President Joe Biden will shortly order American transportation agencies to address competition in rail and shipping, as shippers struggle with sky high freight rates.
Biden’s executive order will tap the Federal Maritime Commission (FMC) and the Surface Transportation Board (STB) to come up with solutions.
The order will ask the FMC to take all possible steps to protect American exporters from the high costs imposed by the ocean carriers and to crack down on unjust and unreasonable fees, including detention and demurrage charges. Demurrage and detention charges imposed on shippers by containerlines have more than doubled over the past year.
White House press secretary Jen Psaki said Thursday that Biden will direct the FMC to crack down on “unjust and unreasonable fees” in the ocean shipping industry and work with the Justice Department to investigate anticompetitive practices.
Paradoxically, the Biden directive is expected not to look into Jones Act operators, with the president a supporter of the ruling that prioritises US tonnage.
The STB, meanwhile, will be tasked with taking long-standing measures to increase competition where the railroad is monopolised, including so-called “competitive switching rules” which require a monopoly railway to grant access to its railroad under certain conditions.
Container shipping spot rates on the Shanghai – Los Angeles route soared $466 this week to stand at a record $9,631 for a feu, which is 229% higher than same period in 2020, latest data from Drewry shows.
Other nations, including China, Vietnam and South Korea, have also looked into tackling high shipping costs over the past year.