The U.S. Federal Maritime Commission will allow Consolidated Chassis Management (CCM), which manages about 125,000 chassis for about 20 liner companies, to amend an agreement that allows it to work collectively when operating chassis pools.
FMC Chairman Richard A. Lidinsky Jr. said he agreed to vote in favor of the changes in the CCM agreement based on the understanding that CCM was “not seeking authority to lease chassis directly to entities who do not contribute to the pool, and does not intend to do so under this amendment.”
The other four commissioners also agreed to the change.
“I support the commission staff’s recommendation and vote at this time to take no action to prevent the amendment from becoming effective under the Shipping Act, while instructing staff to monitor the implementation of the amended agreement through reporting requirements,” Lidinsky said.
CCM has been around since 2005 and has an agreement on file with the FMC that allows carriers to work together under the Shipping Act’s antitrust shield. The changes are expected to make it easier for CCM to operate its pools.
Lidinsky noted that following concerns raised by both FMC staff and in comments from the International Longshoremen’s Association, Institute of International Container Lessors (IICL), and the National Industrial Transportation League, CCM modified its agreement so it did not have authority to set terms or charges governing the “lease” of chassis. It also withdrew proposed new authority to provide chassis directly to non-contributing parties.
The Justice Department also commented on the proposed changes in a letter to the FMC last week, saying amendments to the agreement allow for increased participation and interaction in the pools by non-ocean carrier entities, such as trucking firms and chassis leasing companies not subject to FMC regulatory jurisdiction.
The department said the changes “appear to expand the original purpose of the CCM pool agreement from an equipment interchange pool that provided a service for the benefit and use of the ocean carrier participant to a more land-based transportation business in which the ocean carriers – acting collectively through OCEMA (CCM’s affiliate, the Ocean Carrier Equipment Management Association) and the affiliated parties to the CCM Pool agreement—can engage in business activities that are further removed and possibly independent from actual ocean transportation.”
The Justice Department said it has “long taken the position that the general antitrust exemption for international ocean shipping carrier agreements is no longer justified.”
It said in this case “any rationale for the exemption is further attenuated to the extent the ocean carriers seek to operate a land-based chassis business in which they collectively participate, manage, and interact with non-regulated entities.”
The department said if the FMC found ocean carrier members of OCEMA “are attempting improperly to extend immunity to non-ocean common carrier entities or to business operations outside the contours of the Shipping Act, such as a general domestic chassis leasing business, we
respectfully request that the FMC take appropriate action.”
Lidinsky
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Lidinsky said that “if, despite these assurances and modifications, CCM were to move to a direct-leasing model, I would have serious concerns that such activity may exceed the scope of the limited exemption that the Shipping Act provides from the Sherman Act, Clayton Act, and related general antitrust statutes.”
“Similarly, my vote today is based on the clarification that the amendment does not seek to extend the Shipping Act’s exemption from other antitrust laws, in any form whatsoever, to entities, such as equipment leasing companies, that are not ocean carriers. Under the Shipping Act, the exemption from other antitrust laws is premised on a party being subject to Commission jurisdiction and oversight to protect competition and customers.”
IICL, whose membership includes the chassis leasing companies Flexi-Van and TRAC Intermodal, had opposed the CCM agreement if it was going to allow the CCM pools to lease chassis directly for profit, saying “there should be a level playing field for this land-based transportation business.”
“Equipment leasing companies play a crucial but overlooked role in our nation’s supply chain. So long as they remain in the shadows, outside the commission’s jurisdiction and oversight, they cannot use agreements with ocean carriers to don the cloak of immunity from other general antitrust laws,” Lidinsky said.
He said his position was “based on the repeated representations that the chassis pools will be operated on an at-cost basis, and that CCM will not impose pool charges or other charges that result in profits collected by CCM or distributed to its members. So long as CCM’s management fees and costs are reasonable, this at-cost model tends to mitigate concern that the amendment may produce an unreasonable increase in transportation cost,” he explained.
Lidinsky said his vote also followed assurances by CCM that the amendment would not result in changes or disturbances to existing arrangements and agreements for chassis maintenance and repair, which was a concern raised by the ILA. He said “such disturbances could cause disruptions in the flow of commerce during this critical time in our economic recovery.” — Chris Dupin
