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President Biden disparages ocean carriers, calls price increases ‘outrageous’

President Joe Biden recently spoke by phone with several retailers and farmers to discuss ocean shipping costs and the impacts of those costs on their businesses. In a Twitter post that included excerpts of those calls, he said: “One of the reasons prices have gone up is because a handful of companies who control the market have raised shipping prices by as much as 1,000%. It’s outrageous.”

Hal Lawton, president and CEO of Tractor Supply Company, told the president, “We were paying $3,500 a container in 2020, and then by September, October of last year, we were paying upwards of $20,000 to $25,000.”

Such increases raised costs for Jo-Ann Stores by almost $100m, said Wade Miquelon, CEO and president of the company. “We’re not a huge company, but that $100m increase that they passed on to us is more than our entire profit,” he noted.

Biden blamed a lack of competition for the issue, saying, “As you know, one of the big reasons why prices are going up is the cost of shipping things – across the Pacific, in particular. There’s only nine shipping companies – nine, N-I-N-E – major ocean line shipping companies who ship from Asia to the United States.”

Vincent Duvall, president of the American Farm Bureau Federation, fears losing customers overseas if challenges persist for agricultural shippers.

The president has called on Congress to crack down on the global liners. “We’ve got to change this. I asked the Congress to pass a piece of legislation [the Ocean Shipping Reform Act of 2021] to remedy this. Democrats and Republicans voted for it, it’s over in the House of Representatives. I expect it to be voted on fairly shortly, and I expect it to pass. And I’m looking forward to signing it, because we’ve got to bring down prices.

“The underlying elements of our economy are incredibly strong, stronger than any other nation in the world. But inflation is a problem. This won’t solve it all, but it will solve a big piece of it.”

Kim Biggar

Kim Biggar started writing in the supply chain sector in 2000, when she joined the Canadian Association of Supply Chain & Logistics Management. In 2004/2005, she was project manager for the Government of Canada-funded Canadian Logistics Skills Committee, which led to her 13-year role as communications manager of the Canadian Supply Chain Sector Council. A longtime freelance writer, Kim has contributed to publications including The Forwarder, 3PL Americas, The Shipper Advocate and Supply Chain Canada.

Comments

  1. Respectfully, Mr. President – you are WAY off the mark.

    One of the first professional lessons I learned as a 16-year-old deck cadet was “There is no excuse for ignorance”, and it is lamentable, that an esteemed person as the President of the United States of America would make statements that are flagrantly incorrect but also completely misrepresents the trials and tribulations of an essential global industry. Container or Liner Shipping

    It also is factually incorrect because there are far more than 9 (N-I-N-E) carriers that operate between Asia and Europe, and neither have the rates have not gone up 1,000%. Allow me to quote Alhaliner of the 21st April 22 “The joint market share of the three major alliances has dropped from 82.2 percent to 67.7 percent,” reports Alphaliner, in contrast to the Biden administration that blamed the alliances for many of the current market issues.” https://lnkd.in/dTZ57n3z

    But does @POTUS have any perspective on what the USA has done to cause and exacerbate this situation? From port congestion, abysmal productivity, aging infrastructure, issues with haulage, and let’s not speak at all about the inflammation of the Ukraine war.

    Respectfully sir, a very large part of the high freight rate is the insatiable demand of the American consumer. The US demand is up significantly and it has drained inventories and caused a vicious cycle of compensatory stocking.

    But where were you sir, when for years and years your buyers would demand the lowest almost penury freights, would negotiate in packs of alliances, and drove many a carrier to bankruptcy? Where were you when year after year after year Liner Shipping was possibly the worst ever investment?

    This crisis is of your making sir – your ports, infrastructure, policy, and demand. Grandstanding and vilifying the carriers who literally feed America is not going to make it better. Governance will.

    1. Container auctions must stop. Especially when the profits made are used to wipe out debts from speculators

  2. “One of the reasons prices have gone up is because a handful of companies who control the market have raised shipping prices”

    That’s how capitalism works mate.

      1. Oh yes it does. If you listened to what Biden said and all the re4st of the rhetoric

  3. The irony is that Federal Maritime Commish (“FMC”), the closest thing we have in the States to a regulator of liner shipping, in a “Finding” that took them 2 years to prepare- published earlier in June, talked about tight market conditions, saying, inter alia, “..The Fact Finding Officer concludes that although certain ocean transportation prices, especially spot prices, are disturbingly high by historical measures, those prices are exacerbated by the pandemic, an unexpected and unprecedented surge in consumer spending, particularly in the United States, and supply chain congestion, and are the product of the market forces of supply and demand.” There is also some legalese in the “Finding” regarding the lack of “concentration” in the Pacific and Atlantic liner shipping markets.

    We could lament the fact that the U.S. in no longer a major maritime nation- I’ve gotten over that a long time ago. At the present time, the cargo interests make a lot of noise- they do all the talking… as evidenced by OSRA 2021 and now OSRA 2022. Clearly, the folks in the West Wing (folks who feed tropes and talking points to Pres Biden) are in the target vector of cargo side rants and lobbying. On a gut level, the carriers really need to step up their noise-making (sorry, WSC, though valuable, is way too polite) to make their case/ fight back on social media, in the trenches, etc etc. And, yes, do some yelling in the direction of the West Wing. Perhaps some of the boffins over there could read the “Finding” from the FMC- an independent agency within the US govt.

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