July 12, 2021

New Presidential Executive Order Targets Maritime Industry and Ocean Carriers

Calls for Improved Detention and Demurrage Practices, Along with Enforcement of Antitrust Laws and Shipping Act Prohibitions
Holland & Knight Alert
Gerald A. Morrissey III | J. Michael Cavanaugh | Jameson B. Rice | Christopher R. Nolan | Sean T. Pribyl | David C. Kully

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 FMC and DOJ's Antitrust Division on July 12 announced that they had signed an interagency Memorandum of Understanding (MOU) to foster increased cooperation and communication in their respective oversight and enforcement responsibilities of the ocean liner shipping industry. The MOU, the first ever between the two agencies, was signed by FMC Chairman Daniel B. Maffei and Acting Assistant Attorney General Richard Powers. Although the practical impact of the MOU remains to be seen, its swift development following Biden's E.O. is notable.

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 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.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.

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