Key Takeaways
- •The subcommittee examined repealing the Shipping Act of 1916’s antitrust exemption after witnesses testified that three foreign-owned alliances now control nearly 90 percent of global maritime trade.
- •Erika M. Douglas (Associate Professor of Law, Temple University) testified that the Federal Maritime Commission has never used its authority to challenge anticompetitive ocean carrier agreements in forty years.
- •Rep. Scott Fitzgerald (R, WI-5) asked Tony Rice (Senior Director of Trade Policy, National Milk Producers Federation) how carrier consolidation affects dairy exporters, who reported losing $1.5 billion.
- •Rep. Scott Fitzgerald (R, WI-5) focused on foreign carrier dominance, while Rep. Jerrold Nadler (D, NY-12) argued the hearing ignored more pressing costs from tariffs and Middle East conflict.
- •Congress may consider legislation to require the Department of Justice to review maritime agreements, aiming to increase transparency and lower shipping costs for American businesses and consumers.
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Hearing Analysis
Overview
The House Judiciary Subcommittee on Administrative State, Regulatory Reform, and Antitrust held a hearing on March 17, 2026, titled “Pier Pressure: Regulation and Competition in Maritime Shipping.” The primary purpose of the hearing was to examine the long-standing antitrust exemption granted to international ocean carriers under Section 40307 of the Shipping Act. Chairman Scott Fitzgerald (R, WI-5) and other Republican members sought to investigate whether this exemption and the resulting market consolidation among foreign-owned carriers have contributed to rising shipping costs and supply chain inefficiencies that harm American consumers and exporters.
Key Testimony
The hearing featured testimony from four experts who largely agreed that the current regulatory framework is outdated. Erika M. Douglas, an Associate Professor of Law at Temple University, testified that the ocean shipping exemption is one of the oldest in antitrust law and is no longer justified. She noted that the industry is now dominated by three major alliances—accounting for up to 95 percent of ocean shipping—which creates a "perfect storm" for anticompetitive conduct such as collusion and market allocation. Richard Sicotte, a Professor of Economics at the University of Vermont, highlighted a lack of transparency in how the Federal Maritime Commission (FMC) analyzes carrier agreements. He pointed out that the FMC has never blocked or enjoined a carrier agreement in over 40 years, suggesting a need for the United States Department of Justice (DOJ) or Federal Trade Commission (FTC) to take over competitive reviews.
Policy Proposals
Tony Rice, Senior Director of Trade Policy for the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC), provided an industry perspective, detailing how the U.S. dairy industry lost over $1.5 billion in 2021 due to shipping disruptions. He emphasized that U.S. exporters are almost entirely dependent on foreign-flagged vessels, as the U.S. fleet represents only 2.3 percent of global capacity. Diana Moss, Vice President at the Progressive Policy Institute (PPI), argued that while the shipping exemption is problematic, it is part of a broader failure in antitrust enforcement. She criticized recent "premature" settlements by the DOJ in major cases, arguing they do little to protect consumers.
The policy discussion centered on several proposals, including the full repeal of the Shipping Act’s antitrust exemption to allow the DOJ and FTC to prosecute anticompetitive behavior in the maritime sector. Witnesses also suggested requiring the FMC to share confidential service contract data with antitrust agencies. Rep. Mark Harris (R, NC-8) discussed the Trump administration’s "Maritime Action Plan," which aims to revitalize U.S. shipbuilding to reduce reliance on foreign carriers. However, Mr. Rice cautioned that proposed port fees on foreign-flagged ships might inadvertently penalize American agricultural exporters who have no other shipping options.
Overview
The hearing was marked by sharp partisan disagreement regarding the scope of the subcommittee's oversight. Ranking Member Jerrold Nadler (D, NY-12) and Ranking Member of the full committee Jamie Raskin (D, MD-8) characterized the focus on maritime shipping as a "diversion" from a broader "affordability crisis." They argued that the real drivers of inflation were President Trump’s "unilateral and haphazard" tariffs, which the Federal Reserve System (Fed) estimated cost American families $1,700 to $2,500 annually, and the war with the Islamic Republic of Iran. Rep. Raskin specifically criticized the "corrupt" settlement of the Live Nation-Ticketmaster antitrust case, alleging that the Trump administration settled a "slam-dunk" case for "practically nothing."
Industry Impact
Several organizations were central to the discussion. The Federal Maritime Commission (FMC) was criticized by both witnesses and members for its perceived failure to exercise its statutory power to challenge unreasonable carrier agreements. The United States Department of Justice (DOJ) was discussed both as a potential solution—if granted more authority over shipping—and as a target of criticism by Democrats for its recent handling of the Live Nation-Ticketmaster and RealPage, Inc. cases. The People's Republic of China (China) was referenced regarding its massive shipbuilding lead over the U.S. and the role of the China Ocean Shipping Company (COSCO) in global trade. Other entities mentioned in the context of failed enforcement or market concentration included Hewlett Packard Enterprise (HP), Juniper Networks, Inc., and the Mediterranean Shipping Company (MSC).
Overview
Notable exchanges included Rep. Raskin’s critique of the "billionaire class," specifically mentioning Elon Musk and Jeff Bezos, and his allegation that Jared Kushner’s investments from the State of Qatar and the Kingdom of Saudi Arabia influenced foreign policy. Rep. Henry Johnson (D, GA-4) argued that private equity firms are "swallowing up" the housing market while the committee focuses on "esoteric" shipping rules. In contrast, Rep. Darrell Issa (R, CA-48) pushed the witnesses to define a "middle ground" for reform that would increase transparency without immediately dismantling the entire regulatory structure.
Key Testimony
The hearing concluded without specific deadlines for legislation, though Chairman Fitzgerald indicated that the testimony would inform future oversight of the FMC and potential amendments to the Shipping Act.
Transcript
Subcommittee will come to order. Without objection, the chair is authorized to declare recess at any time. We welcome everyone to today's hearing. Happy St. Patrick's Day. This hearing on regulation and competition in the maritime shipping industry is a subcommittee hearing we've wanted to tackle for some time. I'll now recognize myself for an opening statement. Today we are here to examine the statutory antitrust exemption granted under the 1916 Shipping Act and its impact on competition and consumers. Since the earliest days of maritime shipping, ocean carriers have entered into cooperative agreements to coordinate freight capacity and global shipping routes. This was to ensure space aboard a vessel didn't go unused and ships would not be arriving at the same ports at the same time. Recognizing that these cooperative agreements, known as conferences, could act to restrict or eliminate competition between rival shippers, Congress began studying the issue. What Congress concluded was that while there were certainly anticompetitive aspects of these conferences, the benefits seemed to outweigh any potential harm. In the words of the 1914 Alexander Report, quote, "to terminate the existing agreements would bring about two results: the steamship lines would either engage in rate wars or, to eliminate a costly struggle, they would consolidate through common ownership." Congress's compromise came in the Shipping Act of 1916. As part of that compromise, ocean carriers could enter into collective agreements so long as those agreements were filed with and overseen by a federal regulator, which today is known as the Federal Maritime Commission, or the FMC. The industry today, however, looks very different from the one Congress confronted in 1916. And in 1998, the top 20 ocean carriers controlled approximately 50 percent of the world's container slot capacity. By 2018, that number had almost doubled to nearly 90 percent. And today, three global shipping alliances together control nearly all transatlantic and transpacific trade. The intent behind the Shipping Act was also to advance the interests of American shippers. As one scholar had put it, both the original statute and the 1961 amendments are designed to protect and foster a strong American-flag merchant marine. In other words, Congress wanted to protect American interests against discrimination by foreign shippers. Yet today, the largest ocean shipping companies are all foreign-owned and controlled. In the list of the top 20 container shipping companies by market cap, there is not a single U.S. company. The United States depends on foreign-flagged vessels for 97 percent of its maritime trade. COSCO Shipping, one of the largest container shipping companies by market share, is owned and controlled by the Chinese Communist Party. That presents its own national security risks, which the House Committee on Homeland Security and the China Select Committee have been investigating. This concentration and coordination can exacerbate supply chain disruptions that would otherwise be more resilient when competition is robust. For example, during the COVID pandemic, freight rates for a container increased from $1,300 to as much as $11,000. When geopolitical crises have struck, such as the Russia-Ukraine conflict or more recently, the ongoing airstrikes against the Iranian regime, ocean carriers have leveraged their monopoly power to charge detention and demurrage fees, surcharges, and other fees that should instead be charged by marine terminal operators. What would otherwise be unreasonable business practices in a competitive environment, it appears to be routine under these anticompetitive alliances. The result of the Shipping Act, as we've seen, may have unfortunately been precisely what Congress was hoping to avoid: concentration of foreign shipping companies to the detriment of American businesses and consumers. When Congress granted the antitrust exemption, it tasked the Federal Maritime Commission with subjecting these ocean carrier agreements to antitrust scrutiny. However, as one of our witnesses will explain today, the FMC has never once brought a case against the powerful ocean shipping carriers that dominate shipping markets. Despite having the statutory authority to seek a judiciary remedy or monetary penalties, the FMC has never taken an enforcement action to challenge an agreement. Some will call this under-enforcement; it could be called a dereliction. Over the years, the FMC has maintained the position that competition was vigorous among ocean carriers and their three major shipping alliances. Even after the COVID pandemic, in which the United States faced some of its greatest supply chain challenges, the FMC reported to Congress that competition among ocean common carriers, among the three major alliances, and among the members in each of these alliances is vigorous. But that argument is in tension with the position taken by Congress and the DOJ in recent years. When Congress passed the Ocean Shipping Reform Act of 2022, it did so to alleviate concerns amongst businesses that ocean carrying alliances were, quote, "able to wield excessive power to prevent competition." Yet despite Congress giving the FMC more authority to police the carriers and the terms of their agreements, it appears the agency is still sitting on its hands. The DOJ, meanwhile, has long maintained the position that antitrust exemption for ocean shipping is no longer justified and has repeatedly submitted comments to the FMC expressing antitrust concerns over ocean carrier alliances. In 2016, for example, the DOJ submitted comments urging the FMC to oppose the proposed Ocean Alliance Agreement. In their comments, the DOJ stated that the agreement contemplates extensive cooperation amongst members and would grant the parties the ability to broadly coordinate service between routes, including the unfettered exchange of competitively sensitive information. Additionally, the DOJ stated the increase in concentration in the transpacific shipping market is likely to enhance market power under the antitrust laws. Despite this warning, the FMC authorized the Ocean Alliance in 2016 and has continued to extend the agreement, most recently until March 2032. An economy based on vigorous competition protected by the antitrust laws does the best job of promoting consumer welfare and a vibrant, growing economy. Statutory antitrust exemptions are antithetical to those principles. As the bipartisan Antitrust Modernization Commission stated, statutory exemptions from the antitrust laws undermine rather than upgrade the competitiveness and efficiency of the U.S. economy. When Congress grants immunity from antitrust scrutiny, we must do so selectively and with consumers in mind. And when compelling evidence suggests consumers no longer benefit from an antitrust exemption, it is appropriate for Congress to reexamine whether it is still in the public interest to allow otherwise anticompetitive behavior to continue unchecked. That is why we're here today, to better understand the history of the Shipping Act and whether, after nearly 100 years, it is still in the consumer's best interest. We will also hear today whether other government regulations, such as environmental regulations in international shipping or restrictions in domestic maritime shipping like the Jones Act, are negatively impacting shipping prices and harming consumers. I look forward to hearing from our witnesses and hearing what they have to say today. Thank you. I now recognize the ranking member, Mr. Nadler, for an opening statement.
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