The US Federal Maritime Commission (FMC) is scheduled to meet on Wednesday in a bid to step-up scrutiny of liner alliances amid the coronavirus pandemic.

The body, the primary US regulator of international shipping, is to hold holding the meeting in the wake of dramatic container freight rate increases on the transpacific. which have already raised the prospect of intervention by Chinese authorities.

And it comes just days after FMC chairman Michael Khouri warned of potential legal redress if liners are found to have behaved in anti-competitive fashion.

A remote meeting of the FMC is expected to see the five commissioners briefed by the Bureau of Trade Analysis on ocean carrier rate trends and alliance activity.

The meeting comes as freight rates on the transpacific have surged since June after lines withdrew capacity to protect earnings.

Rates from China to the US West Coast are currently at just over $3,700 per 40-foot equivalent unit (feu), according to the Freightos Baltic Index (FBX).

That is around 158% higher than the same time last year.

Rates from China to the US East Coast stand at nearly $4,500 per feu and are 72% higher than rate for this week last year.

Closed meeting

While the FMC meeting will be held behind closed-doors, its chairman Khouri gave an idea what to expect in a speech on 15 September to US shippers body NCBFAA.

Carriers are allowed to reduce capacity if they notify the FMC two weeks in advance.

But they face sanctions if their joint action is deemed to have led to a violation of the US Shipping Act by limiting competition and subsequently raising costs or reducing services.

"If the FMC detects any indication of carrier behaviour that may violate section 6(g), we will immediately seek to address these concerns with the carriers," Khouri said.

"If necessary, the FMC will go to federal court to seek an injunction to enjoin further operation of the alliance agreement.

"The unusual circumstances and challenges created by the Covid-19 pandemic together with trade agreement changes have heightened the FMC’s scrutiny of capacity reductions by global alliances."

Chinese threat

Presently, the FMC is receiving notices of the reinstatement of some blanked sailing in both the transpacific and the transatlantic, Khouri said.

But peak volumes on the transpacific could tempt carriers to push up rates further, analysts believe.

That could result in the seventh General Rate Increase (GRI) initiated by carriers since 1 June, according to Freightos.

The US meeting comes amid reports that China's Ministry of Transport also watching carrier activity.

Some reports suggest that Chinese authorities are willing to intervene to stem further freight rate increases on the transpacific.

Some analysts believe that may have led lines led by Cosco Container Lines and AP Moller-Maersk to cancel further rate increases scheduled for the transpacific.

Speculation in liner shipping circles in recent days has focused on rumours that Chinese authorities may be seeking to implement a ban on blanked sailings after Golden Week in early October.

Carriers often blank sailings in the two weeks immediately after the holiday week, when factories close and container shipping demand decreases substantially.

This year, lines are scheduled to blank a higher percentage than normal, according to analyst Sea-Intelligence.