THE Alliance comes up with financial safeguards in event of

Time: 2016-12-06 14:33
CONTAINER lines within the planned THE Alliance are developing safeguards, including an emergency fund, to help recover stranded cargo if one of the members collapses as Hanjin Shipping did this year.
Federal Maritime Commissioner (FMC) William Doyle said he'd like to see the 2M and Ocean alliances adopt similar practices, IHS Media reported.
As shippers scrutinise carriers' financial stability ahead of the 2016 to 2017 bidding season, the safeguards could provide those that deal with the THE Alliance some reassurances,  and give alliance members a contracting edge.
"I find it more than just creative. It's a group looking for a solution. If a solution like that were to occur, I think the other alliances would follow suit with the same kind of instrument,"said Mr Doyle, who was speaking recently at a North Atlantic Port Association meeting outside of Washington,DC.
Mr Doyle and other commissioners on the FMC are now reviewing the vessel-sharing agreement drafted by members of the THE Alliance. This alliance includes German carrier Hapag-Lloyd; the Japanese 'K' Line, MOL, and NYK Line; and Taiwanese Yang Ming. Along with the competing Ocean Alliance, the THE Alliance is set to take sail in April, joining the already-in-place 2M Alliance.
Mr Doyle said he still has serious concerns with proposed language in the agreement related to joint contracting and purchasing power that could hurt domestic US businesses, but could only commend the proposed safeguards in the drafted agreement.
Under the so-called framework language, in the event of a liner collapse the remaining liners in the THE Alliance would have the option to:- Make arrangements directly with entities providing vessels/space to the affected party that are used by the alliance- Make arrangements directly with agents or subcontractors of the affected party- Take other actions to facilitate the movement or cargo carried by the affected party to the intended port of discharge or other locations- Discuss and agree on other measures that are necessary to maintain continuity of operations and facilitate the orderly movement of cargo
Mr Doyle said it marks the first time an alliance agreement has attempted to create contingency plans on how liners would deal with a failed member. "Or, more importantly, how the non-failing carriers can help the failed carrier's shippers and other customers.
Mr Doyle has advocated for such agreements after South Korea's Hanjin filed for bankruptcy this past August. The collapse stranded some 540,000 containers, equating to about US$14 billion in goods worldwide.
Mr Doyle said he had recently spoken with representatives of the THE Alliance regarding the proposed failsafes. Though the details are far from finessed, he said, the intent, in part, is to set up a "catastrophic instrument"that could be used when an individual member liner fails.
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