Commissioner Khouri Requests Alliances to Provide Congestion Information

Commissioner Michael Khouri is calling on the FMC to request all of the four major Alliances to provide new information on the steps each is taking to reduce congestion at U.S. ports. “We have received private reports and seen numerous press accounts that the operations of the four alliances – G6, CKYHE, Oceans 3, and 2M – may be a contributing factor in the chronic congestion at the West Coast ports, and perhaps at other port facilities.” Khouri said.

Reports have alleged that loading practices at Asian ports have significantly increased the homogenous mix of the various alliance members’ containers on each alliance vessel. Consequently, upon arrival at a West Coast port terminal, a significant number of containers now need additional intra-facility ground moves to and among each of the local terminals operated by the individual alliance members before the container is dispatched out of the port complex.

Khouri noted that the Commission approved each of the alliances after full review of the alliance agreement under the standards set forth in Section 6 (g) of the 1984 Shipping Act. That provision requires the Commission to find that, by allowing the joint operation of competitor liner carriers, the operation of the alliance agreement will not produce unreasonable reductions in transportation service or unreasonable increase in transportation cost.

“In terms of overall costs and service levels in the liner supply chain as experienced by U.S. exporters and importers, there has been a deterioration in service and significant increase in costs due to several factors.” Khouri observed. Other factors also playing significant roles in port congestion include issues surrounding labor, chassis, and drayage drivers, among others. Commissioner Khouri is calling for each alliance to report promptly to the Commission on information and operational steps each is taking to ameliorate and eliminate congestion issues at U.S. ports. Further, he is calling for updates to be temporarily included in the alliance’s quarterly reports as currently required in each alliance agreement’s periodic reporting requirements.