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Federal Maritime Commission to address global shipping issues.

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Federal Maritime Commission to address global shipping issues Image: Pexels
Federal Maritime Commission to address global shipping issues. Image: Pexels
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Supply Chain disruption at the time of Covid and the opportunities taken by mainstream container shipping companies have come to a point of legal litigation as these carriers took advantage of this unfortunate situation and profited in billions of dollars. 

OJ Commerce, LLC an e-commerce retailer that sells dropship products from domestic inventory of hundreds of brands. They import goods from Asia and Brazil and fulfil the supply chain needs of their end customers. They had a contract with Maersk Line with a space and price commitment of 10 TEU/week but Maersk’s failure to provide space as promised led them to move shipments on spot rates resulting in losses. 

In the view of this breach of contract OJ Commerce, LLC filed a case against Maersk before the Federal Maritime Commission stating Maersk promised that the tender of cargo under the contract shall be reasonably spaced throughout the term, but they failed, and they further refused to fulfil the existing contractual obligations. 

The FMC case document has mentioned that Maersk retaliated against OJC Commerce and sent internal orders to disengage on renewal of the contract. The decision to cut off OJC was made in retaliation for sending its threat of an FMC complaint. 

Therefore, Maersk retaliated against OJC in two ways explicitly prohibited by the Shipping Act:  A common carrier, either alone or in conjunction with any other person, directly or indirectly, may not retaliate against a shipper by refusing, or threatening to refuse, cargo space accommodations when available, or resort to other unfair or unjustly discriminatory methods because the shipper has patronized another carrier, or has filed a complaint, or for any other reason. 

As Maersk had its internal compliance training on the Shipping Act, Maersk knew that an FMC complaint was not a legitimate reason to refuse to deal or negotiate with the customer they further chose to retaliate against OJC. As a result, OJC was forced to mitigate its losses and book limited space on high prices of spot market rates which were too expensive to justify the cost of container freight. 

Maersk gave seven pretexts in an attempt to justify its illegal actions, The decision was based in part on

  1. OJC’s relatively low volume commitment,
  2. OJC’s lack of cargo volume in other trade lanes,
  3. the availability of space in the Transpacific trade,
  4. the rate levels sought by OJC,
  5. Maersk past experience with the timeliness of OJC’s payment and the perceived credit risk associated with that payment history, and
  6. the fact that OJC did not purchase ancillary services from Maersk.
  7. OJC’s disputatious manner of doing business and its repeated and excessive threats to pursue litigation against Maersk, which threats were disproportionate to the issues between the parties and also disregarded the dispute resolution procedures and remedies for breach of contract set forth in the service contract between the parties.

Each of Maersk’s pretexts were addressed and FMC has noted that because even when the shipper is admittedly in the right, the carriers still retaliate, without remorse or fear of consequence.

The Federal Maritime Commission concluded in its report that this case is not complicated. Indeed, Maersk’s own documents and words make it clear that its violations of the Shipping Act were knowing and intentional, and the damage that they caused to OJC was massive. If OJC is not fully compensated for the damages inflicted on its business, Maersk will only be further emboldened – even encouraged – to retaliate against shippers, which the FMC has publicly stated it will not tolerate.  

These were the brief findings of fact, and the case is still in legal disputes as Maersk chose improper motivation in litigating this case,

In the view of an increase numbers of such cases where all top line carriers have shown the same distorted approach in the process of global supply chain the Ocean Shipping Reform Act of 2022 by the U.S. The OSRA was formed to ensure industry players have the right incentives and that all stakeholders in the ocean freight transportation system can have a voice, said Commissioner Daniel B. Maffei at U.S. Federal Maritime Commission.

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Container Shipping Lines

Maersk and MSC to terminate 2M alliance in 2025

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Maersk and MSC to terminate 2M alliance in 2025. Image: Maersk
Maersk and MSC to terminate 2M alliance in 2025. Image: Maersk
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MSC Mediterranean Shipping Company and Maersk A/S, an entity under A.P. Moller – Maersk, have mutually agreed to terminate, effective in January 2025, the present 2M alliance.

In a joint statement, CEO Vincent Clerc of A. P. Moller – Maersk, and CEO Soren Toft of MSC say, “MSC and Maersk recognize that much has changed since the two companies signed the 10-year agreement in 2015. Discontinuing the 2M alliance paves the way for both companies to continue to pursue their individual strategies.”

He continues, “We have very much appreciated the partnership and look forward to a continued strong collaboration throughout the remainder of the agreement period. We remain fully committed to delivering on the 2M alliance’s services to customers of MSC and Maersk.”

The announcement has no immediate impact on the services provided to customers using the 2M trades. Each company’s customer teams will communicate with their respective clients to support during, and beyond, the phase-out of the 2M alliance.

Background information about the 2M alliance:

  • 2M is a container shipping line vessel sharing agreement (VSA)
  • It was introduced in 2015 by the two companies with the aim of ensuring competitive and cost-efficient operations on the Asia-Europe,
  • Transatlantic and Transpacific trades
  • The 2M agreement has a minimum term of 10 years with a 2-year notice period of termination

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Container Shipping Lines

Mawani announces addition of Indamex 2 shipping service

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Mawani announces addition of Indamex 2 shipping service. Image: Saudi Ports Authority
Mawani announces addition of Indamex 2 shipping service. Image: Saudi Ports Authority
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The Saudi Ports Authority has announced the addition of the Indamex 2 shipping service, a route jointly operated by global container liners Hapag-Lloyd and CMA CGM, to Jeddah Islamic Port.

The trade link is key to the Kingdom’s ambitions in positioning Jeddah as a major east-west hub and strengthening its global maritime connectivity in line with the goals of the National Transport and Logistics Strategy.

The Kingdom’s busiest port will gain access to leading trade gateways across the Indian Subcontinent and North America, including Port Qasim in Pakistan, Mundra and Jawaharlal Nehru in India, and Norfolk, Charleston, and Savannah in the United States.

The first sailing on the new shipping service had left the Red Sea port on the 11 th of January on board MV. SWANSEA V. 006W, a vessel that has a carrying capacity of 4600-6966 TEUs. Over the course of last year, the nation’s hubs have added up to 9 shipping services in a bid to boost the Kingdom’s ranking in the global logistics indices and multiply the sector’s current throughput capacity.

Jeddah Islamic Port remains the region’s prime maritime and transshipment hub, receiving around three- fourths of the Kingdom’s seaborne trade and transshipment volumes across its 62 multipurpose berths designed to handle containers, general cargo, livestock, passengers, bulk grain, and automobiles. With a capacity spanning 130 million tons, the port is home to state-of-the-art infrastructure that comprises four cargo and container terminals, a bonded storage and re-export zone, storage yards, and warehouses.

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Container Shipping Lines

Ocean Network Express to acquire TraPac and Yusen Terminals

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Ocean Network Express to acquire TraPac and Yusen Terminals. Image; ONE
Ocean Network Express to acquire TraPac and Yusen Terminals. Image; ONE
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Ocean Network Express has signed definitive agreements to acquire a 51% stake in each of TraPac LLC and Yusen Terminals LLC, currently held by Mitsui O.S.K. Lines, Ltd. and Nippon Yusen Kabushiki Kaisha respectively. TraPac is a container terminal operator and vessel stevedore that provides container terminal services in Los Angeles and Oakland. YTI is a container terminal operator and vessel stevedore that provides container terminal services in Los Angeles.

These acquisitions are part of the integration of the container shipping businesses from the parent companies into ONE. The recent disruptions to the supply chain due to Covid-19 have highlighted the importance container terminals play in keeping global trade flowing. The newly acquired container terminals will safeguard ONE’s access to terminal capacity in key and strategic gateways, support its growth ambitions and enhance its service offerings to customers.

The closing of these transactions is subject to the approval of the relevant authorities.

Ocean Network Express was established on July 7, 2017 by the integration of ‘K’ Line, MOL and NYK.

Their fleet size is 1,505,181 TEU which is the 7th largest in the world. Operations will be performed through a fleet of 205 vessels, including 35 super-large ships, such as the world largest 20,000TEU container-ships, in a service network covering over 120 countries around the world. ONE will further expand the number of ports in the future to Asia, North America, Europe, the Mediterranean Sea and the Middle East, also planning to expand our direct service to perform a wide service coverage.

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