New Presidential Executive Order Targets Maritime Industry and Ocean Carriers

Holland & Knight LLP

Cargo congestion has reached historic proportions during the COVID-19 pandemic as the demand for imports by U.S. consumers and businesses has skyrocketed combined with an increase in operational disruptions. The effect has been felt across global supply chains, including the U.S.

On July 9, 2021, President Joe Biden took aim at the ocean shipping sector of the maritime industry with the issuance of his Executive Order (E.O.) on Promoting Competition in the American Economy. The E.O. addresses shipping, along with other industries, and is intended to promote fair competition in the American economy. The E.O. specifically references consolidation in the maritime shipping industry during the past couple of decades, suggesting that such consolidation may disadvantage U.S. exporters. To this end, the E.O. encourages the Federal Maritime Commission (FMC) "to ensure vigorous enforcement against shippers charging American exporters exorbitant charges and to "consider further rulemaking to improve detention and demurrage practices and enforcement of related Shipping Act prohibitions."

Notably, the E.O. also calls on the U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) to cooperate with the FMC and other agencies on the investigation and enforcement of existing antitrust laws.

The E.O. follows significant and ongoing activity involving the FMC concerning intermodal congestion. The Commission initiated Fact Finding No. 29, International Ocean Transportation Supply Chain Engagement, in order to identify operational solutions to cargo delivery system challenges related to COVID-19. The E.O. also follows a June 15, 2021, hearing of the House Subcommittee on the Coast Guard and Maritime Transportation on Impacts of Shipping Container Shortages, Delays, and Increased Demand on the North American Supply Chain, at which FMC Chairman Daniel B. Maffei highlighted how overseas shipping is critical to all Americans and how invaluable the contribution of ocean transportation is to economic competitiveness and our way of life.

Although these ocean shipping and intermodal transportation system concerns are not new, the E.O. raises the profile and attention on the matters. Stakeholders in the industry should review the E.O. and closely monitor further industry developments with the FMC, Surface Transportation Board (STB) and DOJ.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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