In his state of the union speech on March 1, US President Biden accused global ocean carriers of anti-competitive behaviour. He said: “When corporations don’t have to compete, their profits go up, your prices go up, and small businesses and family farmers and ranchers go under. We see it happening with ocean carriers moving goods in and out of America. During the pandemic, these foreign-owned companies raised prices by as much as 1,000% and made record profits.
“Tonight, I’m announcing a crackdown on these companies overcharging American businesses and consumers.”
While it’s true that ocean carriers are making enormous profits, the World Shipping Council has said “the claims made by President Biden during his speech are not indicative of the industry or market dynamics.”
John Butler, President and CEO of the WSC, said in a statement, “The truth is that, with demand for ocean transportation services into the US at record levels, market dynamics are influencing prices – not carrier alliances. These vessel sharing agreements are purely operational compacts that enable carriers to share space on one another’s ships, which increases efficiency and supports more service to more ports than would otherwise be the case. Importantly, the operational agreements do not include commercial cooperation.”
Daniel Maffei, chairman of the Federal Maritime Commission, agreed with this position. At the TPM22 conference on February 28, Maffei said, “Many shippers really want us to do something about the rapid inflation of rates and decline in reliability in the ocean freight system. But even after we’ve increased the reporting requirements and deepened our analysis, so far we have found no evidence of anything like that [some kind of artificial limitation on the supply of cargo space] that’s actionable and furthermore neither has the European Union or China.”
The WSC has urged US policymakers to “address the root cause of the logjam by seeking real solutions that take a comprehensive, forward-looking view of the supply chain.” The organisation says landside supply chain congestion is a major issue.
A political effort to find scapegoats for inflation
“Our current congestion can only be unwound if every link in the chain does its part to improve operations and coordination with their service partners and customers – not, as some lawmakers are encouraging, from top-down government mandates on one part of the chain.”
Bud Darr, executive vice president for maritime policy and government affairs at Mediterranean Shipping Co (MSC), the world’s largest containerline, took to LinkedIn this week to express his distress at the way the White House was pursuing liners.
“As an American citizen, I am deeply troubled by something labeled as a ‘Fact Sheet’ being released by the White House so full of mis-statements and intentionally distorted content. It is shameful that in a political effort to find scapegoats for inflation on the eve of the Annual State of the Union Address, that the elected leadership of the US would be so inaccurate in their statements,” Darr wrote.
Supply chain disruption was not the result of some sort of anti-competitive or other nefarious conduct on the part of the ocean carriers, Darr argued, suggesting rather it has been down to the lack of shoreside US supply chain capacity and long-neglected port and intermodal infrastructure.