involved in the ocean container shipping industry, the suggestions indicate the general directions and the attitudes that the responsible authorities of South Korea should equip when reacting to the 'global regulation trend' triggered by the 'trend maker' nations such as US and EU.