Commissioner Doyle votes in favor of Maersk/MSC/HMM Strategic Cooperation Agreement

Commissioner William P. Doyle of the Federal Maritime Commission issued the following statement today:

I voted today to allow the agreement styled the “Maersk/MSC/HMM Strategic Cooperation Agreement” to go forward. The parties to the agreement are Maersk Line, Mediterranean Shipping Company (MSC) and Hyundai Merchant Marine (HMM). However, I take this opportunity to convey to the parties concerns related the shipping public, American businesses and consumers.

Despite announcements that were issued in mid-December by Maersk, MSC and HMM, the “2M” Alliance itself is not party to this strategic cooperation agreement. For clarification, the term “2M” generally applies to the FMC filed agreement known as the “Maersk/MSC Vessel Sharing Agreement.” As such, shippers should understand that the terms and conditions set-out in the 2M Alliance agreement are not available to shippers under this new agreement. Indeed, in the Maersk/MSC/HMM strategic cooperation agreement there is no reference to “2M” anywhere in the agreement.

In mid-December 2016, Maersk Line announced that, together with its 2M Alliance partner MSC, it was entering into a Strategic Cooperation with HMM. Maersk stated in part: “2M cargo will however only be loaded onto HMM vessels with customers’ express agreement – and only on the HMM operated service that is part of the Asia to US West Coast slot swap agreement. These HMM services are not part of the 2M network today.”

MSC issued a contemporaneous statement that included: “We are pleased to have agreed terms with Hyundai and Maersk Line in a new strategic cooperation. This cooperation allows MSC to enhance its market-leading network, providing new transport opportunities for our customers. The agreement primarily sees Hyundai purchasing slots on 2M vessels with the 2M partners also purchasing a number of slots with Hyundai on selected routes. Our focus is on providing the highest standards of reliability and stability, in which our customers can continue to have great confidence. The detail of the agreement, its structure and guarantees have been carefully considered with this in mind.”

Too often small to medium sized shippers lack the bargaining power to choose which actual carrier will transport their goods. Maersk’s statement was widely interpreted as a response to shippers’ concern in the wake of the Hanjin insolvency – meaning that having shippers take affirmative action on which carrier is ultimately used was viewed as a safeguard for those wary of having containers on a HMM vessel.

MSC’s statement provided no shipper option to exclude carriage on the HMM services.

Carriers are integral to the supply chain carrying billions of dollars-worth of goods. Maersk confirmed this week that it will honor its commitment to shippers as to having a say on the vessels their cargo will be loaded. I expect MSC to afford some measure of protection for its shippers as well. Though the Agreement will go into effect soon, the FMC will continue to have authority to monitor this and other agreements for compliance with the law.

Shippers should review their options with all ocean carriers. Make sure you know which actual ocean carrier vessel will carry your goods.

William P. Doyle is a Commissioner with the U.S. Federal Maritime Commission. The thoughts and comments expressed here are his own and do not necessarily represent the position of the Commission.