Carriers have sought to play down US government fears on competition and erroneous charges.
President Joe Biden has issued an executive order demanding the Federal Maritime Commission (FMC) 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.
The World Shipping Council, the Washington DC-based liner lobbying group, has argued that normalised demand, not regulation, will solve the supply chain woes that have bedevilled shippers all year.
In the US, the WSC has pointed out all parts of the supply chain are facing unprecedented pressures.
Supply chains simply cannot efficiently handle this extreme demand surge
“There is a lack of rail and truck capacity, warehouses are full, and ports are bursting at the seams,” the WSC observed in a release issued in the wake of the Biden announcement.
“This is not the fault of any given supply chain actor. Supply chains simply cannot efficiently handle this extreme demand surge, thus resulting in the delays, disruptions and capacity shortages felt across the chain. All supply chain players are working to clear the system, but the fact is that as long as the massive import demand from US businesses and consumers continues, the challenges will remain,” said John Butler, president and CEO of the WSC, going to argue that liner shipping remains competitive .
For his part, Daniel Maffei, the chairman of the FMC, America’s maritime regulator, commented: “In recent months, we have increased our scrutiny of the ocean carrier alliances to identify evidence of anticompetitive behaviour regarding rates and capacity, and we will continue to do so as the Covid-19 and import surge crisis continues.”
In a note to clients, investment bank Jefferies suggested the Biden order would have more bark than bite.
“Although we do not believe there will be any meaningfully impact to international shipping companies, this order does highlight the current strength of ocean shipping and shows that rates are expected to remain elevated going forward,” Jefferies suggested.
“The executive order, aimed at promoting competition across several industries and sectors, will be broad in its scope but limited in enforceable actions, especially as it pertains to international shipping companies,” Jefferies pointed out.
Other nations, including China, Vietnam and South Korea, have also looked into tackling high shipping costs over the past year.
Given the west coat port slowdown is probably the biggest additional bottleneck for the industry (and the cause of knock on effects that led to these price hikes) i think a closer look at the USA’s own infrastructure management and congestion issues would reap faster and more meaningful rewards??
EXACTLY!
I’ll second that. But Joe has to keep certain people happy. Twas ever thus.